Lite Access adds disclosure regarding Ironman buy

Executive Summary

• Lite Access Technologies Inc. is providing additional details regarding its proposed acquisition of Ironman (1097195 B.C. Ltd. and Ironman Directional Drilling U.S. Inc.) following a review by the Ontario Securities Commission.
• The transaction involves acquiring an experienced directional drilling provider to integrate into Lite Access’s fiber optic installation business, aiming to improve gross margins and revenue.
• The acquisition is structured as a share exchange and cash payment, with significant minority shareholder protections in place due to the non-arm's-length nature of the deal involving director Mr. Mike Irmen.

Key Details

• Transaction Structure: Definitive share exchange agreement dated Dec. 7, 2024, as amended, to acquire Ironman parties.
• Consideration:
  • Shares: 85,392,538 shares, representing nearly 50% of the company on a post-listing basis.
  • Cash: Deferred cash consideration of $1.2 million per year plus interest for five years (totaling $6 million in cash payments).
  • Escrow: Shares are subject to a three-year escrow.
• Business Rationale:
  • Margin Improvement: Acquisition aims to eliminate negative margins caused by subcontractor costs for directional drilling, a significant portion of Lite Access's revenue.
  • Revenue Growth: Combining teams to add existing Ironman revenue and offer Ironman’s services on new projects sourced by Lite Access.
  • Management: Integration of Ironman’s experienced management team (Mike Irmen and Bob Scott) to address Lite Access's lack of specialized skills for larger fiber optic projects.
• Minority Shareholder Protection:
  • The acquisition is a related party transaction under Multilateral Instrument 61-101 because Mr. Mike Irmen is both a director of Lite Access and a principal of Ironman.
  • Mr. Irmen recused himself from board discussions and director meetings regarding the acquisition.
  • Only disinterested directors attended meetings related to the acquisition.
  • The company relied on the formal valuation exemption under Subsection 5.5(b) of MI 61-101 as it is not listed on specified markets.
• History:
  • Lite Access previously engaged Ironman for horizontal directional drilling services on fiber optic projects.
  • A cooperation agreement was entered into on July 20, 2022.
  • Acquisition discussions began in April 2023 with the previous CEO.

Notable Quotes

• None explicitly quoted in the text, though the rationale is detailed in the "Business rationale" section.