TORONTO, Feb. 8, 2019 /CNW/ - Acasta Enterprises Inc. (TSX:AEF) ("Acasta" or the Corporation") is pleased to make the following corporate announcements:
Change of Auditor
In connection with the initiative to reduce expenses, the Corporation has requested and accepted the resignation of KPMG LLP ("KPMG") and the appointment of UHY McGovern Hurley LLP ("UHY") as the Corporation's auditor. The Corporation thanks KPMG for its services provided to date. UHY is a mid-size firm of Chartered Professional Accountants registered with the Investment Industry Regulatory Organization of Canada ("IIROC"), the Canadian Public Accountability Board ("CPAB"), and the U.S. Public Company Accounting Oversight Board ("PCAOB"). UHY audits approximately 130 reporting issuers and the Board feels UHY is best positioned to meet the Corporation's needs going forward. In accordance with National Instrument 51-102 ("NI 51-102"), the Company has filed a Change of Auditor Notice ("Notice") on SEDAR together with letters from both KPMG and UHY, with each letter confirming agreement with the statements contained in the Notice, as applicable. There were no reportable events as defined in NI 51-102 between KPMG and the Corporation.
New Chief Financial Officer
The Corporation is also pleased to report the appointment of Mr. Paul Bozoki as Chief Financial Officer. Mr. Bozoki is a CPA, CA (Ontario) and a U.S. CPA (New Hampshire) with approximately 25 years of experience in finance, accounting and tax matters including in excess of 10 years as serving as Chief Financial Officer of various public companies listed on the TSX and TSXV. Mr. Bozoki holds an MBA from the Richard Ivey School of Business and a Bachelor of Commerce from Queen's University.
The Corporation wishes to thank its past Chief Financial Officer, Mr. Michael Murphy, for his contributions and wish him continued success in the future.
Proposed Conversion of High Yield Secured Debt to Equity
The Corporation also announced that, in accordance with the Corporation's plan to urgently reduce its outstanding high yield secured debt, WFI Inc. ("WFI") has agreed to convert the maximum amount of principal permitted by the applicable policies of the Toronto Stock Exchange (the "TSX") (the "Conversion") into equity of the Corporation. Under the terms of the Conversion, WFI has agreed to convert an aggregate principal amount of $4,783,578 (or approximately US$3,587,683) of high yield, secured indebtedness into class B shares ("Class B Shares") of the Corporation. The Corporation will issue to WFI 6,499,426 Class B Shares (the "Conversion Shares") pursuant to the Conversion at a deemed price of $0.736 per share.
WFI is indirectly controlled by the co-CEOs of the Corporation. After the issuance of the Conversion Shares to WFI, the co-CEO's will indirectly control 29,887,822 Class B Shares or approximately 41.8% of the 71,493,704 then outstanding Class B Shares. The issuance of the Conversion Shares, which represent 9.99% of the outstanding Class B Shares, will not materially affect control of the Corporation. Subject to TSX approval, it is expected that the Conversion will be completed on or after February 18, 2019.
The Conversion may be considered a "related party transaction" pursuant to Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ("MI 61-101"). After considering various alternatives and the receipt of independent legal advice, the independent directors of the Corporation unanimously determined that the Conversion: (i) was in the best interests of the Corporation; (ii) was reasonable under the circumstances; and (iii) will improve the financial position of the Corporation as it will reduce overall indebtedness as well as future high yield interest expense. The Conversion is exempt from the formal valuation and minority approval requirements, respectively, of MI 61-101 as neither the fair market value of the Conversion, nor the fair market value of the Conversion Shares, exceed 25% of the Corporation's market capitalization (as calculated pursuant to MI 61-101).
The Corporation remains focused on streamlining operations, reducing expenses and is examining a number of alternatives to recapitalize its balance sheet and enhance shareholder value.
Adoption of Advance Notice By-Law
The Corporation announced that the Board of Directors had also recently approved the adoption of an advance notice by-law (the "Advance Notice By-law"), establishing a framework for advance notice of nominations of directors by shareholders of the Corporation. Among other things, the Advance Notice By-law fixes certain deadlines by which shareholders must submit a notice of director nominations to the Corporation prior to any annual or special meeting of shareholders where directors are to be elected and sets forth the information that must be included in the notice.
The Advance Notice By-law provides a clear process for shareholders to follow for director nominations and sets out a reasonable time frame for the submissions of nominees and the accompanying information. The Advance Notice By-law will help to ensure that all shareholders receive adequate notice of the nominations to be considered at a meeting and can thereby exercise their voting rights in an informed manner. The Advance Notice By-law is similar to the advance notice by- laws adopted by many other Canadian public companies.
In the case of an annual meeting of shareholders, notice to the Corporation must be given not less than 30 or more than 65 days prior to the date of the annual meeting. In the event that the annual meeting is to be held on a date that is less than 50 days after the date on which the first public announcement of the date of the annual meeting was made, notice may be given not later than the close of business on the 10th day following such public announcement.
In the case of a special meeting of shareholders (which is not also an annual meeting), notice to the Corporation must be given not later than the close of business on the 15th day following the day on which the first public announcement of the date of the special meeting was made.
The Advance Notice By-law is effective immediately and will be placed before shareholders for approval, confirmation and ratification at the next annual and special meeting of shareholders. In the event that the Advance Notice By-Law is not so approved, confirmed and ratified, it shall terminate and be of no further force or effect.
A copy of the Corporation's Advance Notice By-law will be made available under the Corporation's profile at www.sedar.com.
Cautions Regarding Future Plans and Forward Looking Information
Certain statements contained in this press release constitute forward-looking statements within the meaning of applicable Canadian securities laws which reflect the Corporation's current expectations and projections about future results. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "outlook", "objective", "may", "will", "expect", "intent", "estimate", "anticipate", "believe", "consider", "should", "plans", "predict", "estimate", "potential", "could", "likely", "approximately", "scheduled", "forecast", "variation" or "continue", or similar expressions suggesting future outcomes or events. The forward-looking statements made in this press release relate only to events or information as of the date on which the statements are made in this press release. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this press release. Such forward-looking statements are based on a number of assumptions that may prove to be incorrect.
Except as specifically required by applicable Canadian securities law, the Corporation undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. These forward-looking statements should not be relied upon as representing the Corporation's views as of any date subsequent to the date of this press release. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. There can be no assurance that the Conversion will be completed as proposed or at all.
SOURCE Acasta Enterprises Inc.
View original content: http://www.newswire.ca/en/releases/archive/February2019/08/c6722.html