ARNPRIOR, ONTARIO–(Marketwired – Nov. 10, 2016) – Pacific Safety Products Inc. (TSX VENTURE:PSP) (“PSP” or the “Company“) announced today that it has entered into an arrangement agreement (the “Arrangement Agreement“) with Med-Eng Holdings ULC (the “Buyer“), a Canadian wholly owned subsidiary of Safariland, LLC (“Safariland”), under which the Buyer will acquire all of the outstanding common shares of PSP for $0.21 per share in cash.
The purchase price represents a premium of approximately 23.5% to the closing price of PSP’s common shares on the TSX Venture Exchange on November 9, 2016 and a premium of approximately 25.9% to PSP’s volume weighted average share price for the twenty trading days ending November 9, 2016.
The transaction, which will be completed by way of a plan of arrangement (the “Arrangement“) under the Canada Business Corporations Act, is expected to close in December 2016. Completion of the Arrangement is subject to customary closing conditions, including court approval, TSX Venture Exchange approval, as well as the approval of two-thirds of the votes cast on the Arrangement resolution by shareholders present in person or represented by proxy, voting as a single class (with each PSP shareholder being entitled to one vote for each common share held), at an annual and special meeting of shareholders of PSP (the “PSP Meeting“) scheduled to be held on Monday, December 19, 2016 to, among other things, consider and vote upon the Arrangement.
The Board of Directors of PSP, after consultation with its financial and legal advisors, has determined that the Arrangement is fair to the shareholders of PSP and is in the best interest of PSP and accordingly has approved the Arrangement Agreement and the making of a recommendation that shareholders of PSP vote in favour of the Arrangement resolution at the PSP Meeting. Echelon Wealth Partners Inc., financial advisor to the Board of PSP, has provided an opinion to the Board of Directors, based upon and subject to certain assumptions, that the consideration being offered by the Buyer pursuant to the Arrangement is fair, from a financial point of view, to the shareholders of PSP. A copy of Echelon’s opinion will be included in the management information circular to be prepared and mailed in connection with the PSP Meeting.
Shareholders, including the directors and officers of PSP, who in the aggregate beneficially own approximately 21.7% of the outstanding common shares of PSP, have agreed, pursuant to support agreements and subject to certain exceptions, to vote their shares in favour of the Arrangement at the PSP Meeting.
Under the Arrangement, Buyer will also acquire the common shares of PSP issued upon conversion of outstanding convertible debentures in the aggregate principal amount of $749,000, which are convertible at a price of $0.15 per common share. In addition, each stock option of the Company outstanding immediately prior to the effective time of the Arrangement will be cancelled in exchange for a cash payment equal to the amount by which the consideration per common share payable pursuant to the Arrangement exceeds the exercise price of such option. Total cash consideration of approximately $15.4 million will be paid for PSP’s common shares, convertible debentures and stock options.
The Arrangement Agreement includes covenants of PSP typical for a transaction of this nature, including with respect to non-solicitation, a right granted to Buyer to match any superior proposal for PSP and a provision entitling PSP to a “fiduciary-out”. In addition, PSP has agreed to pay a termination fee of $780,000 to Buyer upon the occurrence of certain events, including if PSP pursues a superior proposal, as well as an expense reimbursement fee upon a termination of the Arrangement Agreement in certain circumstances. The Arrangement Agreement is subject to customary termination rights, including termination at either party’s option if the Arrangement has not been completed by February 19, 2017.
In connection with the PSP Meeting, a management information circular of PSP providing details of the Arrangement as well as the rationale for the support of the Arrangement by PSP’s Board of Directors will be prepared and mailed to shareholders over the coming weeks. A copy of the Arrangement Agreement, the management information circular and the support agreements will be available on PSP’s SEDAR profile at www.sedar.com.
Echelon Wealth Partners Inc. and ZED Financial Partners are acting as financial advisors to the Board of Directors of PSP. Wildeboer Dellelce LLP is acting as counsel to PSP. Blake, Cassels & Graydon LLP is acting as legal counsel to the Buyer.
About PSP: The mission statement of Pacific Safety Products Inc. is …we bring everyday heroes home safely®. PSP is an established industry leader in the production, distribution and sale of high-performance and high-quality safety products for the defence and security market. These products include body armour to protect against ballistic, stab and fragmentation threats, ballistic blankets to reduce blast effects, tactical clothing, and protective products against chemical and biological hazards. PSP is the largest body armour manufacturer in Canada, directly supplying the Canadian Department of National Defence, Federal Government Agencies and major Canadian law enforcement organizations. The Company, through its U.S. subsidiary GH Armor Systems Inc., provides body armour products under the GH Armor Systems® brand to U.S. based law enforcement and private security firms. The Company also produces tactical clothing. Pacific Safety Products is a reporting issuer in British Columbia, Alberta and Ontario, Canada and publicly trades under the symbol PSP on the TSX Venture Exchange.
About Safariland and Med-Eng Holdings ULC:
The Safariland Group is a leading global provider of a diverse range of safety and survivability products designed for the public safety, military, professional and outdoor markets. The Safariland Group offers a number of recognized brand names in these markets including Safariland®, Med-Eng®, ABA®, Second Chance®, VIEVU®, Mustang Survival®, Bianchi®, Break Free®, Protech® Tactical, Defense Technology®, Hatch®, Monadnock®, Identicator® and NIK®. The Safariland Group’s mission, “Together, We Save Lives”, is inherent in the lifesaving and protective products it delivers. The Safariland Group is headquartered in Jacksonville, Florida. The Safariland Group is a trade name of Safariland, LLC.
Med-Eng Holdings ULC, a Canadian-based company, is a leading global brand of explosive ordnance disposal equipment and holds 35 years of expertise and market leadership. Med-Eng bomb disposal, tactical and demining suits and helmets are trusted by defense forces, public safety and humanitarian demining agencies in 100 countries. In addition, Med-Eng Holdings ULC offers a full suite of remotely operated vehicles (ROVs, or robots), the HAL® brand of hook and line systems, and a vast array of search specialty tools for EOD/IEDD and military UXO (unexploded ordnance) operations.
Forward-Looking Information: This news release contains certain statements which may constitute “forward-looking information” within the meaning of applicable securities laws. These statements relate to anticipated or assumed events or results and, in some cases, can be identified by words or phrases such as “may”, “will”, “expect”, “plan”, “anticipate”, “intend”, “potential”, “estimate”, “believe” or the negative of these terms. The forward-looking events and circumstances discussed in this news release, including statements regarding expectations as to whether the Arrangement will be completed, the satisfaction of conditions to the Arrangement and the timing for completing the Arrangement and holding the PSP Meeting, may not occur and could differ materially as a result of known and unknown risk factors and uncertainties affecting the Company. No forward-looking statement can be guaranteed. Forward-looking statements and information by their nature are based on assumptions and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statement or information. Accordingly, readers should not place undue reliance on any forward-looking statements or information. The forward-looking information contained herein is expressly qualified in its entirety by this cautionary statement. Any forward-looking statement speaks only as of the date of this news release and, except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any forward-looking statement, whether as a result of new information, future events or results or otherwise.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Terry Vaudry
Chief Executive Officer
(613) 623-6001
www.pacsafety.com
Safariland / Med-Eng Holdings ULC:
Jonathan Keehner / Tim Ragones / Aura Reinhard
Joele Frank, Wilkinson Brimmer Katcher
(212) 355-4449
