Kairos Provides Details Pertaining to the Non-Arm’s Length Nature of Its Proposed Agreement to Acquire the Remaining Interests in the Fortuna and Salvadora Properties Not Already Owned
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Calgary, Alberta (FSCwire) - Further to its initial press release dated July 18, 2014 in respect of the proposed acquisition (the “Acquisition”) of additional interests by Kairos Capital Corporation (“Kairos”) in the Fortuna and Salvadora claims from Polar Star Mining Corporation (“Polar Star”), Kairos hereby provides additional information related to the non-arm’s length nature of the Acquisition. The proposed acquisition contemplates that the option agreement that is currently in place between Polar Star and Kairos will be cancelled and the balance of the interests that were not acquired by Kairos as part of its Qualifying Transaction will be conveyed to Kairos such that Kairos will own a 100% unencumbered interest in the Fortuna and Salvadora property claims (collectively the “Acquired Properties”).
The Acquisition is to be effected pursuant to a purchase and option cancellation agreement that was entered into between Kairos and Polar Star on July 16, 2014 (the “Purchase and Option Cancellation Agreement”), pursuant to which Kairos would issue 3,750,000 common shares of Kairos at a deemed price of $0.10 per share for an aggregate purchase price of $375,000 (the “Purchase Price”). The Transaction is a non-arm’s length transaction as Kairos and Polar Star have common directors and principal shareholders. Consequently, each of Kairos and Polar Star formed special committees of independent directors who negotiated and approved the terms of the Acquisition.
In addition to announcing the Acquisition, Kairos also announced that it may also complete a non-brokered private placement of up to 20,000,000 common shares of Kairos at a price of $0.10 per common share for gross proceeds to the Corporation of up to $2,000,000.
Regulatory Requirements
The Acquisition is a “related party transaction” within the meaning of TSX Venture Policy 5.9 (“Policy 5.9”) (which incorporates Ontario Securities Commission Rule 61-501) (“OSC Rule 61-501”) insofar as Al Kroontje, Colin Bird and Charles Cannon-Brookes are directors of both Kairos and Polar Star and therefore are related parties. As a result, OSC Rule 61-501 provides that a “related party transaction”, such as the Acquisition, must be approved by a majority of the votes cast by holders of securities, excluding holders of securities whose votes cannot be included for the purposes of minority approval, as that term is defined in OSC Rule 61-501. Under OSC Rule 61-501, as applied to the Acquisition, minority approval of the resolution concerning the Acquisition would require the approval by a majority of all the votes cast by minority shareholders.
The Acquisition is, however, exempt from the minority shareholder approval requirement pursuant to Section 5.7(2) of OSC Rule 61-501. This exemption may be relied upon, if at the time the Acquisition is agreed to, neither the fair market value of the subject matter, nor the fair market value of the consideration for, the Acquired Properties exceeds 25% of the market capitalization of Kairos. On June 30, 2014 (the last day of the month prior to execution of the Purchase and Option Cancellation Agreement), Kairos had 15,000,000 common shares outstanding. The “market capitalization” of Kairos was $0.10 per share, which was determined by multiplying the number of outstanding Kairos Shares by the simple average of the closing price of such shares on the twenty business days prior to July 17, 2014 calculated in accordance with Regulation 183(2) and (4) of the Securities Act (Ontario). Since the Purchase Price does not exceed 25% of the market capitalization of Kairos, the Acquisition is exempt from the requirement under OSC Rule 61-501 to obtain minority shareholder approval for the Acquisition.
Special Committee Review
After concluding that the Acquisition is subject to the requirements of OSC Rule 61-501, the Board of Directors of Kairos determined it was appropriate to form a special committee to consider the Acquisition and to determine if it would be in the best interests of Kairos and its shareholders (the “Special Committee”).
Based on disclosures made by each Kairos director respecting his relationship to and interests in the Acquisition, it was determined that Kenneth L. DeWyn and Douglas M. Stuve were the only directors of Kairos sufficiently independent and free from conflicts of interest to sit on the Special Committee. By unanimous resolution of the Board of Directors of Kairos passed on May27, 2014, the Special Committee was established with Messrs. DeWyn and Stuve as members to review and consider the Acquisition and determine whether it is in the best interests of Kairos and its shareholders.
No member of the Special Committee is a director or officer of Polar Star and no member of the Special Committee will benefit from the Acquisition in a manner that is different from the other shareholders of Kairos.
For the purposes of discharging its mandate, the Special Committee was given the power and authority to establish its own procedures. The Special Committee was also granted all such powers as it reasonably required to discharge its mandate including the ability to retain such independent legal advisors as it considered necessary and to retain such other advisors as the Special Committee considered necessary or desirable, on such terms as the Special Committee considered appropriate. All directors, officers and employees of Kairos were authorized and directed to make available any and all information regarding Kairos that may be requested by the Special Committee from time to time during the course of the exercise of its mandate.
After considering a variety of factors, including the reasons for the Acquisition described in the Kairos’ July 18, 2014 press release, the Special Committee has recommended the Acquisition for approval by the Board of Directors of Kairos.
The completion of the Acquisition remains subject to certain conditions including, but not limited to, approval of TSX Venture Exchange and certain other usual conditions.
About Kairos
Kairos’ is a Canadian corporation whose common shares are posted for trading on the TSX Venture Exchange Inc. (the "Exchange") under the ticker symbol “KRS”.
Kairos conducts mineral exploration activities exclusively in Chile, through its wholly-owned subsidiary Minera Kairos Chile Limitada. During this challenging period in the mining sector, the Corporation’s activities are focused on the evaluation and acquisition of properties so as to secure a portfolio of properties that hold promise for copper/gold or gold/copper accumulations.
Reader Advisory: Neither the Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Exchange) accepts responsibility for the adequacy or accuracy of this press release.
Forward-Looking Information: This press release contains forward-looking statements. Actual results could differ materially from those currently anticipated due to a number of factors and risks. The forward-looking statements contained in this press release are made as of the date hereof and Kairos undertakes no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
For further information contact
Al Kroontje
Kairos Capital Corporation
(403) 607-4009
To view this press release as a PDF file, click onto the following link:
public://news_release_pdf/kairos07282014.pdf
Source: Kairos Capital Corporation (TSX Venture:KRS)
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