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TORONTO, Jan. 24 /CNW/ --
Rick Rule to Join Sprott Investment Team and be Nominated to Board of
Directors
TORONTO, Jan. 24 /CNW/ - Sprott Inc. (TSX:SII) ("Sprott") today announced the signing of a definitive share exchange agreement
(the "Agreement") with Arthur Richards Rule IV and the Rule Family Trust U/A/D 12/17/98
(the "Seller") for the acquisition (the "Transaction") of all of the outstanding stock of Rule Investments, Inc. (the owner
of Global Resource Investments, Ltd.), Terra Resource Investment
Management, Inc. and Resource Capital Investment Corporation
(collectively, the "Global Companies"), as first announced by the Company on September 22, 2010. Closing is
expected to occur in early February 2011, subject to the timing of
necessary regulatory approvals.
"We are pleased to have the well respected team of investment
professionals Rick has built join our organization, and look forward to
working with them to continue to deliver superior investment
performance to our clients and shareholders," commented Eric Sprott,
Chairman of Sprott.
"With our due diligence activities complete, and integration planning
underway, our combined team will be moving quickly to offer compelling
new investment opportunities to Canadian investors, while continuing to
grow our client base both in the United States and globally," said
Peter Grosskopf, CEO of Sprott. "We remain convinced that our
objectives of expanding our investment management capabilities,
increasing our US distribution capabilities, and diversifying our asset
and earnings profile will be well served by having the Global Companies
join the Sprott organization. Combined, the companies' Assets Under
Management would have been approximately $9.0 billion as of December
31, 2010."
"Much like the mutual funds and hedge funds managed by Sprott Asset
Management, the Global Companies' pooled investment vehicles have
performed exceptionally well in 2010, highlighting the degree of
investment expertise that the Global Companies bring to the combined
organization," added Mr. Grosskopf.
"The entire team at the Global Companies is delighted to be joining
Sprott Inc. We expect that our clients will benefit from the help of
the Sprott team, and that this will be a true win-win for all
stakeholders; clients, employees, and shareholders of both
organizations," commented Rick Rule, founder of the Global Companies.
Transaction Terms
Sprott will issue 20 million common shares in the capital of Sprott ("Sprott Shares") in consideration for the acquisition of the Global Companies.
Approximately 500,000 of the Sprott Shares will be received by
employees of the Global Companies after closing. The Seller has agreed
to forego any general quarterly or special dividends, if any,
associated with Sprott's 2010 financial performance. In addition, the
Seller and certain current and future employees of the Global Companies
will further be entitled to receive, on the date that is five years
following the closing of the Transaction, additional shares (the "Earn-out Shares") based on the aggregate EBITDA of the Global Companies during such
five year period, and the performance of the Global Companies relative
to the balance of Sprott. For every dollar that the aggregate EBITDA
exceeds US$40 million, the Seller and certain current and future
employees shall receive 0.145455 Earn-out Shares, up to a maximum of
eight million Earn-out Shares in aggregate. Subject to certain
conditions, including minimum AUM thresholds at the Global Companies,
if aggregate EBITDA of US$95 million is reached prior to the end of
such five-year period, the Seller and certain employees as noted above
shall receive all the Earn-out Shares at such time; provided that the
Seller and these specific employees shall not receive such shares prior
to three years after the closing of the Transaction. Each of the
Seller and the employees of the Global Companies receiving Sprott
Shares or Earn-out Shares will enter into lock-up agreements with
Sprott whereby they will agree not to directly or indirectly sell their
shares without Sprott's consent, subject to certain conditions, with
one-third of such shares being released from lock up every year for
three years from the date of issuance.
Upon closing of the Transaction, Mr. Rule will join the investment and
management team at Sprott for a minimum three year term and will be
included on management's slate of nominees for the election of
directors at Sprott's next annual meeting of shareholders. The
Transaction is an arm's length transaction and is subject to the
approval of all applicable regulatory authorities, including the
Toronto Stock Exchange, as well as other third parties, as necessary.
Forward-Looking Statements
This release contains "forward-looking statements" which reflect the
current expectations of Sprott Inc. These statements reflect
management's current beliefs with respect to future events and are
based on information currently available to management. Forward-looking
statements in this press release include, but are not limited to, the
closing of the Transaction and the anticipated benefits from the
Transaction. Forward-looking statements involve significant known and
unknown risks, uncertainties and assumptions, including with respect to
the closing of the Transaction, the timing and receipt of all
applicable regulatory approvals and third party consents, the
anticipated benefits from the Transaction and the satisfaction of other
conditions to the completion of the Transaction. Many factors could
cause actual results, performance or achievements to be materially
different from any future results, performance or achievements that may
be expressed or implied by such forward-looking statements including,
without limitation, those listed under the heading "Risk Factors" in
Sprott's annual information form dated March 30, 2010 as well as that
the closing of the Transaction could be delayed if the necessary
regulatory approvals and third party consents are not obtained within
the timelines planned or the Transaction may not be completed at all if
these approvals are not obtained or any other conditions to closing are
not satisfied. Should one or more of these risks or uncertainties
materialize, or should assumptions underlying the forward-looking
statements prove incorrect, actual results, performance or achievements
could vary materially from those expressed or implied by the
forward-looking statements contained in this release. Although the
forward-looking statements contained in this release are based upon
what Sprott believes to be reasonable assumptions, management cannot
assure investors that actual results, performance or achievements will
be consistent with these forward-looking statements. These
forward-looking statements are made as of the date of this release and
Sprott does not assume any obligation to update or revise them to
reflect new events or circumstances, except as required by law.
About the Global Companies
The Global Companies are leading experts in the natural resource
investing sector providing both investment management and specialized
broker services. The Global Companies are led by Rick Rule, a highly
respected natural resources investor with over 35 years of experience
in the investment industry, and have developed a highly specialized
team of resource investing experts, including geologists and mining
engineers. They offer their expertise through pooled investment
vehicles, managed accounts and brokerage accounts and have delivered
strong investment performance to their clients. The Global Companies
currently administer or manage more than US$1.8 billion in assets.
About Sprott Inc.
Sprott Inc. is a leading independent asset manager dedicated to
achieving superior returns for its clients over the long term. The
company currently operates through three distinct business units:
Sprott Asset Management LP, Sprott Private Wealth LP and Sprott
Consulting LP. Sprott Asset Management is the investment manager of
the Sprott family of mutual funds and hedge funds and discretionary
managed accounts; Sprott Private Wealth provides wealth management
services to high net worth individuals; and Sprott Consulting provides
management, administrative and consulting services to other companies,
including Sprott Resource Corp. (TSX: SCP) and Sprott Resource Lending
Corp. (TSX: SIL; NYSE Amex: SILU). Sprott Inc. is headquartered in
Toronto, Canada, and is listed on the Toronto Stock Exchange under the
symbol "SII". For more information on Sprott Inc., please visit www.sprottinc.com.
To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/January2011/24/c4849.html
p align="justify"Investor contact information: (416) 203-2310 or 1 (877) 403-2310 or a href="mailto:ir@sprott.com"ir@sprott.com/a/p