Sonomax Hearing Healthcare Inc. (TSXV:SHH) has entered a corporate reorganization agreement with Benvest New Look Income Fund (TSX:BCI:UN) under which Sonomax will change its name and emerge with about $1.74 million in non-dilutive capital.

"We are very pleased to announce this transaction, which will provide us with working capital to complete (product testing) . . . and clean up our balance sheet," said Sonlomax president and CEO Nick Laperle.

"This transaction will definitely help Sonomax execute its previously-announced business plan."

Under the arrangement, which Benvest is using as part of its previously announced plan to convert to a corporate structure, Benvest New Look Income Fund and shareholders of New Look Eyewear Inc., an affiliate, will acquire 100 per cent of the shares of the original Sonomax Hearing Healthcare.

Sonomax shareholders, will exchange their Sonomax shares on a one-for-one basis for shares of a new corporation, Sonomax Technologies Inc., leaving them with 100 per cent of the new company.

Sonomax Technologies will also have the same operations, assets, board of directors and management as Sonomax Hearing, but with an additional $1.74 million in cash, less the costs incurred in connection with the transaction, the company said Friday.

The agreement also provides that Benvest and Sonomax Technologies will enter into a distribution and licensing agreement, prior to the closing of the transaction, for optical retail distribution in Quebec, Ontario and the Atlantic Provinces by Benvest New Look of Sonomax V3 ProFit products.

Conversion deals like the one involving Benvest and Somomax have become common on the Canadian business scene, driven by Ottawa's new rules to tax trusts like corporations starting in 2011.

In many cases, consolidations and other deals are being done to secure the tax losses of other companies in order to reduce the tax hit the converting company will face under its new corporate structure.

The Somomax deal requires approval of 66 2/3 of Sonomax's shareholders and the same percentage of holders of its convertible promissory notes, who will vote as a separate class, with one vote for each dollar principal amount of the notes.

Sonomax is focused on the research, development and licensing of in-ear technologies, with over 50 patents worldwide.

Benvest holds the securities of New Look Eyewear Inc., a provider of eye-care products and services in Eastern Canada. It also operates a complete eyewear transformation laboratory, which is located in Ville St-Laurent, Que.

Benvest units were up nine cents at $6.09 in afternoon trading Friday on the Toronto Stock Exchange. Sonomax shares were unchanged at 8.5 cents.