December 13, 2005 Ottawa, Canada -- Tropic Networks, a developer of metro-regional DWDM systems, has announced a proposal to "spin out" its high technology assets and business into a new company to be renamed Tropic Networks ("NewCo"). The company says the move comes in an effort to maximize value for its stakeholders.
After transferring its technology assets to NewCo, the company says it will refocus its business in the oil and gas sector and raise capital to finance the acquisition of a TSX-listed public company, Chamaelo Exploration Ltd., and another private company, Tournament Energy Ltd., pursuant to a plan of a stated arrangement.
According to a press release, on October 25, 2005, Chamaelo announced the details of this arrangement publicly. Upon completion of the arrangement, the combined entity will continue business under the name "Chamaelo Exploration." The arrangement, which is subject to shareholder and regulatory approval, is expected to provide approximately CDN$9.4M in additional funds to support NewCo's growing technology business following the arrangement.
"2005 has been a very successful year for the company, with good progress in
many areas, including significant growth in sales. The market for metro optical
equipment continues to improve, and this financial transaction further
strengthens our ability to grow the business with key partners and clients in
2006," comments David Orr, executive chairman of the board, Tropic Networks.
According to the release: "In connection with the arrangement, the current shareholders, directors, officers, and employees of Tropic will become shareholders, directors, officers, and employees of NewCo. As part of the transfer of Tropic assets, NewCo will assume all of Tropic's liabilities and contracts. Newco will be renamed Tropic Networks. This financial transaction will be seamless for all customers, partners, suppliers, employees, and shareholders in the company. In addition to being shareholders of NewCo, the current shareholders of Tropic will also hold a small percentage of Tropic common shares following the arrangement."
A special meeting of Tropic shareholders will be held on December 22, 2005 to consider, among other topics, the stated arrangement. Tropic, Chamaelo, and Tournament have jointly prepared an information circular, dated November 25, 2005, which has been mailed to the shareholders of each company.