Sofame Reaches Non-Binding Agreement To Acquire New England-Based Power Engineering And Services Firm

Montreal, QC - Sofame Technologies Inc. has reached a non-binding agreement (LOI) to complete the arm's-length acquisition of 100 per cent of the common shares of a group of New England-based power engineering and services firms (the "Group") for a maximum of $5M. The Group to be acquired specializes in steam generation at industrial and institutional boiler plants, utility power generating stations, cogeneration facilities, hydroelectric power generation, pulp & paper, and water or waste water treatment plants generating roughly, in the aggregate, $7M of sustainable revenues and mainly having intangible assets. Through the proposed transaction Sofame would effectively acquire expertise in process controls, boilers, boiler room auxiliary equipment, steam and condensate distribution, combustion controls, burner management, emissions monitoring, waste heat recovery and field servicing and start-up of systems throughout North America. The acquisition would enable Sofame to provide comprehensive customer support in areas of engineering, systems integration, field service, mechanical fabrication, and equipment supply for boiler room applications.

The proposed merger would deliver all the outstanding equity interests of the Group to be acquired through a wholly owned subsidiary of Sofame Technologies Inc. to be incorporated in the United States. As part of the proposed transaction, the shareholders of the Group to be acquired would receive a compensation composed of 1) the issuance of shares of Sofame having a value, at closing using a discounted market price prevailing at time of closing, corresponding to $850,000; ii) payment in cash of $ 2.65M U.S. Dollars at closing; and iii) an earn-out over three years based on the agreed-upon expected financial performance of the acquired company before interest and financial expenses. All key management of the firm would remain in their current roles, and enter into long-term employment agreements with Sofame Technologies Inc.. The acquisition is an arm's-length transaction and therefore is not a related party transaction pursuant to Multilateral Instrument 61-101. As a result, no meeting of Sofame shareholders is expected to be required as a condition to completion of the acquisition. No insiders would be created as a result of the transaction.

As at the date hereof, Sofame has received sufficient financing commitments from various lenders to complete the proposed transaction. These consist of a term sheet for a $ 2M royalty loan, and $ 1.5M in pledges for an unsecured convertible debenture for a two year term, bearing an interest rate of 10% per annum, convertible at $ 0.05 cents, and including, for each $ 2,500 tranche of debenture, 12,500 warrants to purchases Sofame shares at $0.05 for the first 12 months and $ 0.10 cents thereafter. Sofame has made an application to the TSX Venture Exchange for conditional approval of the unsecured convertible debenture financing. Sofame's secured short-term lender, TCA Global Fund headquartered in Aventura, Florida, is aware of the proposed transaction, and a formal request for TCA's consent is required under the credit agreement signed in September 2013. More details of the proposed transaction, and the financial position of company to be acquired, will be announced as the transaction moves through the formal approvals process.

According to Robert Presser, Sofame's Board Chairman, "This opportunity to join forces with a US Company in the same industry as Sofame, and with the same entrepreneurial culture, has been over two years in the making. Both companies expect to become stronger, and achieve solid revenue growth in North America, as a result the combination of expertise, personnel and complementary capabilities."