Maxwell Technologies, Inc. has entered into an agreement (the "Arrangement Agreement") in which Maxwell proposes to acquire substantially all of the assets and business of Nesscap (the "Arrangement" or the "Transaction").
Maxwell will purchase the operating entities of Nesscap for a total purchase price of $23.175 million, or about 1.1 times annualized revenue based on Nesscap's 9-month revenue ended September 30, 2016. The purchase price will be paid by the issuance of approximately 4.6 million Maxwell shares, subject to a 10% upward or downward adjustment based on the average closing price of Maxwell shares for the 10 consecutive trading days ending two days prior to closing.
Each of Maxwell's and Nesscap's board of directors has unanimously approved the Transaction. In approving the Transaction, Nesscap's Board of Directors has received a verbal fairness opinion from its financial advisor, Paradigm Capital Inc., stating that the consideration to be received by Nesscap is fair from a financial point of view to Nesscap and it expects to receive the written fairness opinion in connection with the mailing of a circular to its shareholders.
Based on recent share price ranges and subject to the payment by Nesscap of outstanding indebtedness owed by Nesscap to I2BF Energy Limited ("I2BF") and Arbat Capital Group Ltd. ("Arbat") in an aggregate principal amount of $4.5 million (plus accrued and unpaid interest) and of certain other outstanding liabilities, Nesscap shareholders and debt holders are expected to own approximately 12% of Maxwell's total outstanding common shares following completion of the Transaction. As part of the Arrangement, Maxwell entered into a principal shareholders agreement with I2BF and Arbat, which together own approximately 80% of the common shares of Nesscap, and will represent approximately 10% of the ownership of Maxwell following closing, subject to any adjustment based on Maxwell's share price as set forth above. Pursuant to the terms of the principal shareholders agreement, Maxwell has agreed to appoint a representative of I2BF and Arbat to Maxwell's Board of Directors, which such representative shall initially be Ilya Golubovich. Such appointment is subject to the closing of the Transaction and is intended to be no later than one business day following Maxwell's 2017 Annual Meeting of Shareholders.
In order to become effective, the Transaction must be approved by two-thirds of Nesscap shareholders. In addition, I2BF and Arbat are both a related party to the Company, as such term is defined in Multilateral Instrument 61-101 – Protection of Minority Securityholders in Special Transactions ("MI 61-101"). Therefore, the Arrangement will also be conditional upon the approval of a simple majority of the Nesscap shareholders, excluding I2BF and Arbat. Nesscap has relied on the exemption from the valuation requirements of MI 61-101 contained in section 4.4(1)(a). Upon completion of the Arrangement, it is expected that Nesscap will voluntarily dissolve (the "Dissolution") pursuant to Section 237(a) of the Business Corporations Act (Ontario).
It is expected that a special meeting of Nesscap Shareholders to approve the Arrangement and the Dissolution will be held in the second quarter of 2017 (the "Meeting"). The Arrangement is also conditional upon customary terms for transactions of this nature including the approval of the Ontario Superior Court of Justice (Commercial List) (the "Court").
Further particulars of the Meeting, the Arrangement, the Dissolution and the Arrangement Agreement will be included in the information circular for the Meeting. If all approvals are obtained and other conditions met, it is expected that the Arrangement will be completed by the second quarter of 2017.
I2BF, Arbat as well as all the directors and officers of Nesscap have entered into Voting Agreements with Maxwell in support of the Arrangement, and Nesscap has agreed to use best efforts to obtain Voting Agreements from other key shareholders in advance of the Meeting. The Voting Agreement requires such shareholders, subject to termination rights, to, among other things, vote all of their Nesscap common shares in favor of the Arrangement.
For more info, go to http://www.maxwell.com