Run of River Power Inc. Announces Entry into an Arrangement Agreement for the Sale of Run of River Power Inc. and Rockford Energy Corporation

VANCOUVER, May 8, 2014 /CNW/ - Run of River Power Inc. ("ROR" or the "Company") (TSX-V:ROR) announces that it has entered into a definitive arrangement agreement dated May 6, 2014 (the "Arrangement Agreement") with Concord SCCP General Partner (I) Inc. ("Concord") and its wholly-owned subsidiary ROR Acquisition Ltd. ("AcquireCo"), 0999130 B.C. Ltd. (the "REC Acquirer") and a wholly-owned subsidiary of ROR, Rockford Energy Corporation ("REC").  The Arrangement Agreement replaces and supersedes the letter of intent (the "Letter of Intent") among the parties which was previously disclosed in ROR's news release dated April 11, 2014. 

The proposed arrangement (the "Arrangement") is intended to effect: (i) an internal reorganization of ROR whereby it will amalgamate with certain of its wholly owned subsidiaries (the "First Amalgamation"); (ii) the sale by the shareholders of ROR (the "ROR Shareholders") to AcquireCo of all of the issued and outstanding shares (the "ROR Shares") of ROR (the "ROR Disposition"); (iii) the amalgamation of AcquireCo with the entity formed as a result of the First Amalgamation such that the amalgamated company will become a wholly-owned subsidiary of Concord; (iv) the repayment of certain liabilities of ROR which are incurred on or before closing of the Arrangement; and (v) the distribution of cash consideration to the ROR Shareholders for their ROR Shares pursuant to the ROR Disposition. 

The transaction also includes the sale by ROR of all of the issued and outstanding common shares in the capital of REC (each, a "REC Share") to the REC Acquirer (the "REC Sale") such that REC, which owns the Brandywine Creek Project, will become a wholly-owned subsidiary of the REC Acquirer. The REC Acquirer will purchase the REC Shares for aggregate consideration of $8,040,000 (the "REC Purchase Price"), comprised of $7,540,000 of outstanding debentures of ROR which will be transferred to ROR and set-off against the REC Purchase Price and a cash payment of $500,000 (the Arrangement and the REC Sale are collectively referred to as the "Transaction").

The distribution of the cash consideration to the ROR Shareholders is to occur on or about August 29, 2014. The amount of cash to be distributed will be the balance remaining after payment of the indebtedness and liabilities of ROR and its subsidiaries, other than REC, at the effective date of the Arrangement, the total of the cash on hand of ROR and its subsidiaries, other than REC, at the effective date, the $1,250,000 to be advanced by Concord as a capital contribution to AcquireCo and $500,000 being the cash portion of the consideration to be paid by the REC Acquirer for the REC Shares.

For more information on the Arrangement and the Arrangement Agreement, please refer to the full text of the Arrangement Agreement, a copy of which will be filed by ROR on SEDAR and will be available for viewing under its profiles on www.sedar.com.

Concord and AcquireCo are both private British Columbia corporations that have an arm's length relationship with ROR. The REC Acquirer is a private British Columbia company of which is beneficially owned by certain holders of outstanding debentures and convertible debentures of ROR. Peter Zell, a director and significant shareholder of ROR, is a director and shareholder of the REC Acquirer. Brett Robinson, a director and shareholder of ROR, is a shareholder of the REC Acquirer and Real Gamache, a significant shareholder of ROR, is a shareholder of the REC Acquirer.  Information in this news release concerning the ownership and directors of the REC Acquirer has been provided to ROR by the REC Acquirer.

Shareholders Meeting to Approve the Transaction

A special meeting of the ROR Shareholders (the "Meeting") will be held at 10:00 a.m. (Pacific time) on May 30, 2014 at Suite 900 – 885 West Georgia Street, Vancouver, British Columbia.  At the Meeting, ROR Shareholders will be asked to consider and, if determined appropriate, approve the Transaction. 

To be approved, the Transaction requires approval by a special majority (i.e. 2/3) of the ROR Shareholders, and approval by a majority (i.e. 50% plus one) of the disinterested ROR Shareholders in accordance with Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ("MI 61-101").  Disinterested shareholder approval of the Transaction is needed as the REC Sale is a "related party transaction" as defined in MI 61-101. Peter Zell, a director and significant shareholder of ROR, is a director and shareholder of REC Acquirer, and Real Gamache, a significant shareholder of ROR, is a shareholder of REC Acquirer.  Mr. Zell and Mr. Gamache are considered "interested parties" as defined in MI 61-101, as is Terese Michone who is a significant shareholder of ROR and an associate of Real Gamache. To the knowledge of management, the interested ROR Shareholders who will have their ROR Shares excluded from the disinterested shareholder approval will be Peter Zell, Real Gamache and Terese Michone who collectively hold approximately 46.39% of the issued and outstanding ROR Shares.

A Notice and Information Circular and related meeting materials are expected to be provided to ROR Shareholders in connection with the Meeting and will be filed on SEDAR under ROR's profile at www.sedar.com.

Requisite Approvals

Closing of the Transaction is subject to, among other things, receipt of the requisite approvals of the ROR Shareholders, approval of the Court and approval of the TSXV.  Approval of a special majority of the ROR Shareholders and a majority of the disinterested ROR Shareholders is required for the Transaction to proceed. 

Dissent Rights

Registered shareholders of ROR may exercise rights of dissent in connection with the Transaction in accordance with the Arrangement Agreement and Sections 237 to 247 of the BCBCA.  It is a condition to closing of the Transaction that dissent rights shall not have been exercised with respect to more than 5% of the issued and outstanding ROR Shares.

Formal Valuation and Fairness Opinion

In connection with the Transaction, the Company has engaged a qualified independent valuator to provide a comprehensive valuation and fairness opinion. The Company intends to provide a copy of the valuation and fairness opinion to the ROR Shareholders in connection with the Meeting and to file the same on SEDAR along with the Meeting materials.

About Run of River Power Inc.

ROR develops renewable, sustainable energy through its portfolio of clean energy projects. The Company helps diversify BC's energy mix by providing a cleaner way to generate power and increasing the security of BC's energy supply. ROR operates an Eco Logo© certified hydroelectric power generation station at Brandywine Creek, near Whistler, BC that provides green power for about 4,000 homes.

Disclaimer Regarding Forward Looking Information

Certain information included in this press release constitutes forward-looking information under applicable securities legislation.  Forward-looking information typically contains statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", "project" or similar words suggesting future outcomes or statements regarding an outlook, or statements that certain events or conditions "may" occur. Forward-looking information in this press release includes, but is not limited to, statements regarding the expectations of management of ROR regarding: (i) the Transaction; (ii) completion of the Transaction; (iii) entry into of the agreements contemplated by the Arrangement Agreement; (iv) the intended results of the Transaction; (v) the conditions to completion of the Transaction; (vi) the calculation of and timing for payment of the cash consideration to the ROR Shareholders; (vii) the Meeting in connection with the Transaction; (viii) the delivery of an information circular in connection with the Meeting to consider the Transaction; and (ix) the proposed de-listing of the ROR Shares and the proposed ceasing to be a reporting issuer of ROR. 

Although ROR believes that the expectations reflected in the forward-looking information are reasonable, undue reliance should not be placed on forward-looking information because ROR can give no assurance that such expectations will prove to be correct.  Such forward-looking statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the statements including, without limitation, the risks that: (1) the Transaction may not be completed for any reason whatsoever, including that the requisite Shareholder, court and/or regulatory approval of the Transaction may not be obtained or that AcquireCo and/or the REC Acquirer may not have the necessary funds to make their payments required by the Transaction; (2) the Transaction, if completed, may not have the intended effect as set out in this news release; (3) the aggregate amount of the ROR liabilities to be deducted prior to the payment of the cash consideration to the ROR Shareholders may be significant, and the resulting cash consideration, if any, may be nominal; (4) the meeting of ROR Shareholders to consider the Transaction may not occur; (5) the information circular and other materials for the Meeting may not be delivered to ROR Shareholders as expected; (6) the ROR Shares may not be de-listed and ROR may not cease to be a reporting issuer following closing for any reason whatsoever, and (7) such other risks and uncertainties beyond the control of ROR. 

Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which have been used. The forward-looking information contained in this press release is made as of the date hereof and ROR undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless required by applicable securities laws. The forward looking information contained in this press release is expressly qualified by this cautionary statement.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

powering a cleaner tomorrow®

SOURCE: Run of River Power Inc.

Information Contact: Richard W. Hopp, President and CEO, Tel: [phone], [email protected], www.runofriverpower.com