Vancouver, British Columbia – February 18, 2009 – Georgetown Capital Corp. (“Georgetown”) is pleased to announce that it has entered into a binding letter of intent (the “Letter of Intent”) dated as of February 12, 2009 to acquire the outstanding securities of Upper Canada Explorations Limited (“UCEL”) on a one-for-one basis (the “Acquisition”). Pursuant to the Letter of Intent: 6,991,665 issued and outstanding shares of UCEL will be exchanged for common shares in the capital of Georgetown (the “Payment Shares”); warrants to acquire an aggregate of 2,238,335 common shares of Georgetown will be issued in exchange for outstanding warrants of UCEL at exercise prices of $0.25 and $0.40; broker warrants to acquire 481,011 common shares of Georgetown will be issued in exchange for outstanding broker warrants of UCEL at varying exercise prices; and 1,200,000 common shares of Georgetown will be issued (including 600,000 on closing of the Acquisition) to satisfy UCEL’s obligation under an option agreement dated August 8, 2007.
Certain of the Payment Shares will be subject to escrow and resale restrictions in accordance with the policies of the Exchange. As a condition to closing of the Acquisition, the 400,000 incentive stock options granted to the directors and officers of Georgetown will be cancelled. Furthermore, concurrent with the closing of the Acquisition, Nick Tsimidis, the President and a director of UCEL, will purchase, subject to TSX Venture Exchange (the “Exchange”) approval, 1,500,000 of the 2,000,000 seed shares of Georgetown issued to certain officers and directors (the “Escrowed Holders”) of Georgetown at a price of $0.08 per share, which are held in escrow pursuant to a CPC Escrow Agreement made as of September 4, 2008 among Georgetown, Olympia Trust Company, and the Escrowed Holders. In addition, Georgetown will use its best efforts to identify up to 1,000,000 freely tradable common shares of Georgetown to cross at $0.15 per share on the facilities of the Exchange on the closing of the Acquisition with clients of First Canadian Capital Markets Ltd. (“First Canadian”), a limited market dealer based in Toronto, of which Nick Tsimidis is the Chief Financial Officer and a director. If necessary, UCEL will arrange for an equity financing (the “Private Placement”) at $0.15 per security to close concurrently with the Acquisition, the terms of which will be determined by the parties in accordance with the policies of the Exchange. First Canadian will be entitled to (i) a - 2 - finder’s fee equal to 8% of the gross proceeds raised pursuant to the Private Placement and (ii) finder’s warrants, exercisable at the same price and for the same type of security offered in the Private Placement equal to 10% of the number of securities issued in the Private Placement, which fee shall be approved by the Exchange, and UCEL shareholders, if required by the Exchange.
Georgetown is a “capital pool company” under the policies of the Exchange and the Acquisition will represent a “qualifying transaction” in accordance with Exchange Policy 2.4. Upon completion of the transaction, Georgetown will be listed as Tier 2 Mining Issuer pursuant to the minimum listing requirements of the Exchange. The Acquisition will not be a Non-Arm’s Length Transaction pursuant to the policies of the Exchange.
UCEL is a junior mining exploration and development company incorporated in July 2007 in Ontario that is engaged in the acquisition, exploration and development of mineral resource properties (with an emphasis on gold) in Canada. The principal shareholder of UCEL is CAJUBI (holding 10.35% of the issued share capital of UCEL and warrants to purchase an additional 332,500 shares of UCEL), a private pension plan for the benefit of employees of a Paraguayan utility company controlled by a board of managers. Nick Tsimidis holds, directly and indirectly, 5.66% of the issued share capital of UCEL and convertible securities to purchase an additional 16,667 shares of UCEL. In addition, Mr. Tsimidis is the beneficial holder of 1/3 of the shares of First Canadian which holds convertible securities (warrants) to purchase 413,211 shares of UCEL. UCEL has entered into an option agreement pursuant to which it can earn 100% interest in various claim units located in Jacobson, Riggs, Abbie Lake and David Lake Townships in the Sault Ste. Marie mining division in the Province of Ontario, and certain claim units located in Bolger Township in the Province of Ontario. The option maybe exercised at any time before August 8, 2010.
UCEL has raised $993,000 through the sales of securities and has expended approximately $476,000 on property acquisitions and explorations, $205,000 in equity investments. It currently has approximately $38,000 in cash on hand, $160,000 in accounts payable and $18,000 in future tax liability. UCEL’s audited financial statements for the period from incorporation (January 12, 2007) to December 31, 2007 show a net loss of $5,252 and total assets of $816,726. Its unaudited financial statements for the nine month period ended September 30, 2008 show a net loss of $186,831 including a $107,297 write-down for a mineral property abandoned in the quarter and total assets of $711,742. UCEL has not had any commercial revenues since incorporation.
On closing of the Acquisition, all of the current directors and officers of Georgetown will resign. Subject to the approval of the Exchange, the new directors of the resulting issuer will be Nick Tsimidis (President and Chief Executive Officer), Greg Lipton, Dino Markakis and Robbie Grossman (Corporate Secretary). Kyle Appleby will be the Chief Financial Officer of the resulting issuer. The background of each of the above individuals is as follows: Mr. Tsimidis has been the President and a director of UCEL since May 14, 2007. Mr. Tsimidis earned his Bachelor of Commerce from the University of Toronto and is a Chartered Accountant. He is the Chief Financial Officer, Compliance Officer and a director of First Canadian Capital - 3 - Markets Ltd., a limited market dealer based in Ontario. Mr. Tsimidis spent six years with KPMG LLP providing auditing and assurance services to a variety of public and private companies until 1993 when he began serving as a director, officer and consultant to public companies. Mr. Tsimidis is currently the Chief Financial Officer and a director of Metals Creek Resources Corp. (END:TSXV) and Mooncor Oil & Gas Corp. (MOO:TSXV).
Mr. Appleby has been the Chief Financial Officer of UCEL since April 22, 2008. He earned his Bachelor of Arts in economics from York University and is a Chartered Accountant. Mr. Appleby is currently the Chief Financial Officer of Renforth Resources Inc. and is the former Chief Financial Officer of Simberi Mining Corporation (SAU:TSXV). He was also an Audit manager at Silver Gold Glatt & Grosman from 2004 to 2006, a Controller at the Toronto Parking Authority from 2003 to 2004, and a Senior Accountant at SF Partnership from 1998 to 2003. Mr. Lipton has been a director of UCEL since February 2008. He is a registered professional geologist with the Association of Professional Geoscientists of Ontario and a member of the Prospectors and Developers Association of Canada. Mr. Lipton is currently the President, Chief Executive Officer and a director of Metallum Resources Inc. (MRV:TSXV).
Mr. Markasis has been a director of UCEL since February 2008. He obtained a degree in Environmental Studies from the University of Waterloo in 1999 and his Bachelor of Education from Brock University in 2001. He has been a teacher in the Peel District school board in Ontario since 2001.
Mr. Grossman has been the Corporate Secretary and a director of UCEL since February 2008. He obtained his Bachelor of Laws from the University of Windsor in 2001 and Bachelor of Arts in Political Science from Concordia University. Mr. Grossman has been a partner since 2008 and an associate from 2004 to 2008 of Garfinkle Biderman LLP. He practices in corporate commercial and securities law, acting for public and private companies, securities dealers and financial institutions, and has acted on a number of public and private financings and commercial transactions. He is currently an officer of Mooncor Oil & Gas Corp. (MOO:TSXV) and an officer and a director of East Coast Energy Inc.
Georgetown is making an application to the Exchange to have the requirement for sponsorship of the transaction waived. There can be no assurance that the waiver will be granted. In any event, an agreement to sponsor should not be construed as any assurance with respect to the merits of the transaction or the likelihood of completion.
Completion of the transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable to Exchange Requirements (as that term is defined in Exchange policies), majority of the minority shareholder approval. Although Georgetown has commenced its business due diligence, completion of the Acquisition is subject to satisfactory completion of the due diligence process by Georgetown and the parties entering into a definitive purchase agreement. 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 filing statement to be prepared in connection with the transaction, any information released or received with respect to the - 4 - 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.
For additional information, please contact:
Hani Zabaneh, Chief Executive Officer
Telephone: (604) 628-5620
This news release contains certain statements that may be deemed “forward-looking statements. Forward looking statements are statements that are not historical facts and are generally, but not always, identified by the words “expects”, “plans”, “anticipates”, “believes”, “intends”, “estimates”, “projects”, “potential” and similar expressions, or that events or conditions “will”, “would”, “may”, “could” or “should” occur. Although Georgetown believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results may differ materially from those in forward looking statements. Forward looking statements are based on the beliefs, estimates and opinions of Georgetown’s management on the date the statements are made. Georgetown undertakes no obligation to update these forward-looking statements in the event that management’s beliefs, estimates or opinions, or other factors, should change, except as required by law.
THIS PRESS RELEASE, REQUIRED BY APPLICABLE CANADIAN LAWS, IS NOT FOR DISTRIBUTION TO U.S. NEWS SERVICES OR FOR DISSEMINATION IN THE UNITED STATES, AND DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO SELL ANY OF THE SECURITIES DESCRIBED HEREIN IN THE UNITED STATES. THESE SECURITIES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS UNLESS REGISTERED OR EXEMPT THEREFROM.
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