Wednesday, February 2, 2011

Canada Pacific Capital enters into agreement with BVI-registered corporation

On January 20, a capital pool company Canada Pacific Capital Corp. has entered into a letter of intent, pursuant to which it proposes to acquire all of the issued and outstanding securities of China Freeze-Dry Inc., incorporated under the law of the British Virgin Islands. The BVI company is the indirect owner of China-based company Linyi Shenhe Foodstuff Co., Ltd. Canada Pacific intends for the acquisition of Linyi through the target to constitute its qualifying transaction.

The target is a British Virgin Islands corporation, which is the 100% direct owner of Hong Kong-based Supertown Trading Company Limited (HK). This company, in its turn, is the 100% direct owner of Linyi.

Pursuant to the terms of the letter of intent, Canada Pacific agreed to consolidate, prior to completion of its proposed qualifying transaction, its shares, broker warrants, and options on a 10:1 basis. Currently, the Corporation has 11,600,000 shares, 800,000 broker warrants, and 1,160,000 options outstanding. Post-consolidation, Canada Pacific will have 1,160,000 common shares, 80,000 broker warrants, and 116,000 options outstanding.

Subject to certain terms and conditions, the Corporation intends to acquire all of the 45,000 issued and outstanding common shares of the Target in consideration for a total of 90,251,562 post-consolidation common shares of the Corporation, at a deemed price of US$1.50 per share for a total purchase price of US$135,377,343 representing five times the average operating cash flow of Linyi as indicated in its audited June 30, 2010, 2009 and 2008 financial statements.

The company and Linyi will use best efforts to complete a brokered or non-brokered private placement (or a combination of both) financing on a best effort basis, of up to Cdn$30,000,000 by issuing up to 9,972 additional Target shares with the price of not less than Cdn$3,008.39 per Target share. Up to 9,972 target shares will be exchanged for up to 20,000,000 post-consolidation shares of the Corporation.