| ||Mon Jul 25, 2016|
Knol Resources Corp. Announces Proposed Reverse Takeover Transaction With Kewa Financial Inc.
| ||Vancouver, British Columbia, July 25, 2016 -- Knol Resources Corp. (NEX: NOL.H) ("Knol" or the "Corporation") is pleased to announce that it has entered into a non-binding letter of intent (the "Letter of Intent") dated June 20, 2016 with KEWA Financial Inc. ("KEWA") which outlines the general terms and conditions of a proposed transaction (the "Proposed Transaction") that will result in Knol acquiring all of the issued and outstanding common shares (the "KEWA Shares") and other securities of KEWA.|
The Corporation is currently listed on NEX and it is intended that the Proposed Transaction will constitute its "reactivation" as defined in the policies of the TSX Venture Exchange (the "Exchange") and upon completion of the Proposed Transaction (the "Closing") and meeting all the conditions of the Exchange will have its listing transferred from NEX to the Exchange.
The Proposed Transaction is currently expected to be completed by way of a three-cornered amalgamation or other similar transaction between Knol and KEWA which will result in KEWA becoming a wholly-owned subsidiary of Knol.
Overview of KEWA
KEWA is incorporated in the Province of Ontario and is engaged in the business of providing environmental surety bonding and reclamation solutions for carefully selected U.S. based mining companies. Reclamation surety bonds guarantee that land used for mining will be remediated to previously agreed upon standards after mining activities have been concluded. KEWA's comprehensive surety bonding solution provides capital relief to the bonded principals while ensuring their compliance with rapidly increasing environmental remediation obligations. Following the Closing and completion of the KEWA Financing (as defined below) and Ancillary Acquisitions (as defined below), KEWA will own 100% of an A.M. Best A- rated licensed U.S. insurance company with a U.S. Treasury listing, a Barbados domiciled licensed reinsurance company, a licensed insurance agency with over 35 years of history, and a profitable environmental reclamation services company.
The Proposed Transaction
The Letter of Intent is to be superseded by a definitive agreement (the "Definitive Agreement") between Knol and KEWA with such agreement to include representations, warranties, covenants and conditions typical for a transaction of this nature. The Proposed Transaction is subject to, among other things, receipt of all applicable shareholder and regulatory approvals, the final approval of the Exchange and the satisfaction of customary closing conditions, including the conditions described below.
The Proposed Transaction is an arm's length transaction and, as such, the Corporation intends to apply to the Exchange for a waiver from the shareholder approval requirements for the Proposed Transaction, if applicable. However, prior to completion of the Proposed Transaction, the Corporation intends to hold a meeting of its shareholders for purposes of approving, among other matters, certain matters ancillary to the Proposed Transaction, including (i) a change of the name of Knol to "KEWA Financial" or such other similar name as KEWA may determine and which shall be acceptable to the Exchange, and (ii) a consolidation of the issued and outstanding common shares of Knol in an amount to be agreed between KEWA and Knol prior to execution of the Definitive Agreement but to be in the range of one "new" Knol common share for every 14 to 16 "old" Knol common shares (the "Consolidation"), with each post-Consolidation Knol common share being a "Knol Share".
Following the Closing, Knol will continue on with the business of KEWA with KEWA as its wholly‐owned and operating subsidiary and change its name to "KEWA Financial" or such other similar name as KEWA may determine and which shall be acceptable to the Exchange (Knol after the Proposed Transaction being referred to herein as the "Resulting Issuer").
It is currently anticipated that under the Proposed Transaction, each shareholder of KEWA (including those receiving KEWA Shares as a result of the KEWA Financing) will receive one Knol Share in exchange for each KEWA Share held by such holder and one Knol Warrant in exchange for each KEWA Warrant held by such holder.
It is expected that all Knol Shares (including Knol Shares issued upon exercise of Knol Warrants) and Knol Warrants (collectively "Knol Securities") issued pursuant to the Proposed Transaction, except those certain Knol Securities issued to U.S. persons, will be freely tradable under applicable Canadian securities legislation, but may be subject to Exchange imposed restrictions on resale. Knol Securities issued to U.S. persons will not be freely tradable and will be subject to restrictions upon trading under applicable U.S. securities laws. None of the securities to be issued pursuant to the Proposed Transaction have been or will be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any state securities laws, and any securities issued pursuant to the Proposed Transaction are anticipated to be issued in reliance upon available exemptions from such registration requirements pursuant to Section 4(a)(2) and/or Regulation D of the U.S. Securities Act and applicable exemptions under state securities laws. The Knol Securities issued to U.S. persons may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements under applicable U.S. securities laws. This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities.
Further details about the Proposed Transaction and the Resulting Issuer will be provided in a comprehensive press release when the parties enter into a Definitive Agreement and in the disclosure document to be prepared and filed in respect of the Proposed Transaction.
Proposed KEWA Financing
In connection with the Proposed Transaction, KEWA and Knol are proposing to enter into agreements with Sprott Private Wealth LP and an affiliate, as finders, to complete a non-brokered private placement of subscription receipts (the "KEWA Subscription Receipts") for minimum aggregate gross proceeds of $8,640,000 (the "KEWA Financing"). Affiliates of Sprott Private Wealth LP own or exercise control or direction over (including managed accounts), directly or indirectly, approximately 16% of Knol's current outstanding common shares and, if warrants held by them were exercised, would hold approximately 25% of Knol's then outstanding common shares.
Each KEWA Subscription Receipt will be deemed to be converted into one unit of KEWA (a "KEWA Unit") without further payment from or action on the part of the holder and concurrently with the satisfaction of certain escrow release conditions, including, among other things, confirmation that there is no impediment to the completion of (i) the Consolidation, (ii) the acquisition of two separate entities by KEWA (the "Ancillary Acquisitions"), and (iii) the Proposed Transaction. Each KEWA Unit will consist of one KEWA Share and one half KEWA Share purchase warrant (each whole KEWA Share purchase warrant, a "KEWA Warrant"). Upon completion of the Consolidation and the Proposed Transaction, holders of KEWA Shares referred to above will receive Knol Shares and Knol Warrants in exchange for their KEWA Shares and KEWA Warrants.
KEWA intends to use the net proceeds of the KEWA Financing and Knol's existing cash on hand to complete the Ancillary Acquisitions and for general corporate purposes.
Conditions to the Proposed Transaction
Completion of the Proposed Transaction is subject to certain conditions precedent including, among other things:
Sponsorship of a Proposed Transaction is required by the Exchange unless exempt in accordance with Exchange policies. Knol is currently reviewing the requirements for sponsorship and may apply for an exemption from the sponsorship requirements pursuant to the policies of the Exchange; however, there is no assurance that Knol will ultimately obtain this exemption. Knol intends to include any additional information regarding sponsorship in a subsequent press release.
- the satisfactory completion of due diligence investigations by each of Knol and KEWA;
- the receipt of all required approvals by the respective boards of directors of Knol and KEWA;
- closing of the KEWA Financing;
- completion of the Ancillary Acquisitions
- Knol having a cash balance net of all liabilities and payables of not less than $4.6 million
- the receipt of any requisite approvals of the shareholders of Knol required by applicable law or Exchange requirements;
- the receipt of approval of the Proposed Transaction by shareholders of KEWA;
- the receipt of all required consents, approvals and authorizations of any regulatory authorities, including, without limitation, the Exchange, as applicable; and
- the receipt of all required consents and approvals of third parties.
Proposed Management and Board of Directors of the Resulting Issuer
It is currently anticipated that all of the current officers and all of the current directors of Knol will resign from their respective positions with Knol. Subject to Exchange approval, on completion of the Proposed Transaction, it is currently anticipated that the board of directors of the Resulting Issuer will be nominated upon agreement between KEWA and Knol and will include the following:
David Wiley will serve as a director and President and Chief Executive Officer of the Resulting Issuer. Mr. Wiley has over 20 years of executive experience in mining, finance and capital markets. Prior to founding KEWA, Mr. Wiley was a Founding Partners of Raven Hill Partners Inc., a Toronto based merchant bank focused on funding early stage ventures. Previously, he co-founded and was the President and CEO of Phoenix Coal Inc. where he was instrumental in growing the company from a private enterprise to a publicly listed company on the Toronto Stock Exchange. Mr. Wiley also previously served as a Managing Director of MHI Energy Partners (energy and mining focused private equity fund).
Brian W. Barr will serve as Chairman of the Board of Directors of the Resulting Issuer. Mr. Barr has over 28 years of director experience in the insurance industry through his former directorships of Aviva Canada Inc. and Norwich Union Life Insurance Company Ltd. where he also served as Chairman. James Falle, FCPA, FCA, ICD.D will also serve as a director of the Resulting Issuer. Mr. Falle has over 25 years of executive experience in the financial services industry. Most recently he served as Executive Vice President and CFO of Aviva Canada Inc. where he oversaw the Finance, Actuarial, Legal and Compliance, Reinsurance and Corporate Development teams. Previously, he has served in executive officer roles for AEGON Canada / Transamerica, Zurich Financial services, Bank of America Canada and Paribas Bank of Canada.
Details with respect to the additional proposed officers and directors of the Resulting Issuer, including the background of each such proposed individual, will be announced in subsequent disclosure.
Halt of Trading of Common Shares of the Corporation
In accordance with the policies of the Exchange, the common shares of the Corporation are currently halted from trading and will remain halted until further notice.
In accordance with the policies of the Exchange, further details about the Proposed Transaction and the Resulting Issuer will be provided in a comprehensive press release when the parties enter into a Definitive Agreement, including details related to the business and assets of KEWA, proposed consideration, description of financing arrangements and loans. Further details will also be provided and in the disclosure document to be prepared and filed in respect of the Proposed Transaction.
Investors are cautioned that, except as disclosed in the disclosure document to be prepared in connection with the Proposed Transaction, any information released or received with respect to the Proposed Transaction may not be accurate or complete and should not be relied upon.
For further information, please contact:
Michael Atkinson, President and Chief Executive Officer of Knol Resources Corp.
Phone: (604) 689-1428
David Wiley, President and Chief Executive Officer of KEWA Financial Inc.
Phone: (416) 388-4879
All information contained in this press release with respect to Knol and KEWA was supplied by the parties, respectively, for inclusion herein, and Knol and its directors and officers have relied on KEWA for any information concerning such party.
This news release does not constitute an offer to sell or a solicitation of an offer to sell any of the securities in the United States. The securities have not been and will not be registered under the U.S. Securities Act or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.
The Exchange has in no way passed upon the merits of the Proposed Transaction and has neither approved nor disapproved the contents of this press release.
Neither the Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Exchange) accepts responsibility for the adequacy or accuracy of this press release.
This news release contains forward-looking statements relating to, among other things, the timing and completion of the Proposed Transaction, the Ancillary Acquisitions, the KEWA Financing, the Consolidation, the future operations of the Corporation, KEWA, and the Resulting Issuer and other statements that are not historical facts. Forward-looking statements are often identified by terms such as "will", "may", "should", "anticipate", "expects" and similar expressions. All statements other than statements of historical fact included in this release, including, without limitation, statements regarding the Proposed Transaction, the Ancillary Acquisitions, the KEWA Financing, the Consolidation and the future plans and objectives of the Corporation, KEWA, and the Resulting Issuer are forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from the Corporation's, KEWA's, and the Resulting Issuer's expectations include the failure to satisfy the conditions to completion of the Proposed Transaction set forth above and other risks detailed from time to time in the filings made by the Corporation, KEWA, and the Resulting Issuer with securities regulators.
The reader is cautioned that assumptions used in the preparation of any forward-looking information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Corporation, KEWA, and the Resulting Issuer. As a result, the Corporation, KEWA, and the Resulting Issuer cannot guarantee that the Proposed Transaction will be completed on the terms and within the time disclosed herein or at all. The reader is cautioned not to place undue reliance on any forward-looking information. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement. The forward-looking statements contained in this news release are made as of the date of this news release and the Corporation, KEWA, and the Resulting Issuer will update or revise publicly any of the included forward-looking statements as expressly required by Canadian securities law.
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