CALGARY, ALBERTA -- (Marketwired) -- 07/10/13 -- West Mountain Capital Corp. (the "Company" or "West Mountain") (TSX VENTURE: WMT) announces that it has entered into negotiations with Reignwood International Investment (Group) Company Limited ("Reignwood") in relation to a non-binding term sheet that sets out the basic terms and conditions of a proposed private placement (collectively, the "Proposed Private Placement"). The terms of the Proposed Private Placement are anticipated to be as follows: (a) the purchase by Reignwood Holdings Hong Kong Limited ("Reignwood Hong Kong") of 6,800,000 common shares in the capital of the Company (the "Common Shares") at a price of $0.32 per Common Share in consideration of the payment of $2,176,000 in cash to the Company; (b) the purchase by Reignwood Hong Kong of an unsecured convertible debenture of the Company in the principal amount of $10,068,028 (the "Convertible Debenture"); and (c) the purchase by Reignwood Hong Kong of 82 common shares (the "PS2 Common Shares") of the Company's wholly-owned subsidiary Phase Separation Cayman Limited ("PS2 Cayman") at a price of $17,550 per PS2 Common Share in consideration of the payment of USD$1,755,000 in cash to PS2 Cayman, for aggregate proceeds of approximately $14,000,000. The Convertible Debenture is anticipated to have a term of 12 months, bear interest at the rate of 3.5% per annum and be convertible into Common Shares at the conversion price of $0.42 per Common Share. PS2 Cayman owns Phase Separation Solutions Hong Kong Limited and Shanghai Phase Separation Environmental Technology Co., Ltd., the entities through which the Company presently operates in China. The proceeds of the Proposed Private Placement with Reignwood will be used to repay outstanding bank indebtedness, to underwrite the build-out of West Mountain's business plan in China and for general operating purposes.
Although the Company is optimistic that the non-binding term sheet will be entered into, there is no certainty that the Proposed Private Placement will be completed on the terms as set out herein or at all.
It is presently contemplated by the parties to the negotiations that upon completion of the Proposed Private Placement, Reignwood Hong Kong will own 9.9% of the outstanding Common Shares of West Mountain, will own Convertible Debentures that may be converted into additional Common Shares equal to 35% of the outstanding Common Shares of West Mountain and own 45% of the outstanding Common Shares of PS2 Cayman. It is also contemplated that as part of the Proposed Private Placement Reignwood Hong Kong will be provided with the right to nominate one director to the board of directors of the Company (the "Board"), with such person to be acceptable to the TSXV. This right is to survive for as long as Reignwood Hong Kong holds more than 5% of the outstanding Common Shares. In addition, should Reignwood Hong Kong exercise its right to convert the Convertible Debentures it will have the right to nominate one additional director to the Board, with such person to be acceptable to the TSXV. This right is to survive for as long as Reignwood Hong Kong holds more than 30% of the outstanding Common Shares.
In addition to conditions customary for transactions of this nature, the completion of the Proposed Private Placement is conditional upon the following: (a) the entering into of definitive binding agreements providing for the various transactions that comprise the Proposed Private Placement; and (b) the Company receiving all necessary regulatory consents or approvals, including approval by the TSX Venture Exchange ("TSXV") of the Proposed Private Placement. The Company hereby reserves the price of $0.32 for the Proposed Private Placement.
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