CARMANAH AGREES TO PURCHASE SOL INC IN A SHARE EXCHANGE VALUED AT ~$7.5M
Carmanah Technologies Corporation (TSX: CMH) and SOL, Inc., a privately-owned Florida-based company, today jointly announced that Carmanah has entered into a binding Letter of Intent with SOL, Inc. and Michael Sonnenfeldt. Mr. Sonnenfeldt is a director of Carmanah and the controlling shareholder of SOL. Under the terms of the Letter of Intent, Carmanah has agreed to buy all outstanding shares of SOL owned by Mr. Sonnenfeldt and
the parties intend to take the necessary steps to ensure that all other owners of SOL shares prior to closing enter into a definitive agreement to sell their shares to Carmanah. As a result, upon completion of the transaction, SOL will become a wholly-owned subsidiary of Carmanah.
“As solar efficiency improves and LED lighting technology advances, we believe an increasing share of the outdoor lighting market will turn to solar,” said John Simmons, CEO of Carmanah. “Our acquisition of SOL, which has a long history and broad capability in solar lighting, turns our belief into commitment.
The total consideration payable by Carmanah to acquire all of the shares of SOL consists of:
(a) 38,163,176 common shares of Carmanah, which would be issued from treasury; and
(b) a royalty pursuant to which Carmanah will agree to pay to the former shareholders of SOL an amount
equal to 3% of total revenues received by Carmanah in respect of certain specified prospective sales by SOL,
provided each identified project must result in US$5.0 million in revenue to Carmanah before any amounts are
payable to the former SOL shareholders and subject to a number of other conditions.
Based on Carmanah’s current trading price, the total value of the transaction is approximately CAD$7.5 million.
Carmanah will acquire SOL on the basis that it has no debt and no excess cash above a specified level of required
working capital. The definitive agreement for the transaction will contain customary representations,
warranties, covenants and indemnities.
“For more than 20-years SOL has provided best-in-class solar lighting solutions to customers in more than 60
countries around the world,” said Dibs Tailor, CEO of SOL. “Our acquisition by Carmanah begins an exciting new
chapter for us. Our combined product portfolio, technical resources and sales reach will enable us to better
serve customers and make us a very formidable competitor in this high growth market.”
Completion of the transaction is subject to a number of conditions including: (a) satisfactory completion of due
diligence by both parties; (b) absence of any change in the affairs of SOL or Carmanah that would have a material
adverse effect on the relevant entity or its business; (c) approval of the transaction by the board of directors
of Carmanah; (d) execution of a definitive agreement pursuant to which Carmanah will be entitled to acquire 100%
of the outstanding shares of SOL; and (e) receipt of all necessary approvals, including the approval of the
Toronto Stock Exchange and the approval of shareholders of Carmanah at the annual general meeting currently
scheduled to be held on or about May 8, 2014. There can be no assurance at this point that all such conditions
will be satisfied and, in the event any conditions are not satisfied or waived, the transaction would not be
completed. If all conditions are satisfied or waived, the transaction is currently expected to close in May,
2014.
As Mr. Sonnenfeldt is a majority owner of SOL, and a significant shareholder of Carmanah, this transaction is
considered a “related party transaction” for purposes of applicable Canadian securities laws and accordingly
Carmanah appointed an independent committee of its directors to oversee the negotiation and review of the
proposed transaction. The details of that review, a description of the results of an independent valuation
commissioned as part of their review and other details on the reasons for the independent committee’s
recommendations with respect to the transaction will be contained in the information circular for the
shareholders’ meeting at which shareholders of Carmanah will be asked to approve the transaction. Mr.
Sonnenfeldt will not be entitled to vote any shares of Carmanah which he owns in respect of the resolution to
approve the transaction.
