Pan American Fertilizer (CNSX: PAF) Announces Letter of Intent with Argentinean Distributor Mamasu S.R.L.
VANCOUVER, BRITISH COLUMBIA, July 30, 2012 – Pan American Fertilizer Corp., (CNSX: PAF) (“Pan American” or the “Company”) is pleased to announce that it has entered into a non-binding Letter Of Intent (the “LOI”) with Mamasu S.R.L. (“Mamasu”). Under the terms of the LOI, (the “Transaction”) Pan American will acquire all of the issued and outstanding share capital of Servicios y Fertilizantes Sudamericanos S.A. (“SFS”), a wholly-owned subsidiary of Mamasu, which will constitute a “major acquisition” for Pan American under the policies of the Canadian National Stock Exchange (the “CNSX”). SFS is a company incorporated under the laws of Argentina and is engaged in the business of distributing and applying fertilizers, with a focus on calcium sulphate (also referred to as “Agricultural Gypsum”), which is Pan American’s main product.
Pursuant to the terms of LOI, Pan American will acquire 100% of the issued and outstanding shares of SFS in exchange for Pan American paying a total of USD $3,000,000 in cash and issuing a total of 4,500,000 common shares of Pan American at a deemed price of $1.00 per share for a total purchase price of up to USD $7,000,000 (the “Purchase Price”). The Purchase Price will be paid as follows:
-USD $50,000 upon signing the LOI (which has been paid);
-USD $350,000 upon satisfactory completion of the following:
-due diligence; and
-financial audit of the financial statements of SFS and/or Mamasu by Pan American’s auditor;
-USD $650,000 upon signing the definitive agreement (the “Definitive Agreement”);
-USD $2,000,000 to be paid as a percentage for each ton of product sold (on the basis of USD $5.00 per ton sold and collected); and
-4,500,000 common shares of the Company to be issued upon achieving the sales and other milestones, at a deemed price of $1.00 per share, which will be finalized on the definitive agreement:
Under the terms of the LOI, upon closing of the Transaction, Pan American will enter into an employment agreement with Sebastian Pivetta, President of Mamasu, to provide ongoing operational and management services to SFS; and pay commissions to SFS’s current sales staff based on sales generated by them, to be calculated and payable monthly basis.
The completion of the Transaction is subject to a number of conditions, including but not limited to the execution of the Definitive Agreement, completion of satisfactory due diligence, and approval of the Transaction by the board of directors and shareholders of Pan American and Mamasu, if applicable. There can be no assurance that the Transaction will be completed as proposed, or at all.
“The proposed acquisition of Mamasu’s wholly-owned SFS subsidiary is a natural next step for Pan American. With SFS comes a robust, loyal customer base and over 59 years of industry experience. The acquisition of SFS is expected to result in significantly higher profit margins for Pan American, as well as benefitting our overall sales logistics” reported Randy Wright President and CEO of Pan American.
“We at Mamasu view this proposed transaction as the foundation of a long term strategic partnership. We are very impressed with the progress Pan American has made in short span of time and a professional organization like PAF has a very bright future in Argentina. We look forward to a long mutually beneficial partnership and look forward to building on Mamasu’s fifty plus years of successful business history in Argentina” reported Sebastian Pivetta, President of Mamasu.
About Pan American Fertilizer Corp.
Pan American is a Canadian company dedicated to providing fertilizer to a growing global market. The company is focused on the extraction of a specific type of fertilizer called calcium sulphate (also referred to as “Agricultural Gypsum”). To ensure long term development and increase shareholder value, Pan American currently plans to significantly expand its current operational objectives while expanding its asset base by acquiring additional calcium sulphate and other fertilizer related assets.
When used as a fertilizer and as a soil remediator, calcium sulphate is a soft sulfate mineral composed of calcium sulfate dihydrate which is extremely rich in sulphur and calcium. When dissolved in water, the mineral becomes calcium and sulphate sulphur ions, both of which are required nutrients for plants. Calcium sulphate plays a vital role in establishing and maintaining good chemical balance in soil, water and plants, specifically with healthy root development. Ultimately, calcium sulphate increases overall crop quality and yields. http://www.PAFertilzer.com
About Mamasu S.R.L.
Mamasu is an Argentine fertilizer distribution and application company specializing in applying fertilizer mixes to Argentine soils. They also supply rentals of farm machinery as well as manufacture agricultural equipment. They have been in business since 1953. http://www.mamasu.com.ar
On behalf of the board of directors of Pan American Fertilizer Corp.
President and CEO
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