Northfield Capital Corporation (TSX-V: NFD.A) (the
“
Company”) is pleased to announce that it has
entered into a binding share purchase agreement (“
Purchase
Agreement”) with Hemlo Explorers Inc.
(“
Hemlo”) dated as of the date hereof pursuant to
which Hemlo has agreed to acquire all of the common shares
(“
Rocky Shore Shares”) of Rocky Shore Metals Ltd.
(“
Rocky Shore”) held by the Company. Hemlo has
also entered into corresponding purchase agreements with each of
the other Rocky Share shareholders for the acquisition of all of
the issued and outstanding Rocky Shore Shares. Pursuant to the
terms of the purchase agreements, each Rocky Shore Share will be
exchanged for 2.832 common shares (“
Hemlo Shares”)
in the capital of Hemlo.
Pursuant to the Purchase Agreement, the Company
will acquire ownership and control of 15,151,200 Hemlo Shares. The
Hemlo Shares will be acquired for aggregate consideration of
5,350,000 Rocky Shore Shares, having a deemed value of $0.15 per
Rocky Shore Share or $802,500 in the aggregate, pursuant to the
exemption contained in Section 2.16 of National Instrument 45-106 –
Prospectus Exemptions (the “take-over bid and issuer bid”
transaction exemption). The Purchase Agreement contains customary
representations, warranties and agreements, conditions to closing
and other obligations of the parties. Closing of the Transaction is
anticipated to be completed as soon as reasonably possible
following receipt of all necessary regulatory approvals and upon
receipt of the approval of the transaction by shareholders of
Hemlo.
The transaction is a related party transaction
under the rules of the TSX Venture Exchange
(“TSXV”) as the Company, which owns approximately
26.14% of the issued and outstanding Hemlo Shares, is also a
greater than 20% shareholder of Rocky Shore. Further, Michael
Leskovec is a member of the board of directors of Hemlo and the
Chief Financial Officer of the Company and Ernie Eves is a member
of the board of directors of Hemlo and a member of the board of
directors of the Company.
The Company has determined that the Transaction
constitutes a related party transaction under Multilateral
Instrument 61-101 – Protection of Minority Security Holders in
Special Transactions (“MI 61-101”) as the Company
beneficially owns, controls or has direction over, directly or
indirectly, 13,258,787 Hemlo Shares (representing approximately
26.14% of all outstanding Hemlo Shares), and beneficially owns,
controls or has direction over, directly or indirectly, 5,350,000
of the Rocky Shore Shares (representing approximately 30.3% of all
outstanding Rocky Shore Shares).
MI 61-101 requires that an issuer obtain
approval of a majority of the disinterested shareholders as well as
a formal valuation for a transaction that constitutes a related
party transaction, absent an exemption from such requirements. The
Company expects that the transaction, as between Hemlo and the
Company, will be exempt from the formal valuation and minority
approval requirements as the Company is not listed on a specified
market and the fair market value of the consideration for the Hemlo
Shares proposed to be acquired by the Company does not exceed 25%
of its market capitalization.
Prior to the closing of the transactions
contemplated under the Purchase Agreement (the
“Closing”), the Company owns and controls an
aggregate of 13,258,787 Hemlo Shares (of which 12,753,488 Hemlo
Shares are owned by the Company directly and 505,299 Hemlo Shares
are owned by Mr. Robert Cudney (a “control person”
(as such term is defined in the Securities Act (Ontario) of the
Company)), and another entity owned by Mr. Robert Cudney) and
convertible securities entitling the Company and Mr. Robert Cudney
to acquire an additional 4,335,620 Hemlo Shares (of which 4,085,620
convertible securities are owned by the Company directly and
250,000 convertible securities are owned by Mr. Robert Cudney)
representing approximately 26.14% of the issued and outstanding
Hemlo Shares as of the date hereof (or approximately 31.95%
calculated on a partially diluted basis, assuming the exercise of
the 4,335,620 convertible securities only).
Following Closing (assuming no other changes to
the capitalization of Hemlo), the Company, together with Mr. Robert
Cudney, will own and control an aggregate of 28,409,987 Hemlo
Shares (of which 27,904,688 Hemlo Shares will be owned by
Northfield directly and 505,299 Hemlo Shares will be owned by Mr.
Robert Cudney, and another entity owned by Mr. Robert Cudney) and
convertible securities entitling the Company and Mr. Robert Cudney
to acquire an additional 4,335,620 Hemlo Shares (of which 4,085,620
convertible securities are owned by the Company directly and
250,000 convertible securities are owned by Mr. Robert Cudney)
representing approximately 28.21% of the issued and outstanding
Hemlo Shares (or approximately 31.17% calculated on a partially
diluted basis, assuming the exercise of the 4,335,620 convertible
securities only).
The Hemlo Shares will be acquired pursuant to
the Purchase Agreement and the transaction will notake place
through the facilities of any market for Hemlo’s securities. The
Company may increase or decrease its investments in Hemlo at any
time, or continue to maintain its current investment position,
depending on market conditions or any other relevant factor.
This portion of this new release is issued
pursuant to National Instrument 62-103 – The Early Warning System
and Related Take-Over Bid and Insider Reporting Issues, which also
requires an early warning report to be filed on SEDAR+
(www.sedarplus.com) containing additional information with respect
to the foregoing matters. A copy of the related early warning
report may be obtained on Hemlo’s SEDAR+ profile by Michael
Leskovec at the details below. The Company is a value-based
investment and merchant banking company focused on the resource
(critical minerals and precious metals) and transportation
sectors.
For further information, please contact:
Michael G. Leskovec, Chief Financial OfficerTelephone: (416)
628-5940
Neither TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this press release.
Forward Looking Statements
This press release contains forward-looking
statements and forward-looking information within the meaning of
applicable securities laws including, but not limited to, the
completion of the transaction and the Hemlo shareholders’ approval
thereof, the final approval of the transaction by the TSXV. The use
of any of the words “expect”, “anticipate”, “continue”, “estimate”,
“objective”, “ongoing”, “may”, “will”, “project”, “should”,
“believe”, “plans”, “intends'' and similar expressions are intended
to identify forward-looking information or statements. The
forward-looking statements and information are based on certain key
expectations and assumptions made by the Company. Although the
Company believes that the expectations and assumptions on which
such forward-looking statements and information are based are
reasonable, undue reliance should not be placed on the
forward-looking statements and information because the Company can
give no assurance that they will prove to be correct.
Since forward-looking statements and information
address future events and conditions, by their very nature they
involve inherent risks and uncertainties. Actual results could
differ materially from those currently anticipated due to a number
of factors and risks. Factors which could materially affect such
forward-looking information are described in the risk factors in
the Company’s most recent annual management's discussion and
analysis that is available on the Company’s profile on SEDAR+ at
www.sedarplus.com. Readers are cautioned that the foregoing list of
factors is not exhaustive. The forward-looking statements included
in this press release are expressly qualified by this cautionary
statement. The forward-looking statements and information contained
in this press release are made as of the date hereof and the
Company undertakes no obligation to update publicly or revise any
forward-looking statements or information, whether as a result of
new information, future events or otherwise, unless so required by
applicable securities laws.