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Eurocontrol Announces Update on Operational Changes and Sale of Discontinued Subsidiaries
TORONTO, Sept. 14, 2018 (GLOBE NEWSWIRE) -- Eurocontrol Technics Group Inc. (TSX Venture: EUO; OTCQB: EUCTF) (“Eurocontrol” or the “Company”), announces that it has entered into a share purchase agreement (the “Agreement”) with DYG Holdings Ltd. (the “Purchaser”), pursuant to which the Company has agreed to sell all of the shares of its Israeli subsidiaries to the Purchaser representing a sale of all of the Company’s former operating business. The Company entered into the Agreement in order to complete its previously announced process of winding up its operations in Israel in an efficient manner as disclosed in press releases of July 31 and August 29, 2018.
Paul Wood, Interim CEO and President stated, “We are pleased to have come to an agreement on selling the Company’s former operating facilities in Israel. This transaction will not only save Eurocontrol additional shut down costs but we believe that the sale of the Israeli subsidiaries will make the Company more attractive and will open a greater range of transformative transaction alternatives.”
Prior to entering into the Agreement, the Company’s Israeli subsidiaries had effectively ceased all of their respective former operations and are no longer carrying on any active business other than to dispose of inventory and fulfil existing sales contracts. In this regard, the discontinued Israeli subsidiaries have ended the service of all of their employees and have endeavored to dispose of their assets. Management of the Company has determined that the Israeli subsidiaries have no remaining value and expects that its financial statements for relevant future periods will contain adjustments to reflect this assessment. The Company’s management continues to be focused on evaluating alternatives to maximize the value of its assets, which consist primarily of cash and amounts receivable from the remaining earn out payments owing to it.
Under the terms of the Agreement, the Company has agreed to sell all of the issued and outstanding shares of Croptimal Ltd., Xenemetrix Ltd. and Xwinsys Technology Development Ltd. (the “Discontinued Subsidiaries”) for nominal consideration and the possibility of receiving post-closing earn-out payments, only if the Purchaser succeeds in re-establishing the business of the Discontinued Subsidiaries and realizing profits during the earn out period ending December 31, 2025. Any such earn-out payments would represent 20% of the net profit of the purchased companies, after various adjustments up to a maximum of $4,000,000. The Agreement contains only basic representations and warranties and the sale is to be completed substantially on an “as is where is” basis. Closing is planned to occur on obtaining approval of the TSX Venture Exchange (the “Exchange”) which, among other things, will require evidence of value and disinterested shareholder approval, as required under Policy 5.3.
The Purchaser is a newly formed Israeli company owned by Doron Reinis, the Company’s departing Chief Operating Officer and director and Chief Executive Officer of the Discontinued Subsidiaries, and Yoav Allon, currently the departing Chief Financial Officer of the Discontinued Subsidiaries. These individuals collectively own 1,399,000 common shares of Eurocontrol representing 1.54% of the outstanding shares of the Company. Both of these individuals are currently providing services pursuant to termination arrangements made by the Company with them prior to negotiating and agreeing to the transaction for the purchase and sale of the Discontinued Subsidiaries.
In accordance with Policy 5.3 – Acquisitions and Dispositions of Non-Cash Assets of the Exchange, the Proposed Transaction is a “Reviewable Disposition” and subject to the prior approval of the Exchange, because it involves “Non Arm’s Length Parties”, as contemplated in the policy. The proposed transaction is subject to MI 61-101 in respect of the requirement to obtain valuations and minority approval of its shareholders, unless an exemption is available. The Company plans to call a special meeting of shareholders to seek shareholder approval of the transaction and copies of the Agreement and the management information circular for the special meeting will be filed with Canadian securities regulators and will be available on the SEDAR profile of the Company at www.sedar.com.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein.
Forward-Looking Statements - This news release contains “forward-looking statements”. All statements, other than statements of historical fact included in this news release, regarding Eurocontrol’s strategy, future operations, possible strategic transactions, financial position, prospects, plans and objectives of management are forward-looking statements. When used in this press release, the words “plan,” “will,” “would,” “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on Eurocontrol’s current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. As such, actual results, performance, or achievements could differ materially from those expressed in, or implied by, these forward-looking statements and accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits or negative impact they will have on Eurocontrol and its shareholders.