Vancouver, BC, Canada – Friday, May 29, 2009 – Carbon Friendly Solutions Inc. (TSX Venture Exchange: CFQ) ("CFS" or the "Company") is pleased to provide an update from the recent News Release on April 21, 2009 announcing the Company has signed a Letter of Intent to build and operate a Wood Waste Utilization and Biomass Energy Production Facility (the “Facility”) with The Clarke Group (“TCG”).
CFS is close to finalizing its detailed business plan for the purpose of defining the economics and conceptual design of the Facility at the TCG property in Mission, British Columbia. The permit to operate the Facility is currently under review and CFS anticipates permit approval from both the district of Mission and the Fraser Valley Regional District in the next 30 to 60 days. Over the next several months CFS will put its best efforts forward to secure the required financing to build and operate the Facility and execute both the Definitive agreement and Lease Agreement with TCG (the terms of the LOI are outlined below).
“We are very pleased with the progress of the Business Plan to this point and through this process we now have confidence in the financial viability and economics of the project, the ability to supply the Facility with the ongoing required amount of fibre to produce our engineered bio energy products, as well as a long term demand for utilization of our carbon neutral bio energy products”; said Michael Young, CEO.
The Letter of Intent
On April 21, 2009 the Company entered into a comprehensive Letter of Intent (the "LOI") with The Clarke Group Inc., and its affiliated companies Green River Log Sales (1996) Ltd. and 0733403 B.C. Limited (collectively "TCG") under which the parties will work together to build and operate a wood waste and biomass utilization and densification facility (the "Facility") located on approximately 7 acres of riverfront property in Mission, British Columbia (the "Site") owned by TCG. TCG already owns many key assets, permits and licences connected to the Site which are required to operate the Facility. Due to TCG's existing businesses, TCG has pre-existing relationships and industry experience to operate the Facility and has access to sufficient wood waste and biomass feedstock supply sources ("Feedstock") that the Company requires to produce biomass energy products at the Facility.
In order to progress the joint initiative, the parties have agreed as follows:
(a) The Company will prepare a detailed business plan (the “Business Plan”) for the purpose of defining the economics of the Facility, as well as its conceptual design and operation flow and will provide all necessary engineering and conceptual designs for the Facility. The Company, in conjunction with its consultants have commenced drafting the Business Plan;
(b) The Company will use it's best efforts to secure the financing (the "Financing") required to build and operate the Facility;
(c) TCG will within 6 months of the execution of a definitive agreement to be completed by the parties, secure the necessary Demolition, Land Clearing and Construction Waste permit (the “DLC Permit”) from the Fraser Valley Regional District to qualify the Site as a recycling and wood waste utilization facility. TCG is in the advanced stages of the DLC Permit application, although there is no assurance that the DLC Permit will be issued. Should TCG not obtain the DLC Permit within the aforesaid 6 month timeframe, CFS may, at its option terminate the transaction;
(d) TCG, at its sole cost, will prepare and improve the Site location for the construction of the Facility based on the engineering and conceptual design provided by the Company;
(e) TCG will secure adequate Feedstock for the Facility in an amount that is the required minimum under the Business Plan;
(f) The Parties will enter into a formal Lease Agreement under which CFS will agree, effective from the closing of the Financing to lease the Site for a period of not less than 10 years with an option to further renew the lease for an additional 10 years at a fair market value rate agreed to by the parties. In addition to the foregoing annual rent, CFS will pay its share of all property taxes, property insurance, and repairs and maintenance expenses on the Site and Facility;
(g) The Parties will jointly operate the Facility pursuant to a management agreement between TCG and Carbon Friendly to be negotiated in the definitive agreement and effective as of the closing of the Financing, under which principals of TCG will manage the Facility for an all inclusive management, administrative and rent fee payable to TCG in the amount of $12,000 a month. The management fee will be subject to revision at the discretion of Carbon Friendly's board of directors once the Facility is operational; and
(h) Carbon Friendly, will obtain TSX Venture Exchange (“TSXV”) approval to the transaction.
Terms
The Parties have agreed to use their best efforts to enter into a definitive agreement whereby the Company or its wholly owned subsidiary, will own and operate the Facility, and TCG will sell Carbon Friendly all Assets (including buildings, equipment, improvements to the Site, all necessary permits, licences, approvals), and Goodwill (including the Site's strategic location, TCG's industry experience and network and reliable access to Feedstock) required to operate the Facility, in consideration of the payment to TCG of CAD$2,000,000. CAD$500,000 shall be paid in cash and the balance by way of the issuance of common shares at a deemed price equal to the price that CFS completes the required equity Financing, provided that such issuance will be subject to a minimum of 2,000,000 common shares and a maximum issuance of 3,000,000 common shares. The consideration payable by CFS is subject to TSXV acceptance and TCG have acknowledged that an independent valuation report may be required to support such value.
The LOI and any subsequent definitive agreement will terminate automatically in the event certain preconditions have not been met, including amongst others: the delivery of a Business Plan demonstrating the economic viability of the Facility; the receipt of all necessary permits (inclusive of the DLC Permit) and securing adequate Financing within 6 months of the delivery of the Business Plan. There is no assurance that the Company will be successful in raising sufficient financing to build the Facility.
A finder's fee of 300,000 common shares is payable to EH&P Investments A.G. ("EH&P") for introducing the parties to each other and assisting in negotiations. EH&P is a shareholder of the Company but is at arm's length to both parties. On closing of the transaction, it is expected that Mr. Scott Clarke, a principal of TCG will become a director of the Company.
About The Clarke Group
The Clarke Group (TCG) is a family-owned group of building product companies serving markets worldwide with operations in Canada and the United states. Originating in 1969, TCG has thrived producing and supplying cedar building materials. Today TCG employs several hundred people and provides the very highest quality building materials worldwide. Our mandate is to provide the stability and strength of a large network, combined with the grass roots focus of each individual company. This balance of synergy and autonomy enables TCG to create technological and economical advantages in all TCG lines to ensure the very best products, services, consultation and value.
About Carbon Friendly Solutions Inc.
Carbon Friendly Solutions Inc. (CFS) 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. Through its wholly owned subsidiaries, Global CO2 Reduction Inc. and CO2 Reduction Poland Sp. z o.o., CFS is focusing on removing and offsetting carbon dioxide emissions from the completion of reforestation, biomass energy and renewable energy technology projects that are independently validated and verified to globally recognized standards and methodologies.
Contact
Phone: 604-676-9792
Email: ir@carbonfriendly.com
Website: http://www.carbonfriendly.com
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. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
