TriNorth Engages Chief Investment Officer and Proposes to Issue Debentures and to Distribute Feronia Shares to Shareholders

TORONTO, Feb. 28, 2012 /CNW/ - TriNorth Capital Inc. ("Trinorth" or the "Company") (TSXV: TRT) is pleased to announce today that it has entered into an employment agreement with Roger Dent to engage him as its new Chief Investment Officer (CIO), effective upon and subject to the completion of a non-brokered private placement financing of 5% convertible unsecured debentures to raise gross proceeds of up to a maximum of $10 million (the "Financing").

The Company also intends to:

• deliver the shares of Feronia Inc. ("Feronia") (TSXV: FRN) owned by the Company to a trustee for shareholders of the Company as a payment on the reduction of the stated capital of Trinorth common shares (the "Distribution"). The Company currently owns approximately 16 million Feronia shares;
• consolidate its existing common shares on the basis of one post-consolidation share for every 100 pre-consolidation shares (the "Consolidation");
• change its name to Egmont Bay Investments Inc. or such other name as is acceptable to the Company and the TSX Venture Exchange (the "Name Change"); and
• appoint three new directors to replace three of the existing directors on the Company's board of directors (the "Change in Directors").

The Company intends to call an annual and special meeting of shareholders to be held on May 14, 2012 (the "Meeting") to approve, among other things, the Distribution, Consolidation and Name Change. TSX Venture Exchange approval is also required for the Financing, Consolidation and Name Change.

Private Placement Financing of Debentures

The Debentures are being offered by the Company on a non-brokered basis.

The following is a summary of the terms of the Debentures. A copy of the complete terms of the Debentures may be obtained from the Company.

Price	$1,000 per Debenture
Issue Type	Non-brokered private placement, with a 6% commission
Maturity Date	May 15, 2017 (5 years)
Coupon	5% per annum, payable semi-annually on November 30 and May 31 of each year, commencing on November 30, 2012. Holders will have the right to elect to receive common shares in lieu of interest.
Voting Rights	The Debentures will be non-voting. A trustee appointed on behalf of the Debenture holders will be entitled to vote at meetings of shareholders through a class of voting preferred shares held by the trustee on behalf of the Debenture holders.
Conversion	The Debentures will be convertible into fully paid and non-assessable common shares of the Company at the option of the holder at any time prior to the close of business on the earlier of Maturity and the business day immediately preceding the date specified by the Company for redemption of the Debentures at a conversion price of $1.00 per share or 1,000 common shares for each $1,000 principal amount of Debentures, following the 100:1 consolidation. Holders converting their Debentures will receive accrued and unpaid interest thereon.
Redemption	The Debentures will not be redeemable by the Company on or before May 14, 2014 (except in limited circumstances). On or after May 15, 2014 and prior to Maturity the Debentures may be redeemed in whole or in part from time to time at the option of the Company on not more than 60 days and not less than 30 days prior notice, at a price of $1,050 per Debenture on or after May 15, 2014 and on or before May 14, 2015 and a price of $1,030 per Debenture on or after May 15, 2015 and on or before May 14, 2016 and at a price of $1,010 per Debenture on or after May 15, 2016 and before Maturity, plus accrued  and unpaid interest.
Eligibility	Eligible for RRSP's, RRIF's, RESP's, and DPSP's.
Escrow Closing	April 26, 2012
Final Closing	May 15, 2012

Mr. Dent, together with his associates and family members, have agreed to subscribe, directly or indirectly, for 45% of the Financing.

The Financing is expected to close in escrow on or before April 26, 2012. Proceeds from the Financing, net of commissions and expenses, will be deposited with and held by an escrow agent.  Such proceeds, together with all interest and other income earned thereon shall be released from escrow upon satisfaction or waiver of the escrow release conditions on or before the release deadline of 11:59 p.m. (Toronto time) on May 21, 2012, unless otherwise agreed by the Company and the holders of the Debentures.  If the escrow release conditions are not satisfied or waived prior to the release deadline, each holder of Debentures shall be entitled to the return of his aggregate subscription price promptly after the release deadline.

Accredited investors with an interest in the Financing should contact Roger Dent or John Pennal.

Proceeds raised under the Financing will be used to fund the Company's investments as well as general and administrative expenses.  The Company's investment objective is to provide long-term capital growth by investing primarily in equity-related securities of Canadian emerging and established companies having superior prospects for future growth or capital appreciation. The Company's board of directors is responsible for setting the investment guidelines and policies of the Company, and may amend such investment guidelines from time to time as appropriate.  The Company's CIO will have authority to manage and make investments on behalf of the Company in accordance with the investment guidelines.  It is expected that the Company's investments will consist primarily of smaller capitalization stocks, with the intent of participating early in these emerging opportunities. The Company may allocate a portion of its assets to private companies where appropriate. However, it is expected that the majority of the Company's assets will be invested in securities traded publicly on major stock exchanges or over-the-counter. Assets may also be invested in other securities, which may include warrants as well as money market and fixed income securities if, in the opinion of the CIO, such investment is prudent given the prospects for return and the risk factors associated with investment in equity securities at any given time.  The Company anticipates being a passive investor in most or all of its portfolio investments.  However, the Company may on occasion take an active role in certain investments.

New Chief Investment Officer

Subject to completion of the Financing, the Company will internalize its investment management by engaging Mr. Dent as Chief Investment Officer. Pursuant to the terms of an employment agreement entered into between the Company and Mr. Dent, Mr. Dent will join Trinorth on an exclusive basis.

It is anticipated that his investment approach will be similar to the approach of the funds previously managed by Mr. Dent.  He takes a bottom-up approach to investing, with a focus on undiscovered opportunities.  He favours earnings turnarounds, hidden assets, undervalued small cap companies and early stage companies. Investments would typically be considered in all industry sectors and would not be limited to the resource sector.   All investment decisions will be made in accordance with the Company's investment guidelines as determined by the Company's board of directors from time to time.

"I am strongly looking forward to joining Trinorth. In my opinion, Trinorth is an extremely attractive platform for small cap investment. The Company has a very large tax loss carry-forward position that we will be able to use to shelter our investors' gains for an extended period of time.  Post-financing, we expect to have a stable pool of funding which will permit us to fully focus on our investments and not have investment decisions negatively impacted by short-term inflows and outflows of funds.  We also plan on running the Company with a tight cost structure. I expect to make a large personal investment in Trinorth and I hope to see this investment and the investments of those who participate in this financing round grow on a tax-deferred basis over the long term" said Mr. Dent.

Mr. Dent advised the Matrix Strategic Small Cap Fund starting in 2003.  He was the portfolio manager of the Matrix Small Companies Fund from its inception in September 2004. He resigned from these positions effective May, 2011 in order to pursue the opportunity at Trinorth.

According to Globefund.ca, a $10,000 investment in the Matrix Small Cap Fund in January 2003, when Mr. Dent began advising the fund, had grown to a value of over $51,000 on April 30, 2011 (after all fees and expenses).  A similar $10,000 investment in the TSX Total Return Index would have a value of under $26,000.  The fund is up 38.0% in the 12 months ending April 30, 2011 and is up 20.4% on a year-to-date basis as of the same date.  Similarly, a $10,000 investment on the day of the creation of the Matrix Small Companies Fund would have had a value of $24,876 on April 30, 2011 (after all fees and expenses). In comparison, an investment in the TSX Total Return Index would have a value of $19,057. The fund was up 66.6% in the 12 months ending April 30, 2011 and is up 28.4% on a year-to-date basis as of the same date.

The employment agreement with Mr. Dent has an initial term of five years and may be terminated by the Company after the initial term on 120 days notice.  As Chief Investment Officer, Mr. Dent will make all investment decisions in accordance with the Company's investment guidelines. In consideration for his services, Mr. Dent will receive an annual base fee equal to 2% of the average monthly net asset value of the Company and an annual performance fee equal to 20% of the excess in the net asset value on the last day in a calendar year (adjusted for treasury offerings, dividends and returns of capital  in that year) over a benchmark net asset value increased by a "hurdle" of 8%.

Distribution of Feronia Shares

Trinorth intends to:

• reduce the stated capital of Trinorth common shares  by an amount equal to the fair market value on the Distribution record date of the shares of Feronia held by Trinorth; and
• distribute such common shares of Feronia held by Trinorth to its shareholders of record as at May 11, 2012 (the Distribution record date) as a payment on the reduction of the stated capital of the Trinorth common shares, on a pro rata basis (assuming Trinorth owns 16 million Feronia shares this is approximately one Feronia share for every 9.375 Trinorth common shares on a pre-Consolidation basis).

As the Distribution involves substantially all of the Company's assets under applicable corporate laws, it is subject to shareholders' approval.

In addition, as substantially all of the Company's assets will be distributed under the Distribution, the Company will have to raise, from the Financing, the minimum net proceeds required to maintain its Tier 1 listing on the TSX Venture Exchange or its listing may be moved to Tier 2 or to the NEX in accordance with TSXV Policy.

All of the Feronia shares to be distributed are subject to a voluntary lock-up agreement between Cormark Securities Inc. ("Cormark") and certain Feronia shareholders including Trinorth, which restricts Trinorth's ability to sell its Feronia shares until March 31, 2013, except with Cormark's prior written consent.  Accordingly, subject to shareholders' approval, Trinorth intends to deliver the Feronia shares to a trustee to hold such shares on behalf of Trinorth shareholders until expiry (or early termination with the consent of Cormark) of the lock-up agreement.

Consolidation

Subject to shareholders' approval, the Company intends to amend its articles to consolidate its common shares on the basis of one post-consolidation common share for every 100 pre-consolidation common shares.

Name Change

Subject to  shareholders' approval, the Company intends to amend its articles to change its name to "Egmont Bay Investments Inc." or to such other name as is acceptable to Trinorth and the TSXV.

Change of Directors and CFO

On completion of the Financing, all of the existing directors of the Company except for John Pennal and Wesley Hall, namely Ravi Sood, Amar Bhalla, and Riyaz Lalani, have agreed to resign from the Company's board of directors and be replaced by Roger Dent, Andrew Moor, and William Shaw. John Anderson will resign as the Company's Chief Financial Officer and he will be replaced by David Berman. The biographies of the proposed directors and the Chief Financial Officer will be included in the management information circular for the Meeting.

Cautionary Notes

This press release contains forward-looking statements regarding future growth, results of operations, performance, business prospects and opportunities involving the Company.  Words such as "expects", "anticipates", "intends", "plans", "believes", "estimates", or similar expressions, are forward-looking statements within the meaning of securities laws. Forward-looking statements include, without limitation, the information concerning possible or assumed future results of operations of the Company. These statements are not historical facts but instead represent only management's and the board's expectations, estimates and projections regarding future events. These statements are not guarantees of future performance and involve known and unknown risks, assumptions, uncertainties, and other factors that may cause actual results or events to differ materially from what is expressed, implied or forecasted in such forward-looking statements. In addition to the factors the Company currently believes to be material such as, but not limited to, its ability to achieve its investment objectives, its dependence on the efforts of management, risks associated with fluctuations in net asset value and valuation of the Company's portfolio, its ability to operate on a profitable basis, changes in interest rates, evaluation of its provision for income and related taxes, and other factors, such as general, economic and business conditions and opportunities available to or pursued by the Company, not currently viewed as material could cause actual results to differ materially from those described in the forward-looking statements. Although the Company has attempted to identify important risks and factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors and risks that cause actions, events or results not to be anticipated, estimated or intended. Accordingly, shareholders should not place any undue reliance on forward-looking statements as such information may not be appropriate for other purposes. The Company does not undertake any obligation to update or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this press release except as required by applicable law.

Acceptance and completion of the Financing is subject to the satisfaction of a number of conditions, including but not limited to, TSX Venture Exchange acceptance and approval by shareholders. Acceptance and implementation of the Distribution, Consolidation and Name Change are also subject to the satisfaction of a number of conditions, including but not limited to, approval by shareholders. There can be no assurance that the Financing or any of the other related transactions described herein will be completed as proposed or at all.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) has in any way passed upon the merits of the proposed transactions and neither of the foregoing entities has approved or disapproved of the contents of this press release. 

 

John Pennal, President, Chief Executive Officer and Director
[phone]

Roger Dent
[email protected]