ADX: TSX
TORONTO, Oct. 27 /CNW/ - Advantex Marketing International Inc.
("Advantex") today announces that Notre-Dame Capital Inc. ("Notre Dame") and
Trapeze Capital Corporation ("Trapeze") have agreed to act as its exclusive
agents in offering, on a best efforts private placement basis, a minimum of
$6,000,000 and up to $6,500,000 principal amount of secured convertible
debentures of Advantex (the "Debentures"), subject to the negotiation of
definitive transaction documentation and receipt of all necessary regulatory
approvals (the "Offering").
The Debentures will bear interest at 10% per year and maturity in April
2011. Each $1,000 principal amount of Debenture will be convertible, at any
time until maturity at the option of the holder thereof and in accordance with
the terms of the certificates governing the Debentures, into common shares of
Advantex at a price of $0.10 per share.
As part of the Offering, the existing convertible debentures of Advantex
in the principal amount of approximately $3,975,000 will be rolled over into
the new Debentures and the additional proceeds of the Offering of between $2.0
to $2.5 million will be used to fund Advantex's Advance Purchase Marketing
Program and for general working capital purposes. Up to 65,000,000 common
shares of Advantex will be issuable upon due conversion of the Debentures,
representing a net increase of up to 38,371,796 common shares being issuable
in addition to the common shares issuable upon conversion of the existing
debentures in accordance with their terms. The Offering will not result in a
change of control of Advantex since the Debentures will provide that no holder
acting alone may convert any outstanding principal amount due under the
Debentures if, after giving effect to such conversion, such holder, directly
or indirectly, will hold in excess of 19.9% of the issued and outstanding
common shares of Advantex at the time of conversion without first obtaining
the approval of shareholders of Advantex by a majority of votes cast at a duly
called shareholders' meeting.
Advantex has agreed to pay Trapeze a cash commission of 2.5% of the gross
proceeds raised under the Offering and to grant Trapeze an aggregate of
500,000 compensation warrants (each, a "Compensation Warrant"). Each
Compensation Warrant will entitle the holder thereof to acquire one common
share of Advantex at $0.10 for a period of 24 months from the date of closing
of the Offering. Advantex has agreed to pay Notre Dame a $50,000 due diligence
work fee and a cash commission equal to 6% of the gross proceeds raised under
the Offering from purchasers of Debentures introduced by Notre Dame (it is
expected that Notre Dame's commission will not exceed $25,000).
As a condition to the closing of the Offering, $800,000 principal amount
of Debentures are required to be purchased by insiders of Advantex (comprised
of certain members of Advantex's senior management and board of directors), of
which $300,000 will be part of the roll-over of the existing debentures.
Accordingly, the Offering is considered a "related-party transaction" and
subject to Ontario Securities Commission Rule 61-501 ("Rule 61-501") and
Regulation Q-27 of the AutoritDe des marchDes financiers ("Regulation Q-27").
As the maximum number of common shares of Advantex issuable in connection
with the Offering may exceed 25% of the current issued and outstanding shares
of Advantex, security holder approval of the Offering is required under the
rules of the TSX. Since waiting for shareholder approval of the Offering would
hinder Advantex's ability to fund its Advance Purchase Marketing Program
during the upcoming holiday season and generate revenue therefrom, Advantex is
availing itself of the financial hardship provisions under Section 604(e) of
the TSX Company Manual, and has therefore been exempted from applicable
security holder approval requirements of the TSX.
The Offering is expected to close on or about November 6, 2006 and within
the twenty-one days prior notice prescribed by Rule 61-501 and Regulation Q-27
so that the proceeds of the Offering will be available to Advantex to, among
other things, fund its Advance Purchase Marketing Program during the upcoming
holiday season. The ad hoc financing committee of the board of directors of
Advantex, formed to consider the Offering and comprised solely of
disinterested directors, has approved the Offering and determined it is
reasonable for Advantex in the circumstances and will improve Advantex's
financial situation.
About Advantex Marketing International Inc.
Advantex Marketing International Inc. is a leading marketing services
company, specializing in Advance Purchase Marketing Programs for merchants,
coalition loyalty rewards programs, and Online Shopping Malls. Advantex
loyalty partners include CIBC, United Airlines, Delta Air Lines, The New York
Times, and other major corporations, as well as a growing list of restaurants,
retailers, golf courses, small inns and resorts. Advantex is a public company,
traded on the Toronto Stock Exchange under the symbol "ADX". For additional
information on Advantex, please visit www.advantex.com.
This press release includes statements about Company expectations are
forward-looking in nature and subject to risks and uncertainties. Advantex
cautions that actual performance will be affected by a number of factors, many
of which are beyond its control. Discussion of the various factors that may
affect future results is contained in Advantex's recent filings with Canadian
securities regulatory authorities.
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