Press release from Marketwire
ENTREC Increases Option to Purchase Fort McMurray Property to 15 Acres
Tuesday, April 02, 2013
ENTREC Increases Option to Purchase Fort McMurray Property to 15 Acres08:00 EDT Tuesday, April 02, 2013
SPRUCE GROVE, ALBERTA--(Marketwired - April 2, 2013) - ENTREC Corporation (TSX VENTURE:ENT) ("ENTREC") is pleased to announce it has amended its option to purchase a property (the "Property") in Fort McMurray, Alberta such that ENTREC now has the option to purchase 15 acres of land instead of 10 acres. The option is exercisable at any time following the receipt of regulatory approval to the subdivision of the Property from the 27 acre parcel of land in which it is currently included. Once regulatory approval to that subdivision is received and the option is exercised, ENTREC intends to build a shop and office on the Property to support its growth in the Fort McMurray region. ENTREC is currently using the Property to store locally deployed equipment.
Perras Industrial Park Ltd. ("PIPL"), a non-arm's length party, acquired from an arm's length vendor (the "Original Vendor") a 27 acre parcel of land in Fort McMurray for $850,000 per acre. ENTREC has the option to purchase the Property from PIPL for the same price per acre ($850,000 per acre). ENTREC initially paid a deposit to PIPL of $3,500,000 and upon signing the amended option agreement paid a further deposit of $6,500,000. The balance of the purchase price for the Property ($2,750,000) is due upon the exercise of the option to purchase the Property. PIPL utilized $5,000,000 of the further deposit to make a payment on the vendor take-back mortgage on the Property.
Until the option to purchase the Property is exercised and as consideration for the payment of the additional deposit, ENTREC will be permitted to occupy the Property as tenant for no additional cost.
The amended option agreement also provides that each of ENTREC and PIPL shall be responsible for one-half of the costs and expenses incurred from and after April 1, 2013 related to the subdivision, development and sale of the 27 acre parcel of land in which the Property is currently included and that each of ENTREC and PIPL shall receive one-half of the net sale proceeds, after repayment of the vendor take-back financing of the Original Vendor, from the sale of all or any of the lands within that 27 acre parcel of land that are not acquired by ENTREC on the exercise of its option (the "Excess Lands").
Each of Rod Marlin, one of ENTREC's directors and officers, and Glen Fleming, also one of its officers, owns 20% of the shares of PIPL. Therefore the transaction is technically a related party transaction under Multilateral Instrument 61-101 adopted by the Ontario Securities Commission. However, the purchase price for the Property, if the option to purchase is exercised, will be identical to the purchase price paid by PIPL to the Original Vendor for the Property. For the transaction, ENTREC is relying on the exemptions contained in sections 5.5(a) and 5.7(a), respectively, of Multilateral Instrument 61-101 from the valuation and minority shareholder requirements of that instrument as they apply to related party transactions since the fair market value of the Property is significantly less than 25% of ENTREC's market capitalization.
ENTREC will only be able to exercise its option to purchase the Property following the receipt of regulatory approval to the subdivision of the Property from the 27 acre parcel of land in which it is currently included and, while such regulatory approval is anticipated to be received on favourable terms and conditions, there can be no assurance that such regulatory approval will be obtained or that it will be obtained on favourable terms and conditions. Also, PIPL financed a significant portion of its original acquisition of the lands with a vendor take-back financing and the Original Vendor registered its interest in the entire 27 acre parcel of land as security for the vendor take-back financing. If approval to the subdivision of the lands is not obtained and if PIPL defaults on its obligations to the Original Vendor, ENTREC has the option of purchasing the Excess Lands from PIPL subject to the then remaining balance of the vendor take-back financing of the Original Vendor. If ENTREC does not exercise that option, the Original Vendor may enforce its security interest on the lands, including the Property leased by ENTREC. Further, PIPL is obligated to use funds from the sale of the Excess Lands to repay the existing vendor take-back financing of the Original Vendor. If not all of the Excess Lands have been sold by September 30, 2014 and the existing vendor take-back financing has not been repaid in full, ENTREC also has the option to loan PIPL any amounts necessary to pay out the existing vendor take-back financing and have ENTREC's loan registered as a first mortgage charge against the Excess Lands.
ENTREC specializes in the lifting, transportation (over the road and on-site), loading, off-loading and setting of overweight and oversized cargo for the oil and natural gas, construction, petrochemical, mining and power generation industries. The common shares of ENTREC trade on the TSX Venture Exchange under the trading symbol "ENT".
This press release contains forward-looking statements that reflect ENTREC's current beliefs and that are based on information currently available to ENTREC including statements relating to: (i) ENTREC either exercising its option to purchase the Property or entering into a long term lease for the Property; and (ii) the building of a shop on the lands to house ENTREC's Fort McMurray operations. These statements require ENTREC to make assumptions it believes are reasonable but, as a result of such assumptions, such forward-looking statements are subject to inherent risks and uncertainties. Actual results and developments may differ materially from the results and developments discussed in the forward-looking statements as certain of these risks and uncertainties are beyond ENTREC's control. The assumptions made by ENTREC in making the statements relating to the building of a shop on the Property include, but are not limited to, the following: (i) regulatory approval to the subdivision of the Property from the 27 acre parcel of land in which it is currently included will be received; (ii) ENTREC will exercise its option to purchase the Property; and (iii) ENTREC will receive any debt financings required to complete the acquisition of the Property, make future required payments or to build the shop. The risks associated with the forward looking statements include the following: (i) those identified under the "Reader Advisory" above; (ii) all required regulatory approvals will not be obtained or will not be obtained on terms and conditions anticipated by or favourable to ENTREC; and (iii) ENTREC will not be able to obtain debt financing on acceptable terms. Although ENTREC believes that the expectations and assumptions on which such forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because ENTREC can give no assurance that they will prove to be correct.
Readers are cautioned not to place undue reliance on these forward-looking statements, which are given as of the date hereof, and to not use such forward-looking statements for anything other than their intended purpose. ENTREC undertakes no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
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John M. Stevens
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