Ergoresearch reaches Agreement to Take Company Private for Cash Consideration of $0.30 per Share

LAVAL, QC, Jan 10, 2018 /CNW Telbec/ – Ergoresearch Ltd. (“ERG” or the “Corporation”) (TSXV: ERG), a Quebec-based company in the design and manufacturing of cutting edge technology for intelligent orthotics, medical devices and software in the orthopedic industry, has reached an agreement (the “Combination Agreement”) with a corporation (the “Purchaser”) controlled by Sylvain Boucher and Danielle Boucher (together, the “Management Shareholders”) in partnership with Walter Capital Partners Inc. (“Walter Capital”), pursuant to which all of the outstanding shares of the Corporation will be acquired by the Purchaser by way of amalgamation for $0.30 per share in cash (the “Transaction”).

“ERG has been pursuing a product development plan over the last several years, and Sylvain and Danielle Boucher have chosen Walter Capital as the partner that will best support the business plan and goal of providing customers with the most comprehensive suite of products and services,” Mr. Boucher said.

“The Transaction provides compelling value and liquidity to our shareholders” said François Tellier, Chairman of the Special Committee of ERG. “Our directors believe this is the best way to maximize value while providing the Corporation with partners who share our commitment to customers, employees and the markets we serve.”

Mr. Boucher will continue as President and CEO of ERG, which will continue to be headquartered in Laval. “I am proud of what our team has accomplished over the last few years, and I am excited about our prospects with Walter Capital as our chosen business partner,” Mr. Boucher said.

“Consistent with our investment philosophy of supporting entrepreneurs, we are excited to team with Sylvain and Danielle Boucher in helping the Corporation achieve its potential. We look forward to working with Sylvain and his team to support the execution of their development plan,” said Pierre Fitzgibbon, Managing Partner at Walter Capital.

The Transaction will be effected by way of an amalgamation of ERG and a wholly-owned subsidiary of the Purchaser under the Canada Business Corporations Act (the “Amalgamation”). Pursuant to the Amalgamation, shareholders (other than the Management Shareholders and dissenting shareholders, if any) will receive, for each common share of ERG held prior to the Amalgamation, one redeemable preferred share (“Amalco Redeemable Preferred Share”) of the new corporation resulting from the Amalgamation (“Amalco”) and immediately after their issuance, each Amalco Redeemable Preferred Share will be redeemed for $0.30 in cash. In connection with the Transaction, the stock option plan of ERG will be terminated and the option holders will receive a cash payment equal to the “in-the-money” value of their options.

The Management Shareholders, who collectively own or exercise control or direction over 17,544,000 common shares, representing approximately 24.3% of the issued and outstanding common shares of the Corporation, have agreed pursuant to a purchaser formation agreement to transfer, immediately prior to the Amalgamation, a number of common shares of the Corporation equal to 17,251,450 common shares, representing approximately 23.9% of the issued outstanding common shares of the Corporation to the Purchaser in exchange for shares of the Purchaser as part of the Amalgamation. The balance of their common shares, which are currently held by the respective RRSP account of the Management Shareholders, will be exchanged for Amalco Redeemable Preferred Shares.

The Amalgamation is subject to approval by the shareholders of ERG requiring the approval of (i) two‐thirds of the votes cast by holders of shares and (ii) a simple majority of the votes cast by shareholders other than Sylvain Boucher and Danielle Boucher and related parties. Further details of the Transaction will be described in the management proxy circular (the “Circular”) to be mailed to shareholders of the Corporation for a special meeting of shareholders of the Corporation to be held in the first quarter of 2018 (the “Meeting”). The Transaction is subject to customary closing conditions, including approval of the TSX Venture Exchange.

The $0.30 per‐share cash consideration represents a premium of 30.4% over the closing price of the shares on the TSX Venture Exchange on January 9, 2018, the last day of trading prior to the public announcement of the Transaction and over the volume‐weighted average price of the shares in the last 30 days of trading.

The partnership with Walter Capital is the result of a strategic review process.  The Transaction was considered at length by the board of directors of ERG (the “Board”) and has been approved unanimously by the Board (with interested directors abstaining) following the favourable recommendation of the special committee of the Board (the “Special Committee”) and following consultation with the Corporation’s and Special Committee’s financial and legal advisors. The Board concluded that the Transaction is fair to the Shareholders other than the interested shareholders (the “Public Shareholders”), is in the best interest of the Corporation and its Public Shareholders and has authorized the submission of the Transaction to shareholders of the Corporation for their approval at the Meeting. The members of the Special Committee and the Board plan to vote all of their common shares in favour of the Transaction.

In making their respective determinations, the Board and the Special Committee considered, among other things, a fairness opinion (the “Fairness Opinion”) from Raymond Chabot Grant Thornton & Co. LLP (“RCGT”) to the effect that the price of $0.30 to be received by the shareholders under the Transaction is fair, from a financial point of view, to the Public Shareholders.

In connection with the Transaction, Sylvain and Danielle Boucher and Holding PROTEOR S.A. (“PROTEOR”), who hold in aggregate 33,709,683 common shares representing approximately 47.7% of the issued and outstanding common shares of the Corporation, have entered into voting and support agreements with the Purchaser (the “Voting Support Agreements”), pursuant to which they have agreed to vote all of their common shares in favour of the Transaction, subject to the right to terminate the Voting Support Agreements in certain circumstances, including, in the case of PROTEOR, the termination of the Combination Agreement.

Pursuant to the Combination Agreement, the Corporation has agreed not to solicit competing acquisition proposals for the Corporation, subject to customary “fiduciary out” provisions which entitle the Corporation to consider and accept a superior proposal, subject to the right of Walter Capital to match the superior proposal, and the payment to Walter Capital of a termination fee of $650,000.

A copy of the Combination Agreement, the Voting Support Agreements, the Circular and certain related documents will be filed with the Canadian Securities Administrators and may be viewed in due course on SEDAR at www.sedar.com.

Shareholders should consult their own tax and investment advisors with respect to the Transaction, details of which will be contained in the Circular.

About Ergoresearch Ltd.

Ergoresearch is a Canadian company that designs and manufactures cutting edge technologies for the orthopedic industry. The Corporation is a trend-setter in creating custom orthotics and speciality orthotics for the orthopedics market and holds a portfolio of patents in the orthopedics field and in human bionics. The mission of our banner “Équilibre orthèses et biomécanique” is to keep people active and moving. “ÉQUILIBRE”, driven by its proprietary technologies and the expertise of its professionals, offers a range of products, treatments and services in order to relieve pain, restore motor function and optimize performance.

Additional information on the Corporation can be found on the ERG website at www.ergoresearch.com and on the SEDAR website at www.sedar.com.

About Walter Capital Partners  

Walter Capital Partners is a private equity firm and part of Walter Financial and the Walter Group. Walter Capital invests capital and know-how in established small and medium-sized businesses to help accelerate their growth. Drawing on the entrepreneurial values of the Walter Group and the business leadership expertise of its Managing Partners, Walter Capital offers solutions that are above and beyond purely financial transactions. Headquartered in Montreal, Walter Capital provides a solid international network.

Forward‐Looking Information

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information is identified by the use of terms and phrases such as “may”, “would”, “should”, “could”, “expect”, “intend”, “estimate”, “outlook”, “target”, “goal”, “guidance”, “anticipate”, “plan”, “foresee”, “believe”, or “continue”, the negative of these terms and similar terminology, including references to assumptions, although not all forward-looking information contains these terms and phrases. Such forward-looking information includes, but is not limited to, statements relating to the anticipated benefits of the proposed Transaction for ERG, the Purchaser and its respective shareholders, shareholder approvals and the anticipated timing of the special meeting of shareholders of ERG and of the completion of the proposed Transaction.

Forward-looking information is subject to a number of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking information. These risks and uncertainties include, but are not limited to, the failure of the parties to obtain the necessary shareholder approvals or to otherwise satisfy the conditions to the completion of the Transaction; failure of the parties to obtain such approvals or satisfy such conditions in a timely manner; significant Transaction costs or unknown liabilities; failure to realize the expected benefits of the Transaction; and general economic conditions. Failure of the parties to satisfy the conditions to the completion of the Transaction or to complete the Transaction, may result in the Transaction not being completed on the proposed terms, or at all. In addition, if the Transaction is not completed, and ERG continues as a publicly-traded entity, there are risks that the announcement of the proposed Transaction and the dedication of substantial resources of ERG to the completion of the Transaction could have an impact on its business and strategic relationships, operating results and activities in general, and could have a material adverse effect on its current and future operations, financial condition and prospects. Furthermore, the failure of ERG to comply with the terms of the Combination Agreement may, in certain circumstances, result in it being required to pay a fee to the Purchaser, the result of which could have a material adverse effect on its financial position and results of operations and its ability to fund growth prospects and current operations.

Consequently, all of the forward-looking information contained herein is qualified by the foregoing cautionary statements, and there can be no guarantee that the results or developments that we anticipate will be realized or, even if substantially realized, that they will have the expected consequences or effects on our business, financial condition or results of operation. Unless otherwise noted or the context otherwise indicates, the forward-looking information contained herein is provided as of the date hereof, and we do not undertake to update or amend such forward-looking information whether as a result of new information, future events or otherwise, except as may be required by applicable law.

This announcement is for informational purposes only and does not constitute an offer to purchase or a solicitation of an offer to sell ERG common shares. All figures are in Canadian dollars, unless otherwise specified.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE Ergoresearch Ltd

For further information: Sylvain Boucher, President and CEO, Ergoresearch Ltd., Tel.: 450-973-6700, ext. 213,  sboucher (*) ergoresearch.com