LONGUEUIL, QC, July 12 /CNW Telbec/ - SECTION ROUGE MEDIA INC. (TSX-V: SRO) ("Section Rouge Media") announced today that it has signed a binding letter of intent dated June 14, 2007, for the acquisition (the "Acquisition") by Section Rouge Media of 100% of the issued and outstanding shares of Evolutra Corporation / Corporation Evolutra ("Evolutra Corporation").
"This acquisition will enable Section Rouge Media to enter the web media market quickly and significantly and will also contribute to the development of new and essential business opportunities for our magazines", said Richard Desmarais, President and Chief Executive Officer of Section Rouge Media.
Evolutra Corporation is an Ottawa/Gatineau-based company, with offices in Montreal and Quebec City, specializing in web applications development and has recently developed an on-demand web portal designed to help businesses and individuals to easily create, manage and maintain web sites, e-mails, e-commerce, e-learning, analytics and marketing tools. Evolutra Corporation has four major divisions: a Development Division, an e-Learning Division, an e-Commerce Division and an Identification Systems Division. Evolutra Corporation is a company incorporated under the Canada Business Corporations Act. As of the date of this press release, there are 30,500,000 issued and outstanding Common Shares of Evolutra Corporation.
Section Rouge Media is an integrated entertainment company, which specializes, in both publishing and electronic content production and distribution. Its publications division publishes 30 titles regularly (magazines and games). Through its wholly owned subsidiary, Image In Media Inc. ("Image In Media"), Section Rouge Media develops, finances, produces and distributes cross-media products for the worldwide marketplace. Image In Media's integrated approach combines services and expertise in production management, marketing and distribution of products on all formats.
The proposed Acquisition is subject to customary conditions precedent including, without limitation, shareholder and regulatory approval, as well as specific conditions precedent which are:
(a) the completion by Section Rouge Media of a financing, either by way
of a public offering or a brokered private placement, of equity and
convertible securities in the minimum amount of $17,365,000 and up to
a maximum amount of $25,000,000. The financing will be raised
pursuant to an agency agreement with an independent investment dealer
and brokerage firm, Union Securities Ltd.;
(b) approval by the shareholders of Section Rouge Media of a
consolidation of all its Common Shares on a three-to-one basis. For
the purposes of this press release, "Pre-consolidated Shares" means
the Common Shares of Section Rouge Media immediately prior to the
consolidation, and "Post-consolidated Shares" means the Shares of
Section Rouge Media immediately subsequent to the consolidation;
(c) the completion of an acquisition by 6389848 Canada Inc. c/b/a
Financing B2B ("Financing B2B") of 1,200,000 Pre-consolidated Shares
of Section Rouge Media from Pierre Bernatchez and 1,200,000 Pre-
consolidated Shares from 4194420 Canada Inc. for an aggregate
purchase price of $144,000 (the "B2B Transaction"). The B2B
Transaction closed on July 6, 2007; and
(d) the completion of acquisitions by Evolutra Corporation of three
technology companies on or before the proposed closing of the
Acquisition, for an approximate aggregate purchase price of Nine
Million Canadian Dollars ($9,000,000.00).
Under the terms of the proposed Acquisition, Section Rouge Media will acquire all of the Common Shares of Evolutra Corporation for an acquisition price of $37,060,000. The shareholders of Evolutra Corporation will receive $11,100,000 in cash and 51,920,000 Post-consolidated Shares of Section Rouge Media.
The expected closing date for the Acquisition is on or about October 30, 2007.
A finder's fee shall be payable by Section Rouge Media to InterCapital Consultants Inc. and Financing B2B on a 50/50 basis for their efforts in conjunction with the proposed Acquisition, within the limitations established by section 3 of TSX-V Policy 5.1.
Section Rouge Media further announced today that it intends to sell all of the shares it owns in Image In Media for $3,251,602.50 to a group headed by Pierre Bernatchez and Luigi Porco, former owners of the shares of Image In Media prior to a previous sale thereof to Section Rouge Media. Mr. Bernatchez and Mr. Porco are present employees of Section Rouge Media, and Mr. Bernatchez is a director of Section Rouge Media. As consideration for this sale, Section Rouge Media will receive from the group 9,351,808 Pre-consolidated Shares and a convertible debenture in the amount of $1,428,000. The convertible debenture has a five-year term, a 7% interest rate and is convertible at Section Rouge Media's option into common shares of Image In Media upon certain stated events. This transaction is subject to the approval of the shareholders of Section Rouge Media and Image In Media, and subject also to the approval of the Autorite des Marches Financiers and/or other financial market regulators. The expected closing date for this transaction is on or about August 31, 2007.
"Considering the importance of this transaction as well as the impact that Evolutra will give to the development of Section Rouge Media and the global market that we are aiming at, we have agreed to proceed with a change of our corporate name to Evolutra Global Corporation as soon as possible following the completion of this transaction", said Richard Desmarais, President and Chief Executive Officer of Section Rouge Media, "Section Rouge Media intends to use Evolutra's expertise to bring all its magazines business on the web and take advantage of its mass volume content by creating recurring agreements to distribute this content globally."
The Acquisition and the transactions contemplated herein (collectively, the "Transactions") are subject to the approval of the TSX Venture Exchange and also to the approval of the shareholders of Section Rouge Media and Evolutra Corporation.
Certain information included in this press release may be forward-looking and involve risks and uncertainties. The results or events predicted in these statements may differ materially from actual results or events. Factors that might cause a difference include, but are not limited to, competitive developments, risks associated with Section Rouge Media's growth, the state of the financial markets, regulatory risks and other factors. Unless otherwise required by applicable securities laws, Section Rouge Media disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. More detailed information about potential factors that could affect Section Rouge Media's financial and business results is included in public documents Section Rouge Media files from time to time with Canadian securities regulatory authorities.
Completion of the Transactions is subject to a number of conditions, including Exchange acceptance and disinterested Shareholder approval. The Transactions cannot close until the required Shareholder approval is obtained. There can be no assurance that the Transactions will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the Management Information Circular to be prepared in connection with the Transactions, any information released or received with respect to the Transactions may not be accurate or complete and should not be relied upon. Trading in securities of Section Rouge Media should be considered highly speculative.
The TSX Venture Exchange has in no way passed upon the merits of the
proposed Transactions and has neither approved nor disapproved the
contents of this press release.
Union Securities Ltd., subject to the completion of satisfactory due diligence, has agreed to act as sponsor to Section Rouge Media in connection with the Transactions. An agreement to sponsor should not be construed as any assurance to the merits of the Transactions or the likelihood of completion.
The TSX Venture Exchange does not accept responsibility for the adequacy
or accuracy of this release.
All figures contained in this press release are in Canadian Dollars.
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