ST. Felicen, Quebec, June 19, 2006—TechCana Inc., has announced the execution of an agreement in principle with Domtar Inc., related to the acquisition of certain assets held by Domtar and located at Malartic and Grand-Remous, province of Quebec.
The transaction was in the amount of $14,280,000, payable by the issuance to Domtar of 16,800,000 common shares of TechCana, at a price of $0.85 per share.
This agreement in principle also contains the terms and conditions of a private placement by Domtar in the share capital TechCana for an amount of $3,000,000, at a price of $0.85 per share. A total of 20,329,412 common shares will be issued to Domtar on the closing of the Transaction and of the concurrent private placement.
This Transaction is part of the expansion of the manufacturing activities of multi-layered wood flooring and the vertical integration of TechCana's activities. Alain Brunet, president and chief executive officer of TechCana, has indicated that "the completion of this Transaction will accelerate the implementation of TechCana's business plan and will secure our supply of raw materials, which will improve TechCana's competitive positioning in the flooring industry."
According to the proposed terms of the Transaction, TechCana will acquire certain facilities, land and equipments owned by Domtar and located at Grand-Remous and Malartic, province of Quebec. It is contemplated that the transaction will be completed on or around August 31, 2006.
The Transaction is subject to the satisfaction of certain conditions, including:
- the execution of an asset purchase agreement containing closing conditions and representations and warranties acceptable to both parties;
- the granting of a timber supply and forest management agreement for hard wood (mainly birch) by the Ministere des resources naturelles du Quebec to satisfy the post-Transaction raw material supply needs of TechCana;
- the principal shareholders of TechCana following the Transaction, being Produits Forestiers Aventure Inc., Desjardins-Innovatech s.e.c. and Domtar, shall have entered into a shareholders' agreement providing, among others, for their respective representation on the Board of Directors of TechCana following the Transaction;
- financial support from the provincial and federal governments;
- the Board of Directors of each of TechCana and Domtar shall have approved the final terms and conditions of the Transaction; and
- each party shall be satisfied of its due diligence investigations conducted with respect to the other party.
This Transaction constitutes a fundamental acquisition under the policies of the TSX Venture Exchange Inc. and is subject to its approval.
The shareholders' agreement to be executed on closing between Domtar, Produits Forestiers Aventure Inc. and Desjardins-Innovatech s.e.c. shall provide that Domtar will be entitled to propose two candidates to the Board of Directors of TechCana. It is also anticipated that, concurrently to closing, Serge Constantineau, who is currently General Manager, remanufacturing operations, at Domtar, will be joining TechCana as General Manager of its operations.
The common shares to be issued to Domtar as part of the Transaction and the concurrent private placement will be subject to resale restrictions for a period of 4 months following closing.
The parties dealing at arm's length, no finder's fee will be payable for this Transaction.
Domtar has agreed to subscribe, in a private placement to occur on closing of the Transaction, to a total of 3,529,412 common shares in the share capital of TechCana at a price of $0.85 per share for a gross proceeds of $3,000,000. This placement is also subject to the approval of the TSX Venture Exchange Inc.
