Effective February 1, 2006, Fuel Cell Technologies halted trading in its shares and announced an agreement with Madison Pacific Properties Inc. where FCTC will reorganize its business and receive from Madison an investment of $1,550,000.
The reorganization will take place by way of a statutory arrangement. FCT currently has 48,940,000 issued and outstanding Common Shares.
Madison, a Vancouver-based, TSX listed, real estate company (TSX:MPC), has provided FCT with a non-refundable deposit of $200,000, and has also established an interim, secured, demand credit facility (the “Facility”) for FCT, to a maximum of $300,000. The deposit amounts and any amounts borrowed by FCT from Madison will be applied to the Madison investment.
Under the arrangement, FCT will consolidate its Common Shares on a 10 to 1 basis. FCT will then reorganize its capital into non-voting, participating, Class A Shares, voting, participating, Class B Shares, and non-voting, fixed price, redeemable, non-participating, Preferred Shares. Each Common Share of FCT will be exchanged for one Class A Share, one Class B Share and one Preferred Share.
Madison will invest $1,550,000 inclusive of any amounts advanced under the Facility in FCT in exchange for the issuance of 72,602,667 Class A Shares and 3,200,000 Class B Shares.
FCT’s operating subsidiary, Fuel Cell Technologies Ltd. (“FCTL”) will sell all of its assets and business, including the advance of Madison’s investment, to a new subsidiary of FCTL, named FCT Opco Inc. in exchange for assumption of specified liabilities.
All of the issued and outstanding Preferred Shares of FCT will be exchanged for voting, participating, Common Shares of Opco, on a share-for-share basis.
Following the consolidation of FCT Common Shares, for each Common Share of FCT held, a shareholder will hold one non-voting, participating, Class A Share and one voting, participating, Class B Share of FCT, and one voting, participating Common Share of Opco. Opco will change its name to the name of FCTL and will hold all of the operating assets and business of FCTL, and the net proceeds of the investment made by Madison in FCT will be used by Opco to continue the solid oxide fuel cell system business acquired from FCTL. Upon the completion o the arrangement, Opco will not be a reporting issuer.
FCT will change its name to MPP Properties Inc., appoint new management and, subject to the satisfaction of all applicable regulatory requirements, intends to qualify as a real estate issuer, and list for trading its Class A Shares and Class B Shares on the TSX Venture Exchange. After the arrangement, former FCT shareholders will hold approximately 11.4% of the equity of MPP Properties Inc., with the remaining equity being held by Madison.
Following the arrangement, MPP Properties Inc. is expected to acquire a portfolio of commercial and industrial real estate assets in exchange for the issuance of Class A Shares of FCT.
Over the past decade, FCT has designed and built custom fuel cell power systems. Fuel cell systems are the future of power generation because of their environmental benefits and high efficiency. FCT’s 5kW SOFC systems are designed to operate on a variety of readily available fuels and provide a highly efficient, environmentally friendly method to produce on-site electricity and heat that can be used in a variety of remote, commercial, industrial and residential applications.
The completion of the arrangement and reorganization described above will be subject to a number of conditions, including the approval of an interim order by the Ontario court for the manner of disclosure and notice to FCT shareholders, the receipt of approval of the securityholders of FCT by special resolution at a Special Meeting of Shareholders, the final approval of the Ontario court, and the approval of TSX Venture Exchange.
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