Navigator Acquisition Corp. to Acquire Brazilian Green Energy Producers Pacto Energia

September 18, 2020 4:15 PM EDT | Source: Navigator Acquisition Corp.

Vancouver, British Columbia--(Newsfile Corp. - September 18, 2020) - Navigator Acquisition Corp. (TSXV: NAQ.P) ("Navigator") is pleased to announce that it has entered into a letter of intent dated September 16, 2020, with Pacto Energia S.A. ("Pacto") pursuant to which Navigator proposes to acquire a number of subsidiaries of Pacto in exchange for the issuance of securities of Navigator (the "Pacto Transaction"). The Pacto Transaction will result in a reverse take-over of Navigator where the existing shareholders of Pacto will own approximately 82.9% of the outstanding common shares of Navigator upon completion of the transaction. Navigator, after completion of the Pacto Transaction, is referred to in this news release as the "Resulting Issuer". Upon completion of the Pacto Transaction, it is anticipated that the Resulting Issuer will be a Tier 2 Energy Issuer.

Trading in the common shares of Navigator (the "Navigator Common Shares") has been halted in accordance with the policies of the TSX Venture Exchange (the "TSXV") and will remain halted until such time as all required documentation in connection with the Pacto Transaction has been filed with and accepted by the TSXV and permission to resume trading has been obtained from the TSXV.

The Qualifying Transaction

Navigator is a capital pool company and intends that the Pacto Transaction will constitute its "Qualifying Transaction" under the Capital Pool Companies policy (the "CPC Policy") of the TSXV. The Pacto Transaction is arm's length and is therefore not a Non-Arm's Length Qualifying Transaction under the CPC Policy. Accordingly, the CPC Policy does not require Navigator to obtain shareholder approval of the Pacto Transaction.

As consideration for the acquisition of a number of subsidiaries of Pacto, holders of issued and outstanding ordinary shares of Pacto ("Pacto Common Shares") will exchange their Pacto subsidiaries for Navigator Common Shares, in accordance with an exchange ratio (the "Exchange Ratio") to be determined by Navigator and Pacto following receipt of financial advice.

The subsidiaries that will go into the Pacto deal detailed:

(a) 75% of the stock capital of Capim Branco Energia Solar SPE Ltda; Located in the Minas Gerais state of Brazil our 5.88MWp solar plant which has just issued its first invoice, therefore our 15-year contract with Algar Telecom, one of the largest telecom companies in the state of Minas Gerais will be able to be enjoyed fully by NAV, having the 1st payment made in October 2020. As explained before, because of the pandemic we had a delay in the connection of this plant to the grid.

(b) 15% of Atlas Energia Solar SPE Ltda: UFV Atlas I UFV Atlas II; Located in the Minas Gerais state of Brazil our Atlas 2.5 MWp solar plant, had in February 2020 its 1st phase of 500 KWp connected to the grid generating a net result of BRL 23.1 thousand in the 1H 2020. We expect to connect the 2nd phase with the remaining 2 MWp until next February which should generate a net result of BRL 230 thousand in the year of 2021.

(c) 100% of Evolution Comercializadora de Energia Elétrica e Gás Natural Ltda; Located in the São Paulo state of Brazil, our energy trading company, due to the low volume of business caused by the pandemic. We are still closing the financials for Evolution and 1H 2020 should come with a positive result of approximately BRL 200 thousand.

The current issued and outstanding share capital of Navigator consists of 16,930,000 Navigator Common Shares. Navigator has granted its directors and officers options to purchase an additional 1,693,000 Navigator Common Shares at an exercise price of $0.10 per share, and 500,000 compensation options to the agent under its initial public offering at an exercise price of $0.10 per share. The fully-diluted share capital of Navigator is 19,123,000 Navigator Common Shares.

Currently there are 1000 Pacto Common Shares issued and outstanding on a non-diluted and fully diluted basis. Pacto is controlled by its CEO Rodrigo Pedroso who owns 70% of the Pacto Common Shares and Eduardo Alves Pacto's Senior Partner and Director of Business Development who owns 30% of the Pacto Common Shares.

Additional Resulting Issuer Shares will be issued to certain key Pacto management on achieving certain performance milestones. The nature of the performance milestones, and the number of Resulting Issuer Shares to be issued, will be described in the definitive agreement and announced in a subsequent news release.

Certain number of the Resulting Issuer Shares issued to the principals of Pacto who will become management of the Resulting Issuer, will be subject to escrow in accordance with TSXV policies. The final structure of the Pacto Transaction is subject to the receipt of tax, corporate and securities law advice for both Navigator and Pacto.

The Pacto transaction is expected to proceed on a cashless basis, hence no cash will be raised at the Qualifying Transaction. However, the company does plan to raise capital after presenting its audited financial statements for 2020.

No deposit or advance has been made or is anticipated to be made by Navigator to Pacto in connection with the Pacto Transaction.

About Pacto

Pacto Energia S.A. is a privately held Brazilian conglomerate of companies that offers solutions in energy for more than 18 years and has in its portfolio more than 7 GW of plants and projects of generation by renewable energy.

The company was incorporated under the laws of Brazil in 2001 by an experienced in-country management team. Pacto is headquartered in Sao Paulo, with over 7 GW of projects in green energy diversely spread within Brazil.

Pacto financials for 2019 and H1 of 2020 can be found below in the Appendix 1 of this press release.

Following are the information on the significant vendors of Pacto with their respected incorporation locations:

MERITO COMERCIALIZACAO DE ENERGIA ELETRICA LTDA. - state of São Paulo - Brazil
BOVEN COMERCIALIZADORA DE ENERGIA LTDA., state of São Paulo - Brazil
ELECTRA COMERCIALIZADORA DE ENERGIA LTDA, state of Paraná - Brazil
ECEL - ELETRON COMERCIALIZADORA DE ENERGIA LTDA, state of Pernambuco - Brazil
TRADENER LIMITADA, state of Paraná - Brazil
EPOP COOP - Cooperativa de micro e mini geração de energia elétrica, state of Goiás - Brazil
ALGAR TELECOM, state of Minas Gerais - Brazil

Pacto is not a reporting issuer and its securities are not listed or posted for trading on any stock exchange. Further information about Pacto, including financial information, will be provided in a subsequent news release.

Insiders of the Resulting Issuer

Upon completion of the Pacto Transaction, the board of directors (the "Board") and management of the Resulting Issuer will be reconstituted so that five members of the Board will be nominated by Pacto and two members of the Board will be nominated by Navigator. It is anticipated that Rodrigo Pedroso will be an insider of the Resulting Issuer by virtue of his position as a director of the Resulting Issuer.

Rodrigo Ferreira Fonseca Pedroso - Owner of 70% (58% after the QT) of Pacto Energia.

Founder and CEO

Civil Engineer from PUC/GO - Pontifícia Universidade Católica de Goiás, specialist in Project Management from FGV - Fundação Getúlio Vargas, in Hydroelectric Generation from PAPUC - Pennsylvania Public Utility Commission, in Wind Generation from DEWI Institute, in Energy Trading from Universidade Presbiteriana Mackenzie and is currently a student at Harvard University, taking class 57 of the OPM (Owners and President Management Program).

Has over 18 years of experience in the electricity sector in the areas of generation, transmission, distribution and trading. Before founding the Company, worked at ANEEL - National Electric Energy Agency. Currently, besides being CEO of Pacto Energia Group, is also a member of the board of directors of ABSOLAR - Brazilian Solar Photovoltaic Energy Association, and Energy Director of FIESP - Federation of Industries of the State of São Paulo.

Eduardo Constantino Alves - Owner of 30% (24.9% after the QT) of Pacto Energia.

Senior Partner and Director of Business Development

Bachelor's degree in Business Administration from the IESB University of Brasília, specialist in foreign trade, from Insper São Paulo. He has more than 10 years of experience in the area of Mobility, Urban / Road Transport and Real Estate Development. Before becoming a partner at Pacto Energia, he worked at União Incorporadora.

Additional information about the remaining proposed directors and officers of the Resulting Issuer will be provided in an update once the parties enter into a definitive agreement.

Significant Conditions to Closing

The completion of the Pacto Transaction is subject to a number of conditions precedent, including but not limited to satisfactory due diligence reviews, negotiation and execution of definitive transaction documentation, approval by the boards of directors of each of Navigator and Pacto, approval of Pacto shareholders, and obtaining necessary third-party approvals. There can be no assurance that the Pacto Transaction will be completed as proposed or at all.

Sponsorship

Sponsorship of a Qualifying Transaction may be required by the TSXV unless a waiver from the sponsorship requirement is available. Navigator intends to apply for a waiver from sponsorship for the Pacto Transaction on the basis, among other things, that the Resulting Issuer will operate in a highly-regulated industry. There is no assurance that a waiver from this requirement will be obtained.

About Navigator Acquisition Corp.

Navigator is a capital pool company created pursuant to the policies of the TSXV. It does not own any assets, other than cash or cash equivalents and its rights under the Letter of Intent. The principal business of Navigator is to identify and evaluate opportunities for the acquisition of an interest in assets or businesses and, once identified and evaluated, to negotiate an acquisition or participation subject to acceptance by the TSXV so as to complete a qualifying transaction in accordance with the policies of the TSXV.

Completion of the Pacto Transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and if applicable pursuant to TSXV requirements, majority of the minority shareholder approval. Where applicable, the transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the filing statement to be prepared in connection with the Pacto Transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

Certain information in this press release may contain forward-looking statements. This information is based on current expectations that are subject to significant risks and uncertainties that are difficult to predict. Actual results might differ materially from results suggested in any forward-looking statements. Navigator assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those reflected in the forward looking- statements unless and until required by securities laws applicable to Navigator. Additional information identifying risks and uncertainties is contained in filings by Navigator with the Canadian securities regulators, which filings are available at www.sedar.com.

The Navigator Common Shares will remain halted until such time as permission to resume trading has been obtained from the TSXV. Navigator is a reporting issuer in Alberta, British Columbia, Ontario and Saskatchewan.

For more information, please contact:

Navigator Acquisition Corp.

Kyle Shostak
Director and Chief Executive Officer
Email: kshostak@navigatoracquisition.com
Tel: +1 212 909-5870

Alex Lyamport
Director and Chief Financial Officer
Email: alyamport@navigatoracquisition.com
Tel: +1 646 593-3141

Pacto Energia S.A.

Rodrigo Pedroso
Founder and Chief Executive Officer
Email: Rodrigo.pedroso@pactoenergia.com.br
Tel: +55 11 94584-4446

Appendix 1

Financial statements of Pacto for 2019 and H1 2020:

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Figure 1

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Figure 2

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