Outcrop and Zacapa Enter into Amalgamation Agreement
OUTCROP AND ZACAPA ENTER INTO
AMALGAMATION AGREEMENT
VANCOUVER, BC
,
Aug. 31, 2023
/CNW/ -
Outcrop Silver & Gold Corp.
(TSXV: OCG) (OTCQX:
OCGSF) (DE: MRG1) ("
Outcrop
") and
Zacapa Resources Ltd.
("
Zacapa
") (TSXV: ZACA)
(OTCQB: ZACAF) (DE: BH0) are pleased to announce that they have signed an amalgamation
agreement dated
August 30, 2023
(the "
Agreement
") pursuant to which a wholly-owned subsidiary
of Outcrop will amalgamate with Zacapa and all of the issued and outstanding common shares of
Zacapa following the amalgamation will immediately be exchanged for common shares of Outcrop
on a four-for-one basis (the "
Exchange Ratio
")(the "
Transaction
").
Upon completion of the Transaction, it is expected that the shareholders of Zacapa (the "
Zacapa
Shareholders
") will hold approximately 12% of Outcrop's issued and outstanding common shares.
The board of Outcrop will remain the same.
The Transaction constitutes a "related party transaction" subject to TSXV Policy 5.9 –
Protection of
Minority Security Holders in Special Transactions
and Multilateral Instrument 61-101 –
Protection of
Minority Security Holders in Special Transactions
("
MI 61-101
").
Anticipated Benefits of the Transaction
Combined entities will further strengthen Outcrop's exploration and development pipeline and
reduce jurisdictional risk;
Consolidation of the two companies will create a well-capitalized exploration company and will
reduce operating and overhead costs; and
Combined entities will likely increase shareholder liquidity, trading and capital markets exposure.
Anticipated Benefits for Zacapa Shareholders
Opportunity for Zacapa shareholders to hold shares of a larger, more diversified company with
a history of stronger access to markets and capital to further development of the Zacapa
properties;
There are limited conditions, no break fees or expense reimbursement and a short timeline to
closing the Transaction;
The Zacapa board established the independent Special Committee to consider the proposed
Transaction as well as alternatives and the Agreement was negotiated at arm's length between
the Special Committee and Outcrop; and
Evans & Evans, Inc. has provided an oral fairness opinion that the Transaction is fair to the
shareholders of Zacapa.
Transaction Details
Pursuant to the terms of the Agreement, the Transaction is expected to be completed by way of a
three-cornered amalgamation under the provisions of the
Business Corporations Act
(
British
Columbia
) whereby
1433180 B
.C. Ltd. ("
Subco
"), a wholly-owned subsidiary of Outcrop, will
amalgamate with Zacapa and all of the issued and outstanding common shares of Zacapa ("
Zacapa
Shares
") following the amalgamation will immediately be exchanged for common shares of Outcrop
on a four-for-one basis. Warrants, options and deferred share units of Zacapa will be exchanged
into warrants, options and deferred share units, respectively, of Outcrop. Closing of the Transaction
is subject to a number of customary conditions being satisfied or waived by one or both of Outcrop
and Zacapa, including the receipt of Zacapa shareholder approval, together with approval of the
Majority of the Minority (as defined below) at the Meeting (as defined below), and the receipt of all
necessary regulatory approvals, including the approval of the TSX Venture Exchange.
Outcrop and Zacapa are committed to consummating the Transaction in an expedited manner and it
is anticipated that a special meeting of Zacapa Shareholders (the "
Meeting
") to approve the
proposed Transaction will be held in
October 2023
and, if approved and all other conditions have
been met, it is expected that the Transaction will close shortly thereafter. Implementation of the
Transaction will be subject to approval at the Meeting by at least two-thirds of the votes cast by all
the Zacapa Shareholders, based on the votes cast by Zacapa Shareholders at the Meeting, and by
a majority of the votes cast by disinterested shareholders at the Meeting ("
Majority of the
Minority
"). In relation to this approval, the "minority" holders for the purpose of MI 61-101 are
anticipated to include all holders of Zacapa Shares with the exception of
Ian Slater
and his affiliated
entities.
As of the date hereof,
Ian Slater
,
Jay Sujir
,
Marc Boissonneault
,
Sunil Sharma
and
Michelle
Borromeo
(together, the "
Supporting Shareholders
") collectively beneficially own, directly or
indirectly, or exercise control or direction over, 18,340,000 Zacapa Shares, which represent
approximately 15.27% of the issued and outstanding Common Shares. Each of the Supporting
Shareholders have, separately entered into voting support agreements with Outcrop (the "
Support
Agreements
") which they have agreed, among other things, to vote in favour of the Amalgamation,
and to be restricted by non-solicitation and exclusivity provisions. Forms of the Support Agreements
with the Supporting Shareholders, will be reviewable on the Zacapa's profile on SEDAR+ at
www.sedarplus.ca
.
Further information regarding the Transaction will be contained in a management information circular
to be mailed to Zacapa Shareholders in connection with the Meeting. All Zacapa Shareholders are
urged to read the management information circular once available, as it will contain important
additional information concerning the Transaction. Following completion of the Transaction, the
company formed by the amalgamation of Zacapa and Subco will become a wholly owned subsidiary
of Outcrop. There can be no assurance that the Transaction will be completed as proposed or at all.
Special Committee and Board Recommendations
Due to the non-arm's length nature of the Transaction, a special committee (the "
Special
Committee
") consisting of
Marc Boissonneault
, the sole independent director of Zacapa, has been
established by Zacapa to consider the Transaction. The Special Committee has recommended that
the Board of Directors of Zacapa (the "
Zacapa Board
") approve the Transaction. The Zacapa
Board (excluding conflicted directors) having received the recommendation of the Special
Committee, unanimously determined that the Transaction is in the best interests of Zacapa, is fair to
the Zacapa Shareholders and recommends the approval of the Transaction by Zacapa
Shareholders.
The Board of Directors of Outcrop (excluding conflicted directors) have determined that the
Transaction is in the best interests of Outcrop and have approved the Transaction.
Fairness Opinion
Evans & Evans, Inc. has provided the Special Committee with an opinion to the effect that, based
upon its analysis and subject to the full text of the fairness opinion, including the assumptions,
qualifications and limitations set out therein, the Exchange Ratio is fair, from a financial point of view,
to the Zacapa Shareholders
.
Additional Information about the Transaction
Further details regarding the terms and conditions of the Transaction are set out in the Agreement,
which will be publicly filed by Outcrop and Zacapa under their respective profiles on
www.sedarplus.ca
.
About Outcrop
Outcrop is advancing the Santa Ana high-grade silver deposit with exploration activities aiming to
expand the current mineral resource. The Santa Ana project is being advanced by a highly
disciplined and seasoned professional team with decades of experience in
Colombia
.
About Zacapa
Zacapa is a mineral exploration company engaged in gold and copper exploration in world class
jurisdictions in the southwest
United States
, including
Arizona
,
Nevada
,
Idaho
, and
California
. The
portfolio includes epithermal gold projects at South Bullfrog,
Kramer Hills
, and
Miller Mountain
and
the Pearl porphyry copper project.
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.
Forward Looking Statements – This news release includes forward-looking statements that are
subject to risks and uncertainties. All statements within, other than statements of historical fact, are
to be considered forward looking, including, but not limited to, the timing of the Zacapa
Shareholder Meeting and approval of Zacapa Shareholders, closing of the proposed Transaction
and the anticipated benefits of the Transaction. Although Outcrop and Zacapa believe the
expectations expressed in such forward-looking statements are based on reasonable assumptions,
such statements are not guarantees of future performance and actual results or developments may
differ materially from those in forward-looking statements. Factors that could cause actual results
to differ materially from those in forward-looking statements include market prices, exploitation and
exploration successes, continued availability of capital and financing, and general economic,
market or business conditions and regulatory, shareholder and administrative approvals,
processes and filing requirements. There can be no assurances that such statements will prove
accurate and, therefore, readers are advised to rely on their own evaluation of such uncertainties.
We do not assume any obligation to update any forward-looking statements.
Zacapa Resources Ltd. logo (CNW Group/Outcrop Silver & Gold Corporation)
SOURCE
Outcrop Silver & Gold Corporation
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For further information:
For Outcrop: Ian Harris, Chief Executive Officer, +1 604 294 9039,
[email protected]; Kathy Li, Vice President Investor Relations, +1 778 783 2818,
[email protected]; For Zacapa: Ian Slater, Executive Chairman, +1 778 372 2551,
[email protected]; Michelle Borromeo, Vice President Investor Relations, +1 778 330
3835, [email protected]
CO: Outcrop Silver & Gold Corporation
CNW 07:00e 31-AUG-23