Lonestar Capital Corporation Announces Qualifying Transaction
Date July 11, 2008 – Houston, TX and Vancouver, B.C. – Lonestar Capital Corporation (TSX Venture: LON.P) (“Lonestar” or the “Company”), a capital pool company listed on the TSX Venture Exchange (the “Exchange”), is pleased to announce that it has entered into agreements to acquire two leading California solar companies (the “Acquisitions”). It is anticipated that the Acquisitions will constitute the Company’s Qualifying Transaction under the Exchange’s Policy 2.4 - Capital Pool Companies (the “CPC Policy”).
The Acquisitions and the Vendors
Effective June 29, 2008, Acro Energy Technologies, LLC, a Texas limited liability company and wholly-owned subsidiary of Lonestar formed on June 24, 2008 (“Acro Energy Technologies”) entered a Stock Purchase Agreement (the “Acro Agreement”) to acquire all of the issued and outstanding common shares of Acro Electric, Inc., a California corporation (“Acro”). The aggregate purchase price payable is approximately U.S.$5,400,000 (the “Arco Purchase Price”) and will be payable by a combination of cash and common shares in the capital of the Company, as further described below (the “Acro Acquisition”).
Effective July 3, 2008, Lonestar, through Acro Energy Technologies, entered a Stock Purchase Agreement (the “NextEnergy Agreement”) to acquire all of the issued and outstanding common and preferred shares of NextEnergy Corp., a California corporation (“NextEnergy”). The aggregate purchase price payable is approximately U.S.$3,600,000 (the “NextEnergy Purchase Price”) and will be payable by a combination of cash and common shares in the capital of the Company, as further described below (the “NextEnergy Acquisition”).
For each of the Acro Acquisition and the NextEnergy Acquisition, the Company has further agreed to pay an Additional Purchase Price – Earn Out in the event that certain prescribed milestones are achieved in the twelve-month period following completion of the Acquisitions. Acro and NextEnergy are each full service solar integrators specializing in the design and installation of residential and commercial photovoltaic (PV) solar energy systems. Acro is headquartered in Oakdale, California with revenues of $6.8 million for the twelve month period ending May 31, 2008. Steve Vella is the President and sole shareholder of Acro. Residential installations account for approximately 95% of Acro’s revenues, with commercial installations accounting for the remainder. With 28 employees located in Oakdale California, in the Central Valley region, Acro installs solar power systems statewide with an emphasis in the Central Valley. Upon completion of the Acro Acquisition, Mr. Vella will become Chief Operating Officer of Acro Energy Technologies. NextEnergy’s headquarters are in Concord, California with revenues of $5.8 million for the twelve month period ending May 31, 2008. Randy Kauffman is the President and majority shareholder of NextEnergy. NextEnergy has 22 employees in its offices in Concord and San Francisco. Although NextEnergy has installed solar power systems throughout the state of California, its main focus is the Northern California territory. Residential installations account for 90% of NextEnergy’s revenues with small business installations accounting for the remainder. Upon completion of the NextEnergy Acquisition, Mr. Kauffman will become Chief Technical Officer of Acro Energy Technologies.
The foregoing financial information is based on unaudited financial statements from each of the companies.
Acro, Mr. Vella, NextEnergy and Mr. Kauffman are each at arm’s length to the Company and the Acquisition is therefore not a “Non Arms Length Qualifying Transaction” for the purpose of the CPC Policy.
Private Placement and Use of Proceeds
It is intended that the Company will complete, in conjunction with the completion of the Acquisitions, a private placement financing for common shares of the Company for minimum gross proceeds of $8,000,000 and maximum gross proceeds of $12,000,000 (the “Private Placement”, and together with the Acquisitions, the “Transaction”). At this time, no registered dealer or advisor has been retained by the Company to act as the agent for the Private Placement. While the Company does not currently anticipate engaging any such agent for the Private Placement, the Company expressly reserves the option and the right to do so, subject to the approval of the Exchange.
The Company intends to use a portion of the net proceeds of the Private Placement to satisfy the: 1) cash component of the Acro Purchase Price of approximately U.S. $3,780,000; and 2) cash component of the NextEnergy Purchase Price of approximately U.S.$2,700,000.
Approximately U.S. $270,000 of the cash component of the Acro Purchase Price will be placed in escrow upon closing, to be released based on prescribed conditions as set out in the Acro Agreement, with the balance of the Acro Purchase Price of approximately U.S. $1,350,000 payable by way of the issuance to the Acro Vendors of 1,730,769 common shares of the Company based on a value of $.78 per share.
Similarly, approximately U.S. $180,000 of the cash component of the NextEnergy Purchase will be placed in escrow upon closing, to be released based on prescribed conditions as set out in the NextEnergy Agreement, with the balance of the NextEnergy Purchase Price of approximately U.S. $900,000 payable by way of the issuance to the NextEnergy Vendors of 1,153,846 common shares of the Company based on a value of $.78 per share.
The Company intends to use the balance of the net proceeds of the Private Placement to pay for costs and expenses associated with the Transaction, to identify, evaluate and fund the acquisition of additional solar integrators in the United States and for general corporate and working capital purposes.
Completion of the Transaction is subject to the satisfaction or waiver of a number of conditions, including but not limited to: (1) the completion of satisfactory due diligence by Lonestar on Acro and NextEnergy and by Acro and NextEnergy on Lonestar; (2) completion of the Private Placement; and (3) approval of the Transaction by the Exchange and the listing for trading on the Exchange of common shares of the Company issuable in connection with the Transaction, and all other necessary regulatory, director, or other approvals as may be required. There can be no assurance that the proposed Transaction (or any part thereof) will completed as proposed or at all.
Investors are cautioned that, except as disclosed in the filing statement to be prepared by the Company in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should therefore not be relied upon by investors. Trading in the securities of a capital pool company such as those of the Company should be considered highly speculative.
The Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release. The Exchange does not accept responsibility for the adequacy or accuracy of this press release.
This press release contains forward looking statements within the meaning of applicable securities laws and are subject to risks, uncertainties and assumptions. Such forward-looking information includes, among other things, information with respect to the Company’s beliefs, plans, expectations, anticipations, estimates and intentions, the completion of the Private Placement, the Acquisitions, as well as the activities, operations, strategy and financial performance of the Company, Acro Energy Technologies, Arco and NextEnergy. These statements can generally be identified by use of words such as “may”, “will”, “expect”, “estimate”, “anticipate”, “intends”, “believe”, “continue” as well as the negatives thereof and similar variations.
Although the directors of the Company currently believe that the expectations represented in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct, and the results or events anticipated or predicted in any such forward-looking information may differ materially from actual results or results. Forward-looknig statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations and are based on assumptions that may prove to be incorrect. Some of the factors and risks which could affect future results and could cause results to differ materially from those expressed in the forward-looking statements contained herein include the impact of general economic conditions, industry conditions, government regulation, environmental risks, competition from other industry participants, stock market volatility, the ability to access sufficient capital from internal and external sources. A full description of these risks and uncertainties with regards to a capital pool company can be found in the Company’s prospectus dated February 28, 2008 which is available electronically at www.sedar.com.
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The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking statements included herein are made as of the date hereof and is subject to change after such date. READERS SHOULD NOT PLACE UNDUE IMPORTANCE ON FORWARD-LOOKING INFORMATION AND SHOULD NOT RELY UPON THIS INFORMATION AS OF ANY OTHER DATE. WHILE THE COMPANY MAY ELECT TO DO SO, IT DOES NOT UNDERTAKE ANY OBLIGATION TO, ANY TIME, PUBLICLY UPDATE SUCH FORWARD-LOOKING STATEMENTS TO REFLECT NEW INFORMATION, SUBSEQUENT EVENTS OR OTHERWISE.
About Lonestar Capital Corp.
Lonestar is a capital pool company listed on the TSX Venture Exchange. The principal business of Lonestar is the identification and evaluation of assets or businesses with a view to completing a Qualifying Transaction. The Company has not commenced commercial operations and has no assets other than cash.