Athabasca Minerals Inc. Provides Update on Acquisition of Aggregates Management Inc.
October 1, 2008
Security purchase agreement signed with related parties
EDMONTON, ALBERTA - October 1, 2008 - Athabasca Minerals Inc. ("Athabasca" or the "Corporation") (TSX Venture: ABM) is pleased to announce that it has entered into a formal security purchase agreement and finalized the business terms with respect to the previously announced acquisition by Athabasca of all of the issued and outstanding shares of Aggregates Management Inc. ("AMI").
The parties have agreed to acquire an aggregate of 200 common shares of AMI (the "AMI Shares"), as well as all of the issued and outstanding shares (the "Pitts Shares") of Pitts Holdings Ltd. (collectively, the "Acquisition"). Pitts Holdings Ltd. ("Pitts") is a private company that has recently been restructured and own the balance of 100 common shares of AMI. Athabasca has agreed to indirectly acquire the balance of the AMI Shares by purchasing the Pitts Shares in order to effect the Acquisition on a tax efficient basis.
About the Acquisition
Athabasca has entered into a non-arm's length security purchase agreement dated as of September 26, 2008 with AMI, as well as Pitts, Hopkins Construction (Lacombe) Ltd., Shaun O'Connor-Parsons, Dale Nolan, DK Consulting Services Ltd., Udomdej Kriangkum and certain other vendors (collectively, the "Vendors"), pursuant to which Athabasca has agreed to acquire the AMI Shares and the Pitts Shares for an aggregate purchase price of $13,500,000.
The purchase price for the AMI Shares will be $9,000,000 and will be paid by $5,600,000 in cash, $400,000 in promissory notes and the issuance of 5,000,000 common shares of Athabasca (the "Athabasca Shares").
The purchase price for the Pitts Shares will be $4,500,000 and will be paid by $2,800,000 in cash, $200,000 in promissory notes and the issuance of 2,500,000 Athabasca Shares.
The Athabasca Shares to be issued pursuant to the Acquisition will be issued at a deemed price of $0.60 per Athabasca Share.
The effective date of the Acquisition is June 30, 2008 and the Vendors will be paid interest on the cash component of the purchase price from the effective date of June 30, 2008 to and including the closing date of the Acquisition.
The Board of Directors of Athabasca has received an independent valuation of AMI from Evans & Evans Inc. of Calgary, Alberta (the "Independent Valuation"), as previously announced on May 1, 2008. It is the opinion of Evans & Evans Inc. that the fair market value of AMI at the valuation date of January 31, 2008 was in the range of CDN$12,900,000 to CDN$13,500,000. The Acquisition is being completed for an aggregate purchase price of $13,500,000 for the AMI Shares and the Pitts Shares. A complete copy of the Independent Valuation will be attached as a schedule to information circular of Athabasca being prepared for circulation to shareholders (the "Information Circular").
The Acquisition is a "related party transaction" within the meaning of TSX Venture Policy 5.9 (which incorporates Multilateral Instrument 61-101) ("Policy 5.9") as certain of the Vendors are Related Parties. As a result, Multilateral Instrument 61-101 ("MI 61-101") provides that a "related party transaction", such as the Acquisition, must be approved by a majority of the votes cast by holders of securities, excluding holders of securities whose votes cannot be included for the purposes of minority approval, as that term is defined in MI 61-101. Under MI 61-101, as applied to the Acquisition, minority approval of the resolution concerning the Acquisition would require the approval by a majority of all the votes cast by minority shareholders.
In order to finance the cash component of the purchase price, Athabasca has arranged a credit facility from the Bank of Montreal in the form of a $9,000,000 demand loan to be repaid in 60 monthly instalments of $150,000 each, plus interest at a floating rate of prime plus 1.50%.
| ||Pro Forma After Completion of the Acquisition|
|Existing Athabasca Shareholders||20,478,165|
|Total New Athabasca Outstanding Common Shares||27,978,165|
The completion of the Acquisition is subject to the approval of TSX Venture and all other necessary regulatory approval. The completion of the Acquisition is also subject to additional conditions precedent, including: (i) shareholder approval of Athabasca for the Acquisition; (ii) AMI entering into new management agreements with certain key personnel; and (ii) certain other usual conditions for transactions of this nature.
About Athabasca Minerals:
Athabasca Minerals Inc. is a resource company engaged in the management, exploration and development of industrial minerals in Canada. The Company's aim is to find and develop local sources of industrial minerals essential to the economic development of specific high growth regions. The Company has substantial land holdings in the vicinity of Fort McMurray, Alberta and Peace River, Alberta. Independent from its mineral exploration activities, the Company is also pursuing sand and gravel exploration and development projects throughout northern Alberta. These activities include contracts works, gravel pit management, new gravel development and acquisitions of sand and gravel operations.
For further information contact Udomdej Kriangkum, the President of Athabasca at (780) 465-5696 or Dean Stuart, Boardmarker Group, at (403) 517-2270.
As indicated above, completion of the Acquisition is subject to a number of conditions, including but not limited to, TSX Venture acceptance and shareholder approval. The Acquisition cannot close until the required shareholder approval is obtained. There can be no assurance that the Acquisition will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the Information Circular of Athabasca to be prepared in connection with the Acquisition, any information released or received with respect to the Acquisition may not be accurate or complete and should not be relied upon. Trading in the securities of Athabasca should be considered highly speculative.
The securities of Athabasca being offered have not been, nor will be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons absent U.S. registration or an applicable exemption from U.S. registration requirements. This release does not constitute an offer for sale of securities in the United States.
Except for historical information contained herein, this news release contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially. Neither Athabasca nor AMI will update these forward-looking statements to reflect events or circumstances after the date hereof. More detailed information about potential factors that could affect financial results is included in the documents filed from time to time with the Canadian securities regulatory authorities by Athabasca and AMI.
The TSX Venture Exchange Inc. has in no way passed upon the merits of the Acquisition and has neither approved nor disapproved the contents of this press release