(TSXV: MCP.P)
TORONTO, Nov. 15 /CNW/ - MCL Capital Inc. ("MCL") is pleased to announce
that it has entered into an agreement in principle with Feel Good Cars Inc.
("FGC") dated November 14, 2005 (the "Agreement") to acquire 100% of the
issued and outstanding securities of FGC (the "Proposed Acquisition").
MCL is a capital pool company and intends for the Proposed Acquisition to
constitute its Qualifying Transaction as such term is defined in the policies
of the TSX Venture Exchange (the "Exchange"). The Proposed Acquisition will be
an arm's-length transaction. Upon completion of the Proposed Acquisition, MCL
is expected to be a Tier 2 Industrial Issuer.
FGC is incorporated under the Business Corporations Act (Ontario).
Substantially all of FGC's assets are located in the Province of Ontario. FGC
currently has (i) 31 shareholders holding an aggregate of 2,852,477 common
shares in the capital of FGC ("FGC Shares"), (ii) one warrantholder holding
12,500 warrants exercisable for 12,500 FGC Shares at an exercise price of
$2.00 per share ("Series I FGC Warrants"), (iii) 13 noteholders holding notes
in the aggregate principal amount of $535,000 which are exchangeable for an
aggregate of 334,375 FGC Shares and 83,594 warrants which are exercisable for
83,594 FGC Shares at an exercise price of $2.00 per share ("Series II FGC
Warrants"); and (iv) one noteholder holding notes in the aggregate amount of
$1,097,635 which are exchangeable for an aggregate of 548,818 FGC Shares. All
Series I FGC Warrants and Series II FGC Warrants will be exercisable on or
before the day that is 18 months following the date of completion of the
Proposed Acquisition.
Pursuant to the terms of the Agreement, MCL intends to acquire all
3,735,670 FGC Shares, 12,500 Series I FGC Warrants and 83,594 Series II FGC
Warrants expected to be issued and outstanding as of the date of the Proposed
Acquisition. The Proposed Acquisition will occur by way of a "three cornered
amalgamation" of FGC and a wholly-owned subsidiary of MCL. The name of the
amalgamated entity is expected to be Feel Good Cars Inc. while the name of MCL
is expected to be changed to Feel Good Cars Corporation.
Pursuant to the Agreement, the consideration for the Proposed Acquisition
will be as follows: securityholders of FGC shall receive (i) 8 common shares
in the capital of MCL ("MCL Shares") for each FGC Share, (ii) 8 warrants
exercisable for MCL Shares at an exercise price of $0.25 per share ("Series I
MCL Warrants") for each Series I FGC Warrant and (iii) 8 warrants exercisable
for MCL Shares at an exercise price of $0.25 per share ("Series II MCL
Warrants") for each Series II FGC Warrant. All Series I MCL Warrants and
Series II MCL Warrants will be exercisable on or before the day that is 18
months following the date of completion of the Proposed Acquisition.
29,885,360 MCL Shares are expected to be issued upon the Proposed Acquisition
at a price of $0.25 per share, representing an acquisition value of
$7,471,340. In addition, 100,000 Series I MCL Warrants and 668,750 Series II
MCL Warrants are expected to be issued pursuant to the Proposed Acquisition.
In connection with the Proposed Acquisition, a further 4,000,000 warrants
exerciseable for MCL Shares on or before March 31, 2009 ("Series III MCL
Warrants") will be issued to certain members of FGC's senior management team.
All Series III MCL Warrants will be exercisable in the event FGC generates a
total of $10,000,000 of earnings before interest, taxes, depreciation and
amortization ("EBITDA") during its first three complete fiscal years of
operation beginning October 1, 2005 and ending September 30, 2008. To the
extent that the cumulative EBITDA is less than $10,000,000 for that period but
greater than $7,000,000, the Series III MCL Warrants will be exercisable only
in proportion to the amount by which the cumulative EBITDA exceeds $7,000,000.
No Series III MCL Warrants will be exercisable if the cumulative EBITDA is
equal to or less than $7,000,000.
There are currently 11,400,000 MCL Shares issued and outstanding. In
addition, Canaccord Capital Corporation was issued a compensation option in
connection with MCL's initial public offering entitling it to purchase 540,000
MCL Shares ("Compensation Options") while further options for an aggregate of
1,140,000 MCL Shares ("Directors' Options") were issued to MCL's directors in
connection with MCL's initial public offering. The total number of shares,
options and warrants of MCL expected to be issued and outstanding following
the completion of the Proposed Acquisition is, therefore, 41,285,360 MCL
Shares, 100,000 Series I MCL Warrants, 668,750 Series II MCL Warrants,
4,000,000 Series III MCL Warrants, 540,000 Compensation Options and 1,140,000
Directors' Options. It is anticipated that, after the closing of the
Qualifying Transaction, the MCL Shares will be consolidated on a 3:1 basis.
The terms of all warrants and options of MCL will then be adjusted to reflect
such consolidation.
History and Nature of the Business
----------------------------------
FGC is engaged in the development, manufacture and marketing of electric
vehicles and, in particular, the multi-purpose low speed urban vehicle (LSV)
called the ZENN (Zero Emission No Noise). The ZENN is based on a vehicle
platform, the MC-2, manufactured by Microcar S.A.S. of France and is slightly
larger than a Smart Car. The MC-2 host vehicle less the engine, drive train
and fuel system, is to be imported into Canada by FGC where FGC will install
the electric drive system and battery. FGC has developed a multi-channel
marketing programme for the ZENN and will initially focus on the North
American market. It is proposed that the ZENN will be offered for sale in the
United States through dealers at US$9,995. The principal assets of FGC are its
contracts with Microcar S.A.S. and EEStor, Inc, discussed below.
On September 30, 2005, FGC entered into a Technology Agreement with
EEStor, Inc. located in Austin Texas, to acquire the exclusive worldwide right
to purchase high-power-density ceramic ultra capacitors called Electrical
Storage Units (ESU) that are under development by that company. An ESU can
store over 10 times the energy of lead-acid batteries and are expected to be
available for use in the ZENN and regular electrically powered small cars.
FGC's exclusive worldwide right is for all personal transportation uses under
15 KW drive systems (equivalent to 100 peak horse power) and for vehicles with
a curb weight of under 1200 kilograms not including batteries. EEStor, Inc.
has received US$3,000,000 in funding from Kleiner Perkins Caufield & Byers, a
U.S. venture capital firm which was one of the founding investors in Google,
Amazon.com and Palm.
Management of the Resulting Operating Company
---------------------------------------------
As part of the completion of the Proposed Acquisition, the following
members of the FGC management team will assume management responsibilities for
FGC:
Ian Clifford - President and Chief Executive Officer. Mr. Clifford has
twenty years experience as a marketing strategist and multimedia producer. As
co-founder with Marek Warunkiewicz and as a managing partner, Mr. Clifford
built digIT Interactive, a full-service Internet marketing company, into a
forty-person enterprise, which was sold to Quebecor in 2000. Mr. Clifford has
been associated with marketing and customer relationship management (CRM)
campaigns for Nortel Networks, IBM Canada, Hertz Canada, Timex and Unilever,
among others.
Probyn "Bunny" Gayle - Chief Technology Officer. Mr. Gayle has
twenty-five years experience with transportation technology. Mr. Gayle has
operated his own lift-truck company and has provided consulting services to
major Canadian industrial and commercial organizations respecting the
application of electro-mechanical and battery technology to transport
vehicles. Mr. Gayle is an innovator and inventor with experience in
hydraulics, pneumatics, electronics, mechanics, thermal dynamics, structural
dynamics, engineering design, metal fabrication, motive power systems and
hybrid and electric drive systems.
Marek Warunkiewicz - Vice-President of Marketing. Mr. Warunkiewicz has
twenty-seven years experience as a creative director and marketing specialist.
As co-founder with Ian Clifford and as a managing partner of digIT
Interactive, Mr. Warunkiewicz conceived and implemented marketing projects for
Nortel Networks, IBM Canada, The Royal Canadian Mint and MD Management, among
others, and had been engaged in a variety of projects for the Government of
Canada. Mr. Warunkiewicz has experience with print, web-based and multimedia
marketing as well as with the integration of web-based and traditional
marketing and sales systems and processes.
Gregory Gooch - Vice-President of Operations. Mr. Gooch has more than
thirty-five years experience in the financing and development of new products
and businesses and has taught finance at McGill University Business School.
For the past fifteen years, Mr. Gooch has been involved with assembling
management teams for three significant new businesses and with the financing
of these companies in a total amount exceeding $20 million.
Graham Hill - Vice President of Government and Industry Relations.
Mr. Hill has thirteen years experience in the electric vehicles industry.
Mr. Hill was the Dealer Operations Manager for Trans2 Corporation, the
original developers of the Global Electric Motors product line. Following the
acquisition of Trans2 Corporation by Global Electric Motors, Mr. Hill became
responsible for the sales and marketing of that company's electric vehicles to
dealers across the United States. Mr. Hill was also responsible for federal
and state lobbying efforts related to the regulation of, and tax credits for,
electric vehicles. After leaving Global Electric Vehicles, Mr. Hill was
retained by Dynasty Motors to open distribution channels for their information
technology. Mr. Hill has been a speaker at many industry events and is a
member of a number of city and state committees and industry associations,
including the Electric Vehicle Association of America, the Electric Vehicle
Association of Canada, the Department of Energy Denver Clean Cities Steering
Committee and a committee member for the City of Boulder's Transportation
Master Plan.
William B. Williams - Vice-President of Sales. With a total of over
twenty-five years in sales and marketing, and over ten years specifically with
Electric Vehicles. For over ten years he has focused his sales and marketing
efforts in the Alternative Fuel Transportation industry. He was one of the
first dealers in the western United States to sell NEV's/LSV's (Neighborhood
Electric Vehicles/Low Speed Vehicles). He has marketed Electric Vehicles as a
dealer for Trans2, and Bombardier and has also worked with ClubCar, Western
and marketed the Lido. Bill has developed an in-depth knowledge of alternative
vehicles and energy. He has handled community and government relations,
presented vehicles at GSA and Clean Cities National Trade Shows, given
presentations and has spoken at conferences nationwide. He has provided input
for new product development and design for NEV's/LSV's, marine and off-road
divisions. Over the last five years he has held the position of National Sales
Manager for Planet Electric and Vice President of Marketing for Andiamo
Motors, Inc., with Lee Iacocca.
James Long - Interim Chief Financial Officer. James Long has over
twenty-five years of working experience after gaining an engineering degree,
Professional Engineer status and an MBA (Finance). He spent over ten years in
progressive business development positions with two large multinational
corporations. Since then he was employed in a chief financial role with three
start-up companies, with one moving on to become a public company on the TSX.
Jim is currently employed as Controller for the Roma Group of Companies and is
a Director on the Board of Microbix Biosystems Inc.
Board of Directors and Management of the Resulting Issuer
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Board of Directors
In addition, as part of the completion of the Proposed Acquisition, the
MCL board of directors will resign, other than Rick McGraw, who will remain as
Chairman of the Board. The board of directors of MCL will be composed of Ian
Clifford and the following individuals:
Rick McGraw - Mr. McGraw is the founding President, Chief Executive
Officer and a director of MCL. He has served as President and Chief Executive
Officer of Lochan Ora Group of Companies, private investment companies, since
1972. Mr. McGraw has served as the founding President and Chief Executive
Officer and a director of Vitran Corporation, Inc., a transportation and
logistics services company, from 1983 until 2002 and has served as Chairman
since 2002. He has also been a director of Exco Technologies Limited since
1992. He also serves as the Chief Executive Officer and a director of Cutwater
Capital Corporation, a capital pool company. He received a Bachelor of
Commerce from the University of British Columbia.
Stewart Somers - Mr. Somers is Senior Vice President of the strategic
consulting firm, Spergel & Associates Inc., and a partner of Knightsford
Capital Corporation. Between 1970 and 1998, he served as Chief Financial
Officer and senior officer of the following TSX companies: Algonquin
Mercantile Corporation, American Sensors Inc., Federal Diversiplex Inc.,
Hardee Farms International Limited and Zenon Environmental Inc. Mr. Somers
obtained his chartered accountancy designation with Coopers and Lybrand in
1969 after graduating from the University of Toronto.
Glenn Leduc - Mr. Leduc is currently the Chief Financial Officer of
Empire Maintenance Industries Inc. Mr. Leduc has served as consultant and
senior executive with twenty-five years' experience in multinational and
high-tech manufacturing companies including Canadair Ltd., Bell Helicopter
Textron and Avdel Textron PLC. Mr. Leduc is a Canadian chartered accountant
with a BA in economics from Carleton University in Ottawa.
Brian Cott - Mr. Cott has over twenty-five years of entrepreneurial
experience, primarily within the high technology sector. He was Founder and
President of CallPro Canada Inc., a leading communications systems integrator
which was sold to LGS Group in 1998. Mr. Cott has held a number of senior and
general management positions with early, high-growth ventures. Mr. Cott holds
a Business Administration degree from York University.
Management
As part of the completion of the Proposed Acquisition, Rick McGraw will
resign as Chief Executive Officer of MCL and be replaced by Ian Clifford. Rick
McGraw will also resign as Chief Financial Officer of MCL once a full-time
Chief Financial Officer has been retained.
Sponsorship of the Qualifying Transaction
-----------------------------------------
Canaccord Capital Corporation, subject to completion of satisfactory due
diligence, has agreed to act as sponsor in connection with the transaction. An
agreement to sponsor should not be construed as any assurance with respect to
the merits of the transaction or the likelihood of its completion.
Description of Significant Conditions to Closing
------------------------------------------------
Completion of the transaction is subject to a number of conditions,
including but not limited to, Exchange acceptance and, if applicable pursuant
to Exchange requirements, majority of the minority shareholder approval. Where
applicable, the transaction cannot close until the required shareholder
approval is obtained. In addition, other necessary conditions to close the
Proposed Acquisition include FGC having raised a minimum of $2.5 million by
way of private placement in advance of the Proposed Acquisition on terms
acceptable to MCL. There can be no assurance that the transaction will be
completed as proposed or at all.
Investors are cautioned that, except as disclosed in the management
information circular or filing statement to be prepared in connection with the
transaction, any information released or received with respect to the
transaction may not be accurate or complete and should not be relied upon.
Trading in the securities of a capital pool company should be considered
highly speculative.
The Exchange has in no way passed upon the merits of the proposed
transaction and has neither approved nor disapproved the contents of this
press release.
