Empire Announces Completion of Preferred Share Exchange

WINNIPEG, Manitoba, Dec. 31, 2019 (GLOBE NEWSWIRE) -- With reference to its prior News Releases dated June 11, 2019, November 14, 2019 and December 20, 2019, Empire Industries Ltd. (TSX-V: “EIL”, “Empire” or the “Company”) is pleased to announce that 100% of the holders of the issued and outstanding Preferred Shares (defined below) agreed to exchange all of their Preferred Shares for Class “A” Common Shares (“Common Shares”) of the Company effective December 31, 2019. 

Subject to final acceptance by the TSX Venture Exchange, the holders of the Preferred Shares exchanged the Preferred Shares (the “Capital Reorganization”) early for an aggregate of up to 32,906,161 Common Shares at a weighted exchange price of $0.444 per Common Share comprised of 25,244,443 Common Shares at $0.45 per Common Share and 7,661,718 Common Shares at $0.425 per Common Share as a premium for the early exchange (the “Share Exchange Premium”). The Share Exchange Premium cash value of $3,356,230 was equivalent to 3.583 years of forgone 8% cumulative dividends that would have accrued on the Preferred Shares if they were not exchanged early. All of the Common Shares issued are subject to a four month and one day hold period.

Certain insiders of the Company were holders of the Preferred Shares and as such their participation in the Capital Reorganization constitutes a "related party transaction" within the meaning of TSX-Venture Policy 5.9 and Multilateral Instrument 61-101. The Company relied on an exemption from the formal valuation and minority approval provisions of Multilateral Instrument 61-101 in reliance on sections 5.5(a) and 5.7(a) on the basis that the aggregate fair market value of the Capital Reorganization, insofar as each insider is involved, does not exceed 25% of the market capitalization of the Company. A material change report was filed less than 21 days before the completion of the Capital Reorganization. The Company considers this shorter period to be reasonable and necessary in the circumstances to allow the Company to complete the Capital Reorganization prior to year-end.

Early Warning Disclosure

As a result of its participation in the Capital Reorganization, Jolly Admire Limited (“JAL”), located at No. 191 Shaanxi Road, Shanghai, 200030 China, acquired 10,384,560 Common Shares. JAL and High Express Holdings Limited (“HEHL”) are owned and controlled by Koizumi Tadashi. Prior to completion of the Capital Reorganization, HEHL held 20,731,707 Common Shares or 15.9% of Empire’s issued and outstanding voting shares. Upon completion of the Capital Reorganization, JAL and HEHL held an aggregate of 31,116,267 Common Shares representing a total of 19.05% of Empire’s outstanding voting shares. The Common Shares were acquired by JAL for investment purposes.