West Mountain announces proposed transaction with Reignwood International Investment (Group) Company Limited
Calgary, Alberta – July 10th, 2013 – West Mountain Capital Corp. (the “Company” or “West Mountain”) announces that it has entered into negotiations with Reignwood International Investment (Group) Company Limited (“Reignwood”) in relation to a non-binding term sheet that sets out the basic terms and conditions of a proposed private placement (collectively, the “Proposed Private Placement”). The terms of the Proposed Private Placement are anticipated to be as follows: (a) the purchase by Reignwood Holdings Hong Kong Limited (“Reignwood Hong Kong”) of 6,800,000 common shares in the capital of the Company (the “Common Shares”) at a price of $0.32 per Common Share in consideration of the payment of $2,176,000 in cash to the Company; (b) the purchase by Reignwood Hong Kong of an unsecured convertible debenture of the Company in the principal amount of $10,068,028 (the “Convertible Debenture”); and (c) the purchase by Reignwood Hong Kong of 82 common shares (the “PS2 Common Shares”) of the Company’s wholly-owned subsidiary Phase Separation Cayman Limited (“PS2 Cayman”) at a price of $17,550 per PS2 Common Share in consideration of the payment of USD$1,755,000 in cash to PS2 Cayman, for aggregate proceeds of approximately $14,000,000. The Convertible Debenture is anticipated to have a term of 12 months, bear interest at the rate of 3.5% per annum and be convertible into Common Shares at the conversion price of $0.42 per Common Share. PS2 Cayman owns Phase Separation Solutions Hong Kong Limited and Shanghai Phase Separation Environmental Technology Co., Ltd., the entities through which the Company presently operates in China. The proceeds of the Proposed Private Placement with Reignwood will be used to repay outstanding bank indebtedness, to underwrite the build-out of West Mountain’s business plan in China and for general operating purposes.
Although the Company is optimistic that the non-binding term sheet will be entered into, there is no certainty that the Proposed Private Placement will be completed on the terms as set out herein or at all.
It is presently contemplated by the parties to the negotiations that upon completion of the Proposed Private Placement, Reignwood Hong Kong will own 9.9% of the outstanding Common Shares of West Mountain, will own Convertible Debentures that may be converted into additional Common Shares equal to 35% of the outstanding Common Shares of West Mountain and own 45% of the outstanding Common Shares of PS2 Cayman. It is also contemplated that as part of the Proposed Private Placement Reignwood Hong Kong will be provided with the right to nominate one director to the board of directors of the Company (the “Board”), with such person to be acceptable to the TSXV. This right is to survive for as long as Reignwood Hong Kong holds more than 5% of the outstanding Common Shares. In addition, should Reignwood Hong Kong exercise its right to convert the Convertible Debentures it will have the right to nominate one additional director to the Board, with such person to be acceptable to the TSXV. This right is to survive for as long as Reignwood Hong Kong holds more than 30% of the outstanding Common Shares.
In addition to conditions customary for transactions of this nature, the completion of the Proposed Private Placement is conditional upon the following: (a) the entering into of definitive binding agreements providing for the various transactions that comprise the Proposed Private Placement; and (b) the Company receiving all necessary regulatory consents or approvals, including approval by the TSX Venture Exchange (“TSXV”) of the Proposed Private Placement. The Company hereby reserves the price of $0.32 for the Proposed Private Placement.
On May 23, 2013 the Company announced that it had selected a financial partner for the Chinese market by entering into a joint venture agreement with Reignwood. The Company and Reignwood intended to incorporate a jointly owned corporation named Reignwood Environmental that will engage in the environmental business of site remediation, brownfield redevelopment, oily sludge treatment and other business opportunities identified by the Company and Reignwood.
The joint venture agreement contemplates that Company will contribute its existing China-based projects, clean technology and know-how to Reignwood Environmental and that Reignwood will provide Reignwood Environmental with the financing and marketing strength that will allow it to carry out the Company’s China-based business plan. Reignwood Environmental is to be owned as to 55% by the Company and as to 45% by Reignwood.
The joint venture is subject to the execution of a definitive joint venture agreement and the acceptance of the TSXV. The definitive joint venture agreement remains under negotiation and expected to be finalized and executed by the parties on or before August 15, 2013.
In negotiating the above noted Private Placement it is now the intention of the parties to, if the transaction closes, to use Shanghai Phase Separation Environmental Technology Co., Ltd. for this purpose and rename that company Reignwood Environmental.
Reignwood is a private company with investments in a number of diversified industries including consumer goods, health & wellness, financial services, real estate, aviation, energy and environmental. Reignwood is most well known as the exclusive licensee of Red Bull in China and owner of the Fairmont Beijing. Reignwood currently controls assets totalling approximately US$6.0 billion.
Private Placement of Units
The Company anticipates that it will soon complete the private placement of Units described in its news release of June 18, 2013 for maximum proceeds of $1.25 million. Each Unit will be comprised of one 10% convertible unsecured subordinated debenture in the total principal amount of C$1,000.00 (a “Debenture”) and 3,125 common share purchase warrants (each such warrant, a “Warrant”). The Debentures will have a term of two years, subject to prepayment rights in certain circumstances, and will be convertible into common shares (“Common Shares”) of the Company at the conversion price of $0.32 per share. Each Warrant will entitle the holder thereof to purchase one Common Share of the Company (a “Warrant Share”) at a price of $0.32 per Warrant Share at any time prior to 4:30 p.m. (Calgary time) on the date that is two years from the date of the issuance of the Units. It is not anticipated that any new insiders will be created, nor that any change of control will occur, as a result of the private placement of Units. It is presently anticipated that insiders of the Company will comprise the majority of the investors participating in the private placement of Units. Net proceeds of the private placement will be used for general working capital purposes. Completion of the financing is subject to receipt all customary regulatory approvals, including approval of the TSX Venture.
About West Mountain
West Mountain is an established Canadian environmental solutions company specializing in the thermal treatment of a variety of hazardous and non-hazardous waste streams. It employs a unique indirectly heated, closed loop technology that allows it to extract even the most hazardous contaminants from soil, industrial sludge, pharmaceutical waste and consumer waste streams converting much of it into reusable oil and synthetic natural gas that it uses to sustain the process. This methodology offers significant opportunity for greenhouse gas reduction over traditional hazardous waste destruction technologies. The Company’s management team maintains expertise in hazardous waste management, Brownfield remediation and pharmaceutical waste management with experience spanning North America and 15 countries internationally.
This news release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. 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. In particular, this news release contains forward-looking information regarding the Proposed Private Placement, the proposed joint venture with Reignwood, the private placement of Units and the use of the proceeds received through the issuance of treasury securities. The forward-looking statements and information are based on certain key expectations and assumptions made by West Mountain, including expectations and assumptions concerning the completion of the transactions described in this news release. Although West Mountain 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 forwardlooking statements and information because West Mountain can give no assurance that they will prove to be correct. There is no assurance that the Proposed Private Placement or any of the other transactions described in this news release will be completed on the terms set out in this news release or at all.
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 include the failure to enter into definitive agreements that provide for the transactions described in this news release and other factors that are described in the risk factors in the Company’s most recent annual management’s discussion and analysis that is available on SEDAR at www.sedar.com. The forward-looking statements included in this news release are expressly qualified by this cautionary statement. The forward-looking statements and information contained in this news release are made as of the date hereof and West Mountain 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.
For Inquires Contact
West Mountain Capital Corp.
Mr. Paul Antle
President and CEO
709 726 0336
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts the responsibility for the adequacy or accuracy of this release.