TORONTO, Oct. 24 /CNW/ - Further to the news release of September 25,
2006, in which Fareport Capital Inc. (TSX-V: CAB) ("Fareport") announced that
it proposed to restructure its affairs, settle outstanding litigation,
complete a conversion of substantially all of its current debt obligations, a
consolidation of its issued and outstanding common shares, the creation of a
new class of preference shares and a private placement financing of its common
shares (the "Restructuring"), all subject to shareholder and regulatory
approval. While Fareport still proposes to complete the above restructuring,
the terms on which it will occur have been substantially altered.
Fareport now proposes to enter into a financing transaction with arm's
length investors (the "Investors") whereby the Investors will make a
$2,080,000 commitment to acquire new common shares of Fareport. Specifically,
the Investors will first advance to Fareport $200,000 by way of an unsecured
subordinated loan bearing interest at 12% per annum, evidenced by a promissory
note, to be used as working capital (the "Advance"), which Advance will be
credited towards a subsequent private placement of $2,080,000 worth of
Fareport common shares, subject to Fareport entering into debt settlement
agreements with Fareport's creditors. The agreements will provide for a cash
payment by Fareport of approximately $1,075,000 in the aggregate to be
allocated amongst the creditors. The balance of Fareport's debt, being
approximately $2,100,000 (the "Debt Balance"), will be sold by the creditors
to BG Capital Management Corp. ("BG"), an arm's-length third party, at a
significant discount to face value for an aggregate of $460,000.
Fareport then proposes to complete a 100:1 share consolidation, followed
by the issuance of 1,300,000 post-consolidation common shares to the Investors
at a price of $1.60 per common share (for aggregate cash proceeds of
$2,080,000, including the Advance) (the "Private Placement"). Fareport will
pay a commission/financing fee of $46,000 to BG (10% of the $460,000 paid for
the Debt Balance). The Debt Balance will be converted into 1,680,000 common
shares, which is equal to 50% of Fareport's issued and outstanding common
share capital following the completion of the transactions described herein.
As a result of the above transactions, BG would become the controlling
shareholder of Fareport. The terms of the transaction have been set out in a
binding commitment letter and term sheet with BG (the "Commitment Letter"),
which, it is anticipated, will be superceded by definitive detailed
documentation.
In order to complete these transactions, the outstanding litigation must
be settled and prior shareholder approval of (a) the consolidation of
Fareport's common shares on a one hundred "old" common shares for one "new"
common share basis (the "Share Consolidation"), (b) the change of Fareport's
name, (c) the terms of conversion of the Debt Balance, and (d) the issuance of
Common Shares from treasury. Prior TSX Venture Exchange approval is also
required to complete the above transactions. The Company covenants to hold a
special meeting of its shareholders to approve these matters within 75 days of
the Advance closing. These transactions are also subject to BG being satisfied
with its due diligence investigations of Fareport, acting reasonably, such
condition to be satisfied or waived by November 17, 2006.
Also, Fareport wishes to provide an update with regards to its compliance
with Ontario Securities Commission (the "OSC") Policy 57-603. In addition to
the foregoing, and further to the press release of September 22, 2006,
Fareport is up-to-date with respect to its financial statements and management
reporting. The temporary management and insider cease trade order (the "MCTO")
imposed pursuant to OSC Policy 57-603 continues to be in effect. The MCTO
prohibits present and certain past directors, officers and insiders of
Fareport from trading in securities of Fareport. A partial revocation of the
MCTO to permit the settlement of a portion of the Debt Balance with certain
former management and Insiders of Fareport will be sought by Fareport.
Fareport will continue to provide updates on these and related matters in
accordance with OSC Policy 57-603.
Fareport Capital currently operates the Crown Taxi and Olympic Taxi
brokerages and dispatch operations in the city of Toronto. The Crown Taxi
division dispatches to over 300 vehicles. In addition, through its Crown
Transportation and Trax Shuttle Services divisions, the Company also offers
charter transportation services.
Neither the TSX Venture Exchange, nor any other Regulatory Authority has
approved or disapproved of the contents of this news release. Fareport cannot
guarantee that any forward-looking statements contained in this news release
will materialize. Nor is it possible for Fareport to commit itself to updating
information about risks and other factors pertaining to its business that
might appear in this or any other public disclosure documents.
