CARBON FRIENDLY ANNOUNCES THE PACIFIC BRIQUETTERS INC. VENTURE
The Formation of PBI and the
proposed Venture
Vancouver, BC, Canada – Thursday, February 4, 2010 – Carbon Friendly Solutions Inc.
(TSX Venture Exchange: CFQ) (“CFS“ or the “Company”) (http://www.carbonfriendly.com) is pleased to
announce that the Company has, subject to prior TSX Venture Exchange (the “Exchange”) approval to
certain provisions thereof, recently formed and incorporated Pacific Briquetters Inc. (“PBI”), a
non-reporting British Columbia company, for the present and proposed purpose of owning, financing,
developing, constructing and operating a proposed briquette and bio energy manufacturing and
distribution facility and business to be operated on certain lands and premises located in Mission, BC
(the “Premises”), which are owned and operated by an affiliate of 0733403 B.C. Ltd. (“TCG”) which, in
consideration thereof, is intended to be a 25% shareholder, with the Company as to 75%, in PBI going
forward (collectively, the “Venture”).
TCG is a third generation, family owned group of building
product companies with operations in British Columbia, Washington and Oregon.
Concurrent with the
formation and incorporation of PBI, together with the allocation of its respective shareholdings as
between the Company (as to 75%) and TCG (as to 25%), the parties to the Venture have now entered into a
reasonably all-encompassing Shareholders’ Agreement (the “Shareholders’ Agreement”) which delineates
their respective duties and obligations respecting PBI going forward.
The Shareholders’ Agreement and
related provisions
Subject to prior Exchange approval, the Shareholder’s Agreement provides that, in
consideration of TCG agreeing to provide for the benefit of PBI and during the continuance of the
Venture; (i) all of TCG’s existing rights and entitlement to a proposed wood waste and recycling permit
(the “Permit”) to be provided in respect of the Premises; (ii) a 20-year renewable, at the option of
PBI, Commercial Lease Indenture (the “Indenture”) respecting the Premises; and at a rate presently below
current market value; and (iii) certain consulting services under a Consulting Services Agreement (the
“Services Agreement”) providing for both the staffing and operation of the Venture on the Premises, the
Company and PBI have agreed to provide to TCG the following:
(a) a one-time, non-refundable, upfront
cash payment of $24,500;
(b) a one-year commitment under the Indenture;
(c) certain option and
employee benefits under the Services Agreement; and
(d) subject to prior Exchange approval and the
following performance vesting criteria (the “Vesting Criteria”) during the Venture, the issuance to TCG
by the Company of an aggregate of 2,000,000 vesting and non-transferable common stock share purchase
warrants (each a “Warrant”) to acquire an equivalent number of common shares of the Company (each a
“Warrant Share”), at an exercise price of $0.40 per Warrant Share, and exercisable for a period of three
years from the date of issuance of the Warrants (the “Warrant Exercise Term”). Each of the subject
Warrants will vest and only become exercisable by TCG during the Warrant Exercise Term in the following
manner and in the following denominations upon the attainment of the following Vesting
Criteria:
(i) an aggregate of an initial 500,000 of the Warrants will become immediately exercisable
by TCG upon the attainment by PBI during the Warrant Exercise Term of an aggregate of not less than
$500,000 in gross profits (the “Gross Profits” – defined as total revenues during that period less the
costs of all products sold by the Company in connection with said revenues);
(ii) an aggregate of a
further 500,000 of the Warrants will become immediately exercisable by TCG upon the attainment by PBI
during the Warrant Exercise Term of an aggregate of not less than $1,000,000 in Gross
Profits;
(iii) an aggregate of a further 500,000 of the Warrants will become immediately exercisable
by TCG upon the attainment by PBI during the Warrant Exercise Term of an aggregate of not less than
$1,500,000 in Gross Profits; and
(iv) an aggregate of the final 500,000 of the Warrants will become
immediately exercisable by TCG upon the attainment by PBI during the Warrant Exercise Term of an
aggregate of not less than $2,000,000 in Gross Profits.
Under the terms of the Shareholders’
Agreement TCG is required to obtain and maintain the Permit as is required for PBI’s business and
Venture on a strategic site location owned by TCG and leased to PBI under the Indenture (at present the
Premises). Through its relationship with TCG and the utilization of the Permit, PBI is expected to
accept a variety of residual fibre and wood waste types to produce renewable, carbon neutral, engineered
biomass energy products. In this respect it is expected that PBI’s approach to utilizing wood waste and
residual biomass and fibre to its most valuable use will help offset production costs and make the
Venture profitable and successful for both parties. In addition, under the terms of the Shareholders’
Agreement the Company has the right to appoint two directors and TCG has the right to appoint one
director to the Board of Directors of PBI.
Upon the Company’s receipt of Exchange approval to the
terms and conditions of its proposed Venture, the Company expects to immediately file the Shareholders’
Agreement, and its various schedules and related Indenture and Services Agreement, on SEDAR at
www.sedar.com.
PBI’s Venture business
PBI plans to develop and sell high-quality biomass energy
fuel products, with a focus on industrial buyers in the initial years. The starting product line will
focus on production of bio energy briquettes from residual fibre obtained from TCG’s existing operations
and wood waste materials. The briquettes are expected to be utilized by industrial users with heat and
power boiler systems. The initial focus is to sell to the highest priced sustainable market, which is
expected to be potential buyers in Europe, the United Kingdom, the United States and in Asia.
It is
presently expected that production will commence in 2010 at approximately 20,000 tonnes of briquettes
annually. The Company presently has enough unallocated working capital to implement the Venture for one
year; however, the operation is expected to be ongoing. At present it is anticipated that the initial
required Venture capital requirements will be approximately $519,000, which is inclusive of $150,000 in
Venture facility equipment (the balance to be leased), $75,000 in equipment leasing costs, $144,000 in
operational costs under the proposed Services Agreement and $150,000 in site leasing costs under the
proposed Indenture for the Premises.
About Carbon Friendly Solutions Inc.
Carbon Friendly
Solutions Inc. is a project proponent that provides solutions for companies, organizations and
individuals looking to reduce or offset their global warming impact caused by greenhouse gas emissions
while including the generation of carbon credits for sale in the global Voluntary and Compliance
markets. CFS is focusing on removing and offsetting carbon dioxide emissions from the development of
reforestation, biomass energy and renewable energy technology projects that are independently validated
and verified to globally recognized standards and methodologies.
On behalf of the Board of Directors
of
Carbon Friendly Solutions Inc.
“Michael Young”
CEO and a director
Safe harbour
Certain
statements included in this news release contain forward-looking statements, including disclosure
concerning possible or assumed future results of operations of the Company. Forward-looking statements
typically are preceded by, followed by or include the words – “believes,” “expects,” “anticipates,”
“estimates,” “intends,” “plans,” “or similar expressions. Forward-looking statements are not guarantees
of future performance. They involve risks, uncertainties and assumptions, and the Company’s results
could differ materially from those anticipated in these forward-looking statements. The TSX Venture
Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this news
release.
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