/THIS NEWS RELEASE AND THE INFORMATION CONTAINED HEREIN ARE NOT FOR DISTRIBUTION IN THE UNITED STATES/
VANCOUVER, May 26 /CNW/ - EurOmax Resources Ltd. ("EurOmax") (TSX-V: EOX) and Silk Road Resources Ltd. ("Silk Road") (TSX-V: SIL) today announced that they have entered into a definitive agreement (the "Combination Agreement") pursuant to which EurOmax and Silk Road will combine by way of a plan of arrangement (the "Arrangement") further to the business combination announced by the companies on February 23, 2009. In the Arrangement, each outstanding common share of Silk Road will be exchanged for 2.2535 common shares of EurOmax and Silk Road will become a wholly-owned subsidiary of EurOmax.
Based on the 10-day volume-weighted average price of EurOmax's common shares of Cdn$0.174 on the TSX Venture Exchange (the "TSX-V") as at May 15, 2009, the transaction value per Silk common share is Cdn$0.39. This represents a premium of 57.7% based on the 10-day volume-weighted average price of both companies' common shares on the TSX-V as at May 15, 2009. The board of directors of both companies have unanimously supported the Arrangement and recommend their shareholders vote their shares in favour of the business combination.
Shareholders holding approximately 40% of the outstanding shares of Silk Road and approximately 29% of the outstanding shares of EurOmax have agreed to enter into agreements to vote in favour of the Arrangement.
Highlights of the Transaction:
- Combined company will have a broader asset base and capitalization
and stronger balance sheet.
- Combined company can take advantage of operating synergies and
efficiency, and eliminate the duplication of public company costs.
- Shareholders of both companies will have a broader share trading
market with potential for greater liquidity.
- Combined company will have a highly experienced management team and
current directors of both companies will be represented on the board
of directors of the combined company.
The Business Combination
The Arrangement is subject to approval by the shareholders of EurOmax and the shareholders of Silk Road. Full details of the Combination Agreement and the Arrangement will be included in the Management Information Circulars of each of EurOmax and Silk Road to be filed with the regulatory authorities and mailed to EurOmax and Silk Road shareholders, respectively, in accordance with applicable securities laws.
Under the transaction, EurOmax will acquire all of the issued and outstanding shares of Silk Road in consideration for the issue of EurOmax common shares on the basis of 2.2535 EurOmax common shares for each Silk Road common share. The outstanding options and warrants of Silk Road will be deemed to be exchanged for EurOmax options and warrants, adjusted based on the aforementioned exchange ratio.
On a pro forma basis, the combined company will be held by approximately 48% of existing EurOmax shareholders and 52% by existing Silk Road shareholders. The total number of EurOmax common shares outstanding will be approximately 119 million, on a pro forma basis.
The Combination Agreement includes a commitment by both companies not to solicit alternatives to the proposed transaction. Each party has also been provided with certain other rights, representations and warranties and covenants customary for a transaction of this nature.
Fairness Opinion
The board of directors of Silk Road has received a fairness opinion from Evans & Evans, Inc. in respect of the transaction and are recommending Silk Road shareholders vote in favour of the transaction.
Conditions to Closing
Silk Road and EurOmax expect to mail their respective Management Information Circulars on or about May 29, 2009. The transaction is subject to the approval of not less than 66 2/3% of the shares of Silk Road voted with respect to the transaction at the meeting of Silk Road shareholders, the approval of a simple majority of the shares of EurOmax voted with respect to the transaction at the meeting of EurOmax shareholders and certain customary conditions, including receipt of all necessary court and regulatory approvals. The transaction is expected to close by the end of June 2009.
Cautionary Note Regarding Forward Looking-Statements
This news release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking statements include, but are not limited to, statements with respect to the satisfaction of the conditions to the Arrangement and the completion of the Arrangement. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Assumptions upon which such forward looking statements are based include that Silk Road and EurOmax will be able to satisfy the conditions in the Combination Agreement, that the required approvals will be obtained from the shareholders of each of Silk Road and EurOmax, that all third party regulatory and governmental approvals to the transactions will be obtained and all other conditions to completion of the transaction will be satisfied or waived. Many of these assumptions are based on factors and events that are not within the control of Silk Road and EurOmax and there is no assurance they will prove to be correct. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Silk Road and EurOmax to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: risks related to the integration of acquisitions, risks related to international operations, actual results of current exploration activities, conclusions of economic evaluations, changes in project parameters as plans continue to be refined and although Silk Road and EurOmax have attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Silk Road and EurOmax do not undertake to update any forward-looking statements that are incorporated by reference herein, except in accordance with applicable securities laws.
The TSX-V has in no way passed upon the merits of the transaction discussed above and has not reviewed and does not accept responsibility for the adequacy or accuracy of the contents of this press release. On Behalf of the Boards of Directors "John C. Menzies" David R. Bell Chairman and CEO President & CEO EurOmax Resources Ltd. Silk Road Resources Ltd.