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TORONTO, June 19 /CNW/ - ZIPLOCAL INC. (ZIP-TSX Venture Exchange) ("ZipLocal" or the "Company") announces that it has entered into a definitive agreement with JLA CP Holdings Inc. ("JLACP"), a private Ontario corporation, to sell substantially all of its assets, and those of its subsidiary Zip411 Enterprises Inc., for approximately $2.383 million (subject to adjustment) (the Transaction). The purchase price will be paid by the application of approximately $1.933 million (including interest) of secured debt currently in default and owed to affiliates of JLACP with the balance of $450,000 payable in cash. ZipLocal intends to use the cash proceeds of the Transaction to pay off its unsecured debts and other liabilities and to explore new business opportunities. Following completion of the Transaction, ZipLocal will not have an operating business.
A committee of independent directors of the Company has received an opinion from Cormark Securities Inc. that, as of June 19, 2009, the consideration to be received by ZipLocal pursuant to the Transaction is fair, from a financial point of view, to ZipLocal and its shareholders. The directors of the Company, upon recommendation of the independent committee, unanimously recommend that shareholders vote in favour of the Transaction.
Immediately following closing of the Transaction, JLACP will sell all of the assets acquired from ZipLocal and Zip411 to Canpages Inc. (Canpages) (the Canpages Transaction). The purchase price will be satisfied by the issuance of shares of Canadian Phone Directories Holdings Inc. (Holdings), the parent of Canpages. JLACP and the JLA IV Funds (defined below) have agreed to provide an additional $1 million cash indemnity to Canpages and Holdings to facilitate the Canpages Transaction.
JLACP has been incorporated for the sole purpose of facilitating the Transaction and the Canpages Transaction. The Transaction is being undertaken to accommodate material conditions of an acquisition proposal made by Canpages in early 2009, including that, upon completion of any transaction, the shares issued as payment for the assets of ZipLocal be held by one person and that business and financial information relating to Canpages be kept confidential and not be subject to disclosure under applicable securities laws. As privately-held companies, Canpages and Holdings are not subject to public company disclosure obligations.
Closing of the Transaction (and the Canpages Transaction) is subject to various closing conditions including receipt of all necessary consents and regulatory approvals, including the approval of the TSX Venture Exchange.
ZipLocal will be seeking approval of the Transaction from its shareholders at the annual and special meeting to be held on Monday, July 20, 2009. Shareholders holding approximately 34% of the outstanding shares of ZipLocal have entered into a shareholder voting agreement with Canpages and have agreed to vote in favour of the Transaction. ZipLocal has agreed to pay to JLACP a termination fee of $150,000 if the Transaction is not completed if certain conditions in favour of JLACP are not satisfied or certain events occur, including a sale pursuant to a competing transaction proposal. JLACP is required to pay a similar termination fee to Canpages if the Canpages Transaction is not completed.
The shareholders of JLACP are members of the J.L. Albright Ventures group of funds (collectively, JLA IV Funds). John L. Albright, Chairman of the Board of ZipLocal, is the sole director and officer of JLACP and the Managing Partner of JLA IV Funds. In addition, JLA IV Funds hold approximately 21.1 million common shares of the Company (representing approximately 26.5% of the outstanding shares of ZipLocal) and are secured creditors of ZipLocal and Zip411. As a result, the Transaction is a related party transaction under applicable securities laws. The votes attaching to the shares held by JLA IV Funds are eligible to vote in respect of the Transaction for corporate law purposes, however, such shares will be disregarded with respect to determining approval of the Transaction by disinterested shareholders as required by the TSX Venture Exchange.
Additional information regarding the Transaction will be more fully described in the information circular to be mailed to ZipLocal's shareholders in connection with the meeting referred to above. The definitive agreement between ZipLocal and JLACP will be filed on SEDAR and will be available at www.sedar.com.
The Company also announces that Aris Zakinthinos, the Company's Chief Technology Officer, has left to join another technology company.
About ZipLocal Inc.
ZipLocal operates a Canadian online directory that provides a rich, user-defined local search experience. ZipLocal provides relevant search results from Canadian and US businesses with maps and functionality for users to review, rate and tag business listings. ZipLocal is focused on creating the most comprehensive and engaging search experience at the neighbourhood and city-wide level.
FORWARD-LOOKING STATEMENTS
This news release may contain forward-looking statements based on management's current projections, beliefs and opinions at the date of this news release. Actual results could differ materially from those anticipated in the statements due to risks and uncertainties, which affect the Company's business and operations. Reference should be made to the Company's continuous disclosure documents filed from time to time with Canadian securities regulatory authorities for a detailed description of such risks and uncertainties. The Company takes no responsibility to update forward-looking statements if circumstances or management's projections, beliefs or opinions change.
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For further information: Stephen McDonald, ZipLocal Inc., (416) 987-2135, Investor_relations@ziplocal.com
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