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ESREY ANNOUNCES SIGNING OF A NON-BINDING LETTER OF INTENT WITH ENABLENCE TECHNOLOGIES INC.

 

Esrey Energy Ltd. (EEL.V)  has signed a non-binding letter of intent with Enablence Technologies Inc. that provides for a combination of the two companies.

Enablence is currently rolling out its optical platform which is based on a fully integrated architecture. Its subassembly has significant cost, power consumption, size and performance usage benefits.

The addressable market for its initial metro access optical network product is growing exponentially and is estimated to be approximately US$800 million by 2018 (Source: OVUM market forecast). Enablence is also developing a 100G TxRx (Tosa Rosa) for the data centre market.

Under the proposed terms of the LOI, Esrey shareholders will receive approximately 2 shares of Enablence for each share of Esrey owned, subject to final due diligence, a premium of 74.9% to the 20 day Esrey VWAP. The consideration to Esrey shareholders is based on the net cash remaining in Esrey at closing divided $0.08, being equal to the price of the Enablence non-brokered private placement (the "Enablence Private Placement") financing at a price of $0.08 per share (the "Issue Price") announced by Enablence today and is subject to TSX Venture Exchange approval. Upon completion of the Business Combination, the shareholders of Esrey are expected to own approximately 13.6% of the pro forma company, before accounting for any shares issued as part of the Enablence Private Placement.. As outlined in the LOI, Enablence and Esrey have entered into a 60-day exclusivity period. Transaction Benefits

Enablence and Esrey believe that the Business Combination will result in significant benefits to the shareholders of each company, including: Esrey shareholders will have the benefit through their ownership of Enablence shares to gain access to the rapidly growing market for optical components. Enablence is extremely well positioned for success in the metro access telecom and data center applications Esrey shareholders will enjoy increased trading liquidity Esrey may dispose of its remaining oil & gas assets prior to the completion of the Transaction and may distribute the proceeds of any such disposition to its shareholders Enablence shareholders will see the benefit of an enhanced financial position with an increase in available cash of over $6.0mm upon the closing of the transaction

Pursuant to the terms of the LOI, the completion of the Business Combination is conditional upon a number of items, including without limitation, the signing of a Definitive Agreement, completion of satisfactory due diligence, approval of the shareholders of Esrey, receipt of all necessary regulatory approvals, Enablence raising a minimum $4,000,000 by way of the Private Placement and exercise of outstanding warrants, formalization of the legal structure of the transaction and no material adverse change occurring with respect to either Enablence or Esrey.