McVicar Industries Inc. enters into merger agreement with principal shareholder

TORONTO, Jan. 30, 2014 /CNW/ - McVicar Industries Inc. ("McVicar") (TSXV symbol MCV) announces today that it has entered into a conditional merger agreement (the "Merger Agreement") with GC Consulting & Investment Corp. ("GCCI"), a corporation controlled by Dr. Gang Chai, McVicar's chief executive officer, pursuant to which McVicar has agreed, subject to regulatory and shareholder approval, to amalgamate (the "Amalgamation") under s. 174 of the Business Corporations Act (Ontario) with 1909734 Ontario Limited, a wholly owned subsidiary of GCCI ("Subco"), to form a new corporation ("Amalco") to be named McVicar Industries Inc. which will be a wholly owned subsidiary of GCCI.

On the Amalgamation each outstanding McVicar common share, other than those held by shareholders who exercise their dissent and appraisal rights under s. 185 of the Business Corporations Act (Ontario) and by GCCI which will be cancelled, will be exchanged for one redeemable preferred share of Amalco, which will be redeemed by Amalco for cash consideration of $0.50 per preferred share as soon as possible following the Amalgamation. All of the issued shares of Subco (currently held by GCCI) will be exchanged for shares of Amalco.  Consequently, completion of the Amalgamation will result in GCCI having effectively acquired 100% of the issued shares of McVicar.

GCCI owns or exercises control over a total of 3,713,593 common shares of McVicar amounting to approximately 12.90% of its issued common shares.  Accordingly, GCCI is a 'related party' to McVicar and the Amalgamation will constitute a 'business combination' under the terms of Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions of the Canadian Securities Administrators ("MI61-101") and will be subject to TSXV Policy 5.9 which incorporates the provisions of MI61-101 by reference.

As a result, the board of directors of McVicar have formed a special committee (the "Special Committee") consisting of D. James Misener and Colin Digout, both of whom are independent of GCCI, with the mandate to review the terms and conditions of the Amalgamation, to form an opinion as to the fairness, from a financial point of view, of the Amalgamation to shareholders of McVicar and to make a recommendation to the board of directors and to the shareholders as to fairness of the valuation and proposed Amalgamation.  In this regard and pursuant to the recommendation of the Special Committee, independent investment banking firm Evans & Evans, Inc. of Vancouver have been engaged to prepare a formal valuation of McVicar in accordance with the provisions of MI61-101 and an opinion as to the fairness, from a financial point of view, of the Amalgamation to the shareholders of McVicar.

Under applicable corporate law the Amalgamation must be approved by a special resolution passed by a majority of at least two-thirds of the votes cast at a meeting of the shareholders of McVicar.  The Amalgamation is also subject to the minority approval provisions of MI61-101 which require that the Amalgamation be approved by a simple majority of the votes cast at the special shareholders' meeting excluding the votes attached to shares held by GCCI, certain related parties (as such term is defined in MI 61-101) of GCCI any joint actor with GCCI.

To this end a special meeting of shareholders of McVicar has been called for Monday, March 31, 2014.  An information circular including the requisite disclosure concerning the Amalgamation will be mailed to shareholders as soon as possible. Additional details respecting the Amalgamation will also be provided in future press releases as appropriate.

Under the Merger Agreement, completion of the Amalgamation is subject to certain conditions including completion of the formal valuation and fairness opinion under the supervision of the Special Committee such that the Special Committee can make a favourable recommendation as to approval of the Amalgamation to the board of directors and shareholders of McVicar; the requirement for GCCI to provide sufficient funding to Subco such that Amalco can pay the cost of redeeming the Amalco preferred shares issued to shareholders of McVicar; GCCI being satisfied, in its discretion, that any exercise of dissent rights by holders of McVicar shares shall not adversely affect the completion of the Amalgamation or the financial position of Amalco following completion of the Amalgamation; and receipt of all necessary regulatory and shareholder approval.

Following the completion of the Amalgamation, which is expected to occur on or about April 1, 2014, McVicar will cease to meet the continuing listing requirements of the TSX Venture Exchange and will be de-listed.  In addition, GCCI will take all necessary steps to cause McVicar to cease to be a reporting issuer (or equivalent) in all provinces of Canada in which the Corporation is currently a reporting issuer (or equivalent).

About McVicar

McVicar Industries Inc., headquartered in Toronto, Canada, is focused on investments and acquisitions of businesses in China. At present, McVicar has operations in both electronic components and specialty chemicals in four operations in China.

This news release contains forward-looking information which is not comprised of historical facts. Forward-looking information involves risks, uncertainties and other factors that could cause actual events, results, performance, prospects and opportunities to differ materially from those expressed or implied by such forward-looking information. The words "may", "will", "could", "should", "would", "believe", "plan", "anticipate", "estimate", "expect", "intend", and "objective" (or the negatives thereof), and words and expressions of similar import, are intended to identify forward-looking information, which may include statements made in this news release regarding the Amalgamation, shareholder and regulatory approvals, and McVicar's plans following completion of the Amalgamation. Factors that could cause actual results to differ materially from such forward-looking information include, but are not limited to, inability to obtain shareholder and/or regulatory approval of the Amalgamation, the Amalgamation not being completed for any other reason, and receipt by the Special Committee of an unfavourable formal valuation and/or fairness opinion. McVicar believes that the assumptions and factors used in preparing the forward-looking information in this news release are reasonable, for example, that McVicar will obtain all necessary approvals for the Amalgamation, the Merger Agreement will not be terminated, and the Amalgamation will be completed as currently contemplated. Nevertheless, undue reliance should not be placed on such information, which only applies as of the date of this news release, and no assurance can be given that such events will occur in the disclosed time frames or at all. McVicar disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, other than as required by applicable securities laws.

Neither the 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.

SOURCE McVicar Industries Inc.

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