Power Components

Zhuzhou CRRC Times Electric to Acquire Dynex Power for 160% Premium

Dynex Power Inc. announced today that it has signed a definitive Arrangement Agreement with Zhuzhou CRRC Times Electric Co., Ltd., whereby CRRC Times Electric, or one of its affiliates, will acquire all the Company's common shares that it does not already own for $0.65 per share in cash. CRRC Times Electric currently holds approximately 75% of the issued and outstanding common shares in the capital of the Company.

A spokesman for Dynex said that, over the past six months, all the options for Dynex's future as well as the Company's 5-year plan were very carefully considered by a Special Committee of the Board of Directors.  This Special Committee was composed of individuals who are independent, and was formed to conduct a comprehensive strategic review of the Company and, eventually, to review and assess the way forward to privatization.

To support its strong recommendation of accepting CRRC Times Electric's offer, the Special Committee delivered evidence to the Board of Directors that 59.91% of the minority shareholders, those shareholders other than CRRC Times Electric, had executed commitments to vote for the approval of the privatization transaction and to sell their shares to CRRC Times Electric for $0.65 a share.

The purchase price represents an approximate 160% premium over the last trading price of the common shares on the TSX Venture Exchange on January 17, 2019 (immediately prior to the initial announcement of the offer), and an approximate 158% premium over the 20-trading day volume-weighted average share price prior to the initial announcement.

In the course of its work, the Special Committee engaged WelchGroup Consulting Inc. as an independent financial advisor to provide to the Special Committee an opinion of the fairness of the privatization transaction. WelchGroup concluded that as of the date of their opinion and based upon and subject to the information provided to WelchGroup: the consideration to be paid to the minority shareholders pursuant to the Arrangement is fair, from a financial point of view, to the minority shareholders.

The full text of the Fairness Opinion and the various factors considered by the Special Committee and the Board of Directors in their determination to approve the transaction as well as other relevant background information will be contained in the Company's information circular which will be provided to shareholders of the Company in connection with the Extraordinary General Meeting.

Based on the recommendation of the Special Committee, among other things, the Board of Directors of the Company has, with interested directors abstaining, unanimously: (i) determined that the Arrangement is fair to the minority shareholders and that privatization is in the best interests of the Company; and (ii) recommended that shareholders vote in favor of the Arrangement. The Company intends to call an EGM of its shareholders to be held in March 2019 to seek formal approval for the Arrangement. A record date and notice of the EGM will also be announced.

The transaction will be implemented by way of a statutory plan of arrangement under the Canada Business Corporations Act which is subject to, among other things, customary conditions, including approval of a special resolution with respect to the Arrangement by (i) at least 66⅔% of the votes cast by shareholders of the Company present in person or represented by proxy at the EGM, and (ii) a simple majority of the votes cast by the minority shareholders present in person or represented by proxy at the EGM (excluding shareholders whose votes are required to be excluded pursuant to MI 61 – 101), and the receipt of approval of the Ontario Superior Court of Justice of (Commercial List) with respect to the Arrangement. The Arrangement is not subject to a financing condition.

Following this press release, Dynex will soon seek an interim order from the Ontario Superior Court of Justice of (Commercial List) to proceed with the privatization transaction. A Record Date and notice of an Extraordinary General Meeting called to vote on the transaction will also be announced.

David Banks and Daniel Owen representing the Special Committee of the Board said, "This is a red-letter day for Dynex. We have been extremely fortunate to have CRRC Times Electric as the controlling shareholder. CRRC Times Electric has defined the very best of ethical and supportive commercial partnership. They have contributed personnel of the highest caliber to work with Dynex. They have made a very positive and impressive contribution to the business, to the Company and indeed to Canada. From our first meeting with our Chinese colleagues, they have honored every commitment made."

Debbie Weinstein, long standing corporate counsel and corporate secretary said, "Privatization is the logical conclusion of the great support and leadership that CRRC Times Electric has provided Dynex. The Company has great potential under the full ownership by CRRC Times Electric. However, I embrace this good news with some sadness, as I will no longer have the opportunity to work with Dynex and with CRRC Times Electric."

Clive Vacher, President and Chief Executive Officer, commented, "This is an exciting development for Dynex and is positive for the Company and its employees. For over a decade, CRRC Times Electric has been an exceptional majority owner, providing first-class support and guidance. As we go forward as a wholly-owned subsidiary, the future is bright."

Alan Lyons, Dynex Chief Financial Officer stated, "I add my support to this key strategic decision. The new full ownership of Dynex will provide even greater synergies and a simplified structure. Going forward, I will continue to focus on the objectives of Dynex and look forward to working in an even more integrated fashion."

Liu Ke'an, the Chairman of Dynex and General Manager of Zhuzhou CRRC Times Electric Company, added, "This is the dawning of an exciting time for Dynex. There are very fine people working in Lincoln. We have worked very hard to support Dynex. It has been important to CRRC Times Electric for the people in Lincoln to appreciate CRRC Times Electric's strong support. It seems that our great respect for them is reciprocated. The potential in the UK is very bright and exciting, and we look forward to our future there."

Dynex Semiconductor Ltd. , Zhuzhou CRRC Times Electric Co., Ltd.
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