• Rifco (TSXV:RFC) is disputing the termination of an agreement with ACC Holdings dated February 2, 2020
  • Under the agreement, ACC was to acquire Rifco for approximately C$25.5 million
  • However, ACC has now terminated the agreement, citing “recent events” constituting a “material adverse effect”
  • Rifco disagrees, and said that neither party has any basis on which to terminate the agreement
  • Failing the assumption of the deal, Rifco plans to take the matter to the Court of Queen’s Bench of Alberta
  • Rifco (RFC) is currently down 23.81 per cent to $0.80 per share, with a market cap of $17.28 million

Rifco (TSXV:RFC) has issued a release disputing the termination of an agreement with ACC Holdings dated February 2, 2020.

Under the terms of the deal, ACC, a subsidiary of CanCap Management, was to wholly acquire Rifco for approximately C$25.5 million. This amount represented a price of $1.18 per Rifco share, which was a significant 39 per cent premium over the company’s existing valuation.

Bill Graham, President and CEO of Rifco, commented on the deal at the time.

“The Special Committee of the Board of Directors ran an exhaustive process, the completion of which is the proposal we are putting to shareholders today.

“The Special Committee and the Board considered numerous alternatives, and the proposed transaction provides immediate liquidity and certainty of value and we believe it to be in the best interest of shareholders,” he said.

However, ACC has now alleged that “recent events” have constituted a “material adverse effect” on Rifco’s operations, and as such does not intend to close the transaction.

Rifco, on the other hand, “categorically disagrees” with the claim, asserting that neither party has any basis on which to terminate the agreement.

In today’s announcement, Rifco outlined the positive sentiments from all parties following the meetings on March 11, 2020, to discuss post-closing integration opportunities.

“These meetings were positive and constructive in anticipation of closing.

“On the same day CanCap communicated to the Chair of Rifco’s board of directors by email that CanCap was appreciative of Rifco’s transparency in communicating with CanCap on the approach taken towards solicitation of proxies and obtaining voting support for the agreement,” the company said.

Rifco added that the previously announced shareholder approval meeting will go ahead as scheduled on April 3 this year.

Should approval be obtained for the deal, Rifco then plans to take the matter to the Court of Queen’s Bench of Alberta for a hearing scheduled for April 6.

Rifco (RFC) is currently down 23.81 per cent to $0.80 per share at 1:17pm EST.

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