CALGARY, ALBERTA, May 10, 2010 (Marketwire) -- PERFECT FRY CORPORATION (TSX VENTURE:PNM) (the "Corporation") is pleased to announce that it has entered into a form of asset sale agreement (the "Agreement") with a wholly-owned subsidiary of The Middleby Corporation (NASDAQ: MIDD) ("Middleby") to sell all of the operating assets, inventory, certain contractual obligations and entitlements and all of the intellectual property (collectively the "Assets") held by Perfect Fry Company Ltd., a wholly-owned subsidiary of the Corporation. The proposed sale of the Assets is an arm's length transaction.
Purchase Price
In accordance with the terms of the Agreement, Middleby will pay the purchase consideration for the Assets as follows:
a. At closing ("Closing") of the sale of the Assets, $4,750,000 CDN will be
released to the Corporation and an additional $250,000 will be delivered
at Closing by Middleby to an escrow agent appointed by the parties to
satisfy any claims arising under the Agreement. Any amounts remaining in
the escrow account will be released to the Corporation 12 months after
Closing;b. Middleby shall pay the Corporation a royalty based on the gross revenues
realized by Middleby relating to the "Perfect Pop" technology under the
Assets payable over a period of 7 years after Closing and determined as
to 10% of aggregate gross sales in the year 1 after Closing, 9% in year
2, 8% in year 3, 7% in year 4, 6% in year 5, and 5% in years 6 and 7;
and
c. The aggregate purchase price for the Assets is subject to adjustment at
Closing based on the net working capital of the Corporation at Closing.
Conditions of Closing
In accordance with the terms of the Agreement, completion of the sale of the Assets is subject to:
a. Receipt of approvals by shareholders of the Corporation in accordance
with the requirements under the Business Corporations Act (Alberta) and
the Policies of the TSX Venture Exchange ("Exchange");b. Approval of the Exchange of the terms of the Agreement and any other
applicable regulatory approvals;c. Receipt of approval of third parties for transfer to Middleby of
material contracts under the Assets;d. Execution by Middleby of a lease agreement with the Corporation to lease
the building of the Corporation currently utilized to operate the
physical portion of the Assets;e. The absence of any adverse material changes to the financial and
operational condition of the Assets between the date of execution of the
Agreement and Closing; andf. Other customary closing conditions.
The Closing is intended to occur on the 3rd business day following the satisfaction or waiver of the conditions of the parties or such other date as is mutually agreed by the parties, but in no event later than September 30, 2010.
Other Matters
The Corporation has agreed not to solicit, initiate or encourage any acquisition proposal from a third party, disclose non-public information to any third party in connection with any acquisition proposal, or engage in substantive discussions regarding any acquisition proposal, in each case subject to certain limited exceptions set forth in the Agreement. The Corporation is permitted to consider an unsolicited, written, fully financed, superior offer for the sale of the Assets tendered by an arm's length third party, provided that Middleby shall be entitled to match the terms of any such superior offer. Any superior offer would also require the approval of the Corporation's shareholders.
In the event that the Agreement is terminated under certain circumstances, the Corporation shall be responsible for the payment to Middleby of a $250,000 break fee and an additional $250,000 related to the costs and expenses of Middleby. Subject to the foregoing sentence, each party has agreed to be responsible for its own professional fees and other expenses incurred in connection with the sale of the Assets.
Middleby has agreed to make an offer to retain all employees and contract workers relating to the Assets upon terms substantially similar to those currently offered by the Corporation. The Corporation and its subsidiaries have agreed to change their names and cease using the trade name "PerfectFry" at Closing.
Board Recommendation
The board of directors has unanimously determined that the Agreement is in the best interests of the Corporation and its shareholders and recommends that shareholders vote their shares to approve the terms of the Agreement at a proposed special meeting of shareholders.
Shareholder Support and Voting
In connection with the Agreement, the directors and officers of the Corporation have entered into a form of shareholder support and voting agreement (the "Support Agreement") with Middleby. Under the terms of the Support Agreement, shareholders have committed to vote 4,396,330 common shares or 42.55% of the outstanding shares (i) to approve the sale of the Assets and the remaining terms of the Agreement and (ii) against any alternative sale transaction. The obligations of such shareholders under the Support Agreement shall continue until the earlier of the Closing or December 31, 2011.
Special Shareholders Meeting
The Corporation intends to call a special shareholders meeting to be held on or about mid June, 2010, to consider, among other things, approval of the sale of the Assets in accordance with the terms of the Agreement.
Post Closing
After Closing, the remaining assets of the Corporation shall be the building currently utilized to operate the Assets, the net proceeds from the sale of the Assets and the entitlements from Middleby to the royalty payments relating to the "Perfect Pop" technology. Management will review all options available to the Corporation on a go forward basis including the sale of the remaining real estate asset and winding-up the Corporation and distributing the net cash assets to shareholders. The Corporation will seek shareholder approvals for any recommendations deemed by the board to be in the best interests of the Corporation and the shareholders.
NEX Transfer
After completion of the sale of the Assets, the Corporation will cease active business operations. Accordingly, the Corporation has been advised by the Exchange that the common shares will be transferred after Closing to the NEX board of the Exchange.
This news release contains forward-looking statements, which relate to future events or future performance and reflect management's current expectations and assumptions. Such forward-looking statements reflect management's current beliefs and are based on assumptions made by and information currently available to the Company. Investors are cautioned that these forward looking statements are neither promises nor guarantees, and are subject to risks and uncertainties that may cause future results to differ materially from those expected. These forward-looking statements are made as of the date hereof and, except as required under applicable securities legislation, the Company does not assume any obligation to update or revise them to reflect new events or circumstances.
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.
