Kootenay Silver Announces Spin-Out of Canadian Assets
Kootenay Silver Announces Spin-Out of
Canadian Assets
/NOT FOR DISTRIBUTION TO
UNITED STATES
NEWSWIRE SERVICES OR FOR
DISSEMINATION IN
THE UNITED STATES
./
VANCOUVER, BC
,
Aug. 20, 2021
/CNW/ - Kootenay Silver Inc. ("
Kootenay
" or the "
Company
")
(TSXV: KTN), is pleased to announce that its board of directors has unanimously approved a spin-
out of 80% of the Company's Canadian exploration assets (the "
Canadian Assets
"), to its
shareholders by way of a share capital reorganization effected through a statutory plan of
arrangement (the "
Arrangement
"). The Canadian Assets are held through Kootenay's wholly-owned
subsidiary, Kootenay Resources Inc. ("
Spinco
"). Under the Arrangement, Kootenay will distribute
80% of the common shares (each, a "
Spinco Share
") of Spinco to Kootenay's shareholders. Once
the Arrangement becomes effective, which will be triggered by the board of Kootenay, Kootenay
shareholders will ultimately own shares in two public companies: Spinco, which will focus on the
development of the Canadian Assets, and Kootenay, which will continue with the exploration and
development of its Mexican assets.
James McDonald
, Kootenay's President and CEO
stated, "
We believe the spin-out of the
Canadian Assets will be very beneficial to shareholders. Among other benefits, it will unlock the
value of the Canadian Assets by allowing it to be developed separately, by a skilled and
experienced management team, and it will allow our shareholders to own shares in two
companies
."
Under the Arrangement, Kootenay's current shareholders will receive Spinco Shares by way of a
share exchange, pursuant to which each existing common share of Kootenay will be exchanged for
one new common share of Kootenay (each, a "
New Kootenay Share
") and 0.04 of a Spinco Share.
Under the Plan of Arrangement, outstanding options and warrants to purchase common shares of
the Company will be adjusted or replaced so that upon exercise, holders will receive one New
Kootenay Share and 0.04 Spinco Shares for each option or warrant exercised.
The reorganization will be effected pursuant to the arrangement provisions of the
Business
Corporations Act
(
British Columbia
), and must be approved by the Supreme Court of
British
Columbia
and by the affirmative vote of 66 2/3% of Kootenay's shareholders at a shareholders'
meeting to be held on September 15, 2021 (the "
Meeting
"). Upon receipt of approval from the
shareholders of Kootenay and Supreme Court approval of the spin-out, Kootenay's board will
determine a trigger date for Spinco to complete a financing by way of private placement, rights
offering or other means, and apply for a listing on the TSX Venture Exchange (the "
TSXV
") or other
Canadian stock exchange. The trigger date is anticipated before the end of 2021.
Kootenay expects that the Arrangement will increase shareholder value by allowing capital markets
to ascribe value to the Canadian Assets independently of the other properties held by Kootenay. The
spin-out will provide new and existing shareholders more flexibility as to their specific investment
strategy and risk profile. Kootenay also believes that having a separately funded early-exploration
business will accelerate development of the Canadian Assets.
Completion of the Arrangement is subject to a number of conditions, including the following:
a
.
Kootenay shareholder approval at the Meeting;
b
.
the approval of the Supreme Court of
British Columbia
; and
c
.
TSXV approval for the Arrangement by Kootenay and the substitutional listing of the New
Kootenay Shares in place of the existing Company common shares.
On
August 10
, the TSXV conditionally accepted the terms of the Arrangement, subject to standard
conditions including court and shareholder approval.
Upon completion of the Arrangement, it is intended that Spinco will be managed by
James
McDonald
, as the President and Chief Executive Officer and
Rajwant Kang
, as the Chief Financial
Officer. Spinco's board of directors will consist of
James McDonald
,
Rajwant Kang
and
Kenneth
Berry
. Changes and additions to the management team and board will be made as needed as the
Canadian Assets progress.
Additional details of the spin-out transaction will be included in an information circular to be mailed to
shareholders of Kootenay in August, 2021 in connection with the Meeting. The Arrangement is
expected to close on or about September 30, 2021.
About Kootenay Silver Inc.
Kootenay Silver Inc. is an exploration company actively engaged in the discovery and development
of mineral projects in the Sierra Madre Region of
Mexico
and in
British Columbia, Canada
.
Supported by one of the largest junior portfolios of silver assets in
Mexico
, Kootenay continues to
provide its shareholders with significant leverage to silver prices. The Company remains focused on
the expansion of its current silver resources, new discoveries and the near-term economic
development of its priority silver projects located in prolific mining districts in
Sonora
, State and
Chihuahua, State,
Mexico
, respectively.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS:
Certain statements in this press release may be considered forward-looking information. These
statements can be identified by the use of forward-looking terminology (e.g., "expect"," estimates",
"intends", "anticipates", "believes", "plans" or variations of such words and phrases or statements
that certain actions, events or results "will" occur). Forward-looking statements in this press
release include, but are not limited to, statements regarding the completion of the Arrangement;
the completion of the conditions of the Arrangement; the listing of Spinco on the TSXV; the
proposed board of directors and management team of Spinco; and the effects of the Arrangement
on Kootenay and Spinco.
Such forward-looking information involves known and unknown risks -- including the conditions of
the Arrangement not being met; the Arrangement not being completed; the availability of funds; the
results of financing and exploration activities; unanticipated costs, expenses, or liabilities
associates with the Arrangement; the interpretation of exploration results and other geological data;
or unanticipated costs and expenses and other risks identified by Kootenay in its public securities
filings that may cause actual events to differ materially from current expectations. Readers are
cautioned not to place undue reliance on these forward-looking statements, which speak only as of
the date of this press release. Kootenay does not undertake to update any forward-looking
statements, except as may be required by applicable securities laws.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in
the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of
this release.
SOURCE
Kootenay Silver Inc.
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For further information:
James McDonald, CEO and President at 403-880-6016, Raj Kang, CFO
at 604-601-5653; 1-888-601-5650 or visit: www.kootenaysilver.com
CO: Kootenay Silver Inc.
CNW 17:47e 20-AUG-21