/NOT FOR DISTRIBUTION TO U.S. NEWS SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/
VANCOUVER, British Columbia, Aug. 20, 2020 (GLOBE NEWSWIRE) — A-Labs Capital I Corp. (the “Corporation”) (TSXV: ALBS.P), a capital pool company under Policy 2.4 – Capital Pool Companies of the TSX Venture Exchange (“Exchange”), announces that it has entered into an amendment to the Definitive Agreement (as defined below) with BTC Corporation Holdings Pty. Ltd. (“BTC”) in order to extend the deadline for completion of and amend certain terms of the qualifying transaction (the “QT”) described in its news release dated February 19, 2020.
Amendment to Definitive Agreement
The Corporation and BTC have entered into an amendment to the Definitive Agreement to, among other things: (1) extend the deadline to complete the QT from April 30, 2020 to October 31, 2020; (2) amend the ratio of the Consolidation (as defined below) such that it is completed on the basis of one post-Consolidation Corporation Share (as defined below) for each 4.66667 pre-Consolidation Corporation Shares; (3) amend the Exchange Ratio (as defined below) such that the Corporation will issue 1,738 post-Consolidation Corporation Shares in exchange for each one (1) BTC Share (as defined below); and (4) update the proposed nominees for appointment to the board of directors of the Resulting Issuer (as defined below) at closing of the QT.
The amended Exchange Ratio was determined based on a respective valuation of CAD$1,200,000 for the Corporation on the basis of 5,600,000 pre-Consolidation Corporation Shares outstanding and CAD$34,289,002 for BTC (being AUD$36,005,425 using an agreed upon fixed AUD:CAD currency exchange rate of approximately CAD$1.00 : AUD$0.95233) on the basis of 19,729 BTC Shares outstanding immediately prior to completion of the QT.
On February 18, 2020, the Corporation entered into a definitive share sale agreement (the “Definitive Agreement”) with BTC, pursuant to which the shareholders of BTC will exchange 100% of the issued and outstanding fully paid ordinary shares of BTC (“BTC Shares”) for post-Consolidation common shares (the “Corporation Shares”) of the Corporation, resulting in BTC becoming a wholly-owned subsidiary of the Corporation. Pursuant to the Definitive Agreement, in consideration of the Corporation’s acquisition of BTC, each BTC Share that is issued and outstanding immediately prior to completion of the QT was originally to be exchanged for 1,656 post-consolidation Corporation Shares with a consolidation ratio of one post-consolidation share for each 5.09091 pre-Consolidation shares of the Corporation.
Pursuant to the Definitive Agreement, as amended, in connection with the QT, the Corporation expects to complete a consolidation of the Corporation Shares on the basis of one post-consolidation Corporation Share for each 4.6667 pre-consolidation Corporation Shares (the “Consolidation”). In addition, on closing of the QT, the Corporation will (i) complete a continuation out of the federal jurisdiction of Canada and being governed by the Canada Business Corporations Act to become a British Columbia, Canada corporation being governed by the Business Corporations Act (British Columbia) (the “Continuation”); and (ii) change its name to “Banxa Holdings Inc.” or such other name as BTC may determine, subject to approval from the British Columbia Registrar of Companies and the Exchange (the “Name Change”).
The Corporation has received shareholder approval of the Consolidation, the Continuation and the Name Change pursuant to an annual general and special meeting of the Corporation’s shareholders held on April 30, 2020.
In addition to the post-Consolidation Corporation Shares issuable to shareholders of BTC pursuant to the share exchange, at closing of the QT, pursuant to a consulting services agreement between BTC and certain financial advisors to BTC, the Corporation will also issue 1,186,500 post-Consolidation Corporation Shares to such advisors in connection with financial and related consulting services, including advising BTC on the Canadian capital markets and regulatory regime. See the prior press release of the Corporation dated February 19, 2020 for details regarding such advisors and the advisor fee.
Furthermore, in connection with closing of the QT, it is expected that the BTC Share purchase warrants issued to finders or advisers under the Convertible Note Financing (as defined below) and the Concurrent Financing (as defined below) will be exchanged for convertible securities of the Resulting Issuer at the Exchange Ratio, with a resulting adjustment in number and exercise price.
As previously disclosed, the Corporation is a “capital pool company” and it is intended that the QT, when completed, will constitute the “qualifying transaction” of the Corporation for the purposes of Policy 2.4 – Capital Pool Companies of the Exchange.
In multiple closings, with the final closing on July 23, 2020, BTC completed a non-brokered private placement of 1,641 BTC Shares at a price of AUD$1,550 per BTC Share for gross proceeds of AUD$2,543,550 (the “Pre-Transaction Placement”). Dominet Digital Corporation Pty Ltd., a company associated with Domenico Carosa, was issued 7 BTC Shares on July 23, 2020 as an advisor fee for assisting with the Pre-Transaction Placement. The BTC Shares were issuable pursuant to a capital raising agreement dated July 13, 2020.
Convertible Note Financing
On June 22, 2020, BTC completed a non-brokered financing of convertible notes (the “Convertible Notes”) in the aggregate principal amount of CAD$419,000 (the “Convertible Note Financing”). The Convertible Notes are non-transferable, bear compounding interest at a rate of 12% per annum, and will mature on June 22, 2022, provided that if the QT does not close by July 22, 2021, the maturity date of the Convertible Notes will be accelerated to July 22, 2021 and BTC will repay the principal amount of the Convertible Notes and any accrued and outstanding interest under the Convertible Notes.
On the closing of the QT, the holders of the Convertible Notes will be entitled at their sole discretion (except as noted below) and at any time after September 23, 2020 and prior to June 22, 2022 to convert some or all of the outstanding principal amount of the Convertible Note into post-Consolidation Corporation Shares at a conversion price of $0.85 per post-Consolidation Corporation Share (the “Conversion Price”). Provided that the QT has closed by July 22, 2021, then, at the maturity date, the Convertible Notes still outstanding will automatically convert into post-Consolidation Corporation Shares at the Conversion Price. Consequently, up to 492,941 post-Consolidation Corporation Shares are issuable upon conversion of the Convertible Notes.
In addition, upon the closing of the QT, each holders of Convertible Notes shall be issued such number of Resulting Issuer share purchase warrants (the “Convertible Note Warrants”) equal to the number of common shares of the Resulting Issuer that the Convertible Note would convert into at the Conversion Price as of the closing date of the QT. Each such Convertible Note Warrant will be exercisable into one common share of the Resulting Issuer at a price of $1.00 per share for a term of two years from the closing of the QT.
In connection with the Convertible Note Financing, Mackie Research Capital Corporation (“MRCC”) was paid finder’s fees comprised of: (i) a CAD$33,520 cash commission; and (ii) 24 BTC Share purchase warrants, with each such warrant allowing the holder thereof to purchase one BTC Share at a price of AUD$1,821 per share for a period of 24 months from the date of issuance.
BTC intends to complete a non-brokered private placement of subscription receipts (the “Subscription Receipts”) at a price of AUD$1,825 per Subscription Receipt, for gross proceeds of a minimum of approximately CAD$2,000,000 (the “Concurrent Financing”) and up to a maximum of approximately CAD$4,000,000.
Immediately prior to the completion of the QT, subject to receipt of conditional approval from the Exchange in respect of the Qualifying Transaction (the “Escrow Release Condition”), the Subscription Receipts will automatically convert, without any further consideration or action on the part of the holder thereof, into BTC Shares on the basis of one BTC Share per Subscription Receipt.
The gross proceeds of the Concurrent Financing (the “Escrowed Funds”) will be held in escrow by BTC, or an agent appointed by BTC, pending the satisfaction of the Escrow Release Condition on or prior to December 31, 2020 (the “Escrow Release Deadline”). If: (i) the Escrow Release Condition is not satisfied or waived on or before the Escrow Release Deadline, or (ii) prior to the Escrow Release Deadline, the Definitive Agreement, as amended, is terminated or BTC publicly announces that it does not intend to satisfy the Escrow Release Condition, the Escrowed Funds will be returned to the Subscription Receipt holders on a pro rata basis and the Subscription Receipts will be cancelled without any further action on the part of the holders.
In connection with the Concurrent Financing, it is intended that MRCC will act as a finder, and will receive an advisory fee of CAD$26,250 (inclusive of GST), 10,000 common shares of the Resulting Issuer at a deemed price of CAD$1.00 per share, and will be paid an advisory commission of 2% in cash and 2% in broker warrants of the aggregate gross proceeds arising from the Concurrent Financing (collectively, the “MRCC Advisor Fee”). The broker warrants issuable to MRCC, as finder, will be exercisable into common shares of the Resulting Issuer at a price of CAD$1.00 per share for a period of 24 months from closing of the Concurrent Financing.
In addition to the MRCC Advisor Fee, BTC may pay additional finder’s fees in connection with the Concurrent Financing to certain eligible finders in the form of cash and/or securities.
Management and Board of Directors of Resulting Issuer
It is expected that, upon completion of the QT, Konstantin Lichtenwald, a current director of the Corporation, will be appointed as the Chief Financial Officer and Corporate Secretary of the entity resulting from the QT (the “Resulting Issuer”), and Doron Cohen, a current director and CEO of the Corporation, will remain as a director of the Resulting Issuer. With the exception of Mr. Lichtenwald (in the capacity as CFO) and Mr. Doron Cohen (in the capacity as director), it is expected that all existing directors and officers of the Corporation will resign and will be replaced by: (i) Domenico Carosa (Founder, Non-Executive Chairman and Director); (ii) Matthew Cain (Director); (iii) Holger Arians (Chief Executive Officer); (iv) Joshua (Jim) Landau (Director); and (v) Tony Gu Tao (Director).
Haozheng “Jack” Lu was initially proposed to become a director of the Resulting Issuer, as previously disclosed. However, pursuant to the amendment to the Definitive Agreement, Mr. Lu has been replaced with Tony Gu Tao, and an additional director, Joshua (Jim) Landau, has been added to the proposed slate for directors of the Resulting Issuer. The biographies of the two new director nominees are set out below.
Tony Gu Tao – Director
Mr. Tony Gu Tao is the Founding Partner of NGC Ventures, a large and global blockchain venture capital fund. NGC Ventures has deployed capital in more than 100 projects since 2017, and has been the major backer of a few leading blockchain technology companies, including BTC.
Mr. Gu Tao is also a Partner of Rhodium Capital, which is a Singapore-based global M&A and Buyout Firm. Mr. Gu Tao has been involved in multiple high-profile deals across the financial, education, consumer and TMT industries, with aggregated deal value exceeding $1 billion. One of the landmark deals that Mr. Gu Tao was involved in was the acquisition of BESI (which used to be the largest investment bank of Portugal), by Haitong Securities, the second largest investment bank of China, for $400 million in 2015.
Mr. Gu Tao has a bachelor’s degree in Computer Engineering from Zhejiang University, a master’s degree from NTU and a dual-Executive MBA degree from INSEAD and Tsinghua University.
Joshua (Jim) Landau – Director
Mr. Jim Landau has over 40 years’ experience as a technology entrepreneur and mentor. He currently serves as a Chair for an Australian TEC group of managing directors from diverse industries and is a non-executive director of the private equity form Leading Technology Group and the debt mezzanine funder, Visage Invest.
Mr. Landau was the co-founder of one of Australia’s first listed software companies, Software Corporation of Australia, on the second Board of the ASX and was the managing director of Australia’s first main board listed IT services company, Datronics Corporation. He was the former chairman of Centricom, the developer of the Poli Payments platform, a director of Collaborate Corporation and many other cutting-edge technology companies.
Mr. Landau is based in Melbourne, Australia and holds Fellowships of the Australian Society of Certified Practicing Accountants, the Financial Services Institute of Australasia, and the Australian Institute of Company Directors.
For additional information regarding the other proposed management and board of directors of the Resulting Issuer (Messrs. Carosa, Cain, Arians, Cohen and Lichtenwald), please refer to the Corporation’s news release dated February 19, 2020.
Additional information concerning the QT, the Corporation, BTC and the Resulting Issuer is provided in the Corporation’s news release dated February 19, 2020, as updated by this press release, and will be provided in a filing statement to be filed in connection with the QT, which will be available under the Corporation’s SEDAR profile at www.sedar.com.
In accordance with the policies of the Exchange, the Corporation Shares are currently halted from trading and will remain so until such time as the Exchange determines, which, depending on the policies of the Exchange, may not occur until completion of the QT.
Completion of the QT is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange Requirements, majority of the minority shareholder approval. Where applicable, the QT cannot close until the required shareholder approval is obtained. There can be no assurance that the QT will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the 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.
For further information, contact:
Doron Cohen, CEO and Director of the Corporation
NEITHER 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.
INFORMATION CONCERNING BTC, INCLUDING PROPOSED DIRECTORS OF THE RESULTING ISSUER, HAS BEEN PROVIDED TO THE CORPORATION BY BTC FOR INCLUSION IN THIS PRESS RELEASE.
THIS PRESS RELEASE, REQUIRED BY APPLICABLE CANADIAN LAWS IS NOT FOR DISTRIBUTION TO U.S. NEWS SERVICES OR FOR DISSEMINATION IN THE UNITED STATES, AND DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF AN OFFER TO SELL ANY OF THE SECURITIES DESCRIBED HEREIN IN THE UNITED STATES, THESE SECURITIES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1993, AS AMENDED, OR ANY SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR U.S. PERSONS UNLESS REGISTERED OR EXEMPT THEREFROM.
Caution Regarding Forward-Looking Information
The information in this news release includes certain information and statements about management’s view of future events, expectations, plans and prospects that constitute forward looking statements. These statements are based upon assumptions that are subject to significant risks and uncertainties. Forward looking statements in this news release include, but are not limited to, the closing of the QT, the Concurrent Financing and related transactions, including the proposed business of the Corporation after completion of the QT. Because of these risks and uncertainties and as a result of a variety of factors, including with respect to the closing of the QT and the Concurrent Financing, the timing and receipt of all applicable regulatory, corporate, shareholder and third party approvals and the satisfaction of other conditions to closing the QT and the Concurrent Financing, the actual results, expectations, achievements or performance may differ materially from those anticipated and indicated by these forward-looking statements. Although the Corporation believes that the expectations reflected in forward looking statements are reasonable, it can give no assurances that the expectations of any forward-looking statement will prove to be correct. Except as required by law, the Corporation disclaims any intention and assumes no obligation to update or revise any forward looking statements to reflect actual results, whether as a result of new information, future events, changes in assumptions, changes in factors affecting such forward looking statements or otherwise.
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