Release
EnCap Signs Letter of Intent to Acquire Sustainable Energy Properties Inc. as its Qualifying Transaction
EnCap Investments Inc. has entered into a Letter of Intent dated April 17, 2009 (the "LOI") with Sustainable Energy Properties Inc. ("SEP"), a Wyoming corporation with offices in West Vancouver, British Columbia and Houston, Texas. SEP is a newly formed corporation which is actively assembling
significant land assets and acquiring existing companies in order to provide for SEP's developing operations in the renewable and non-food feedstock energy sectors, including subsidiaries in the renewable energy, gasification, energy recapture, energy project development, clean tech and renewable energy technology and contracting sectors. The LOI provides for EnCap to acquire all of the issued and outstanding shares of SEP in exchange for shares of EnCap (the "Transaction"). SEP intends to continue
issuing shares as it adds assets and Portfolio Companies that are slated to close prior to the closing of the Transaction and, accordingly, the number of EnCap shares to be issued at the closing of the Transaction has not been determined by the parties. EnCap is a capital pool company ("CPC") and intends the Transaction to constitute its Qualifying Transaction under the policies of the TSX Venture Exchange (the "Exchange").
The parties have agreed to negotiate a definitive agreement in order to formalize the terms of the Transaction that will be subject to conditions such as the approval of all shareholders of SEP to sell their shares, the mutual agreement of the parties as to the consideration payable for acquisition of
SEP, and Exchange acceptance of the Transaction.
The transaction is an arm's length transaction. Shareholder approval is not expected to be required under the policies of the Exchange because of the arm's length nature of the Transaction; however, shareholder approval for the transaction may be sought or required.
Under the LOI, EnCap agreed to advance, as a non-refundable deposit, $25,000 to SEP to cover certain costs in pursuing the Transaction. The parties do not expect to complete a financing in conjunction with the Transaction, as the Resulting Issuer is expected to be funded by SEP operational finances
and/or by SEP's equity or debt financing efforts.
The LOI provides that, as of the date of the closing of the Transaction, SEP will have revenue within its subsidiaries, a pipeline of renewable energy projects, and a 24 month business plan to support the transaction requirements.
Upon completion of the Transaction, EnCap intends to continue developing the business of SEP. EnCap expects to be considered a "Technology" issuer under the policies of the Exchange and expects that the transaction will meet minimum listing requirements for a Tier 2 issuer and, subject to meeting exchange requirements, possibly a Tier 1 issuer.
Sustainable Energy Properties, Inc.
SEP was recently formed by Paul Cox and Scott Jarnagin in order to develop clean tech and renewable energy technologies and solution providers which, combined with SEP's operations and management services units, can enable SEP to develop renewable power projects, cultivate non-food feedstocks for energy generation, and build, manage and supply technology and management to customers, joint venture partners and SEP Portfolio Companies. SEP ispursuing or plans to have control of significant land and to have key subsidiary companies as part of SEP to provide for SEP's operations in the renewable energy, and non food feedstock energy sectors, including subsidiaries in the gasification, energy recapture, solar, energy project development, clean tech and renewable energy technology.
SEP intends to apply innovative clean tech solutions for applications within the infrastructure and energy sectors, adding long-term value for its stakeholders through the encouragement of entrepreneurship, social responsibility, and sustainable practices as well as transparent, efficient and scalable management. SEP's vision statement suggests their aggressive stance: To achieve worldwide business traction and be recognized as a provider of effective and innovative sustainable solutions that provide economically feasible sustainable energy and technology to markets.
Management
As set out in the LOI, upon closing of the Transaction, the Board of Directors of EnCap is expected to be comprised of nominees of SEP, including Paul Cox, Scott Jarnagin, Karl Watkin, and Jeff Pendergraft. Harley Sinclair, Eugene Beukman and Gary Monaghan will resign as directors and/or officers of EnCap upon the closing of the Transaction.
Brief biographies of the proposed nominees of SEP were provided by SEP and are highlighted below.
Paul Cox - In addition to SEP, Mr. Cox founded and operates Pilotage Capital Corp., a management consulting company primarily involved in the renewable energy sector. He is also the President, CEO, CFO and director of TSX Venture listed Avian Capital Corp. and Adcore Capital Inc., both of which are CPCs currently in the process of completing their respective qualifying transactions. He also holds Board and officer positions with Envortus Inc, a waste to energy and wind energy development company, and with Nova Solar Corp., a CSP solar technology and energy provider company. Previous to these and following his six years in the commercial real estate and finance industry, Mr. Cox was the founder and President TeraGlobal Communications Corp (NASDAQ National board) from 1997 to 2000. Mr. Cox was subsequently the founder and held senior management positions with several companies in the technology, services, capital and renewable energy fields.
Scott Jarnagin - Mr. Jarnagin currently serves as Chairman of Entropy Partners, LLC, a US based firm focused on investment in renewable energy and environmental technologies. He is a partner in Green Atlantic Partners, a boutique hands on firm who work closely with a select group of clients throughout the world. Green Atlantic Partners approaches sectors which are traditionally focused on energy and environmental technologies; however, in some regions, such as China, this has expanded to include natural resources and enabling technologies for both sectors. Prior to Entropy Partners & Green
Atlantic Partners, Mr. Jarnagin was the Founder, CEO and President of TRC, Inc., a commercial services company operating in Texas, California, Oklahoma, and Louisiana.
Karl Watkin - Mr. Watkin is a global serial entrepreneur, currently with significant interests in China, climate change and sustainable technologies. Mr. Watkin is Chairman of the United Nations Bio Energy advisory board, and a member of the Clinton Global Initiative. He is currently working on several major projects in the UK, Africa, and China (with the Chinese government). He founded D1 Oils plc ("D1") and developed the alternative feedstock strategy of jatropha. He was the founder/founding shareholder and/or driving force in a number of alternative climate change reduction businesses including Helius
Energy PLC which specializes in creating electricity from patented bio mass equipment; Proton Power Systems which is a developer of Hydrogen fuel cell solutions; and Sabien Technology PLC which is in the energy reduction for building heating systems sector. Mr. Watkin is helping the City of London with its financial services strategy in China and the Chinese government with their climate change policies, and has participated in a number of UK government ministers visits to China and India. In addition, he is Chairman of Green Atlantic Partners and a partner in Entropy Partners LLC.
Jeff Pendergraft - Mr. Pendergraft is the founder of the Wind Rose Group, an energy investment and advisory firm. He currently serves as Chairman and CEO of HNNG Development, a company focused on commercialization of low BTU natural gas, and has served in those positions since 2004. He is also a director of Blast Energy Services Incorporated. His broad background includes private investments, financings, mergers and acquisitions. Prior to forming the Wind Rose Group in 2001, he was EVP and Chief Administrative Officer at Lyondell Chemical, a $12 billion international chemical and refinery business, and prior to that he served as staff counsel for ARCO and was a corporate executive with Atlantic Richfield Company and its successor organizations.
The Qualifying Transaction
Sponsorship of a Qualifying Transaction of a CPC is required by the Exchange unless exempt in accordance with Exchange policies or waived by the Exchange. EnCap expects that the Transaction will require sponsorship and plans to provide a news release update once a sponsor has been retained. EnCap also expects that trading in its common shares will remain halted pending completion of the Qualifying Transaction. The common shares of EnCap may trade sooner, only upon Exchange approval and the filing of required materials with the Exchange as contemplated by the CPC policy.
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, shareholder approval. Where applicable, the Transaction cannot close until the required shareholder approval is obtained. 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 TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed Transaction and has neither approved nor disapproved the contents of this press release.