OTTAWA,
March 18, 2014 /CNW/ - LW Capital
Pool Inc. ("LW CPI") (TSXV: LWI.H) and Tweed Inc.
("Tweed") are pleased to announce that as of the date hereof
they have entered into an agreement (the "Definitive
Agreement") setting out the terms upon which Tweed will
complete a reverse takeover of LW CPI (the "Transaction").
The signing of the Definitive Agreement follows a previously
announced non-binding letter of intent between the parties dated as
of January 2, 2014.
The Parties
LW CPI is a Capital Pool Company listed on the
NEX board of the TSX Venture Exchange (the
"Exchange"). LW CPI has not commenced commercial
operations and has no assets other than cash. The
Transaction, if completed, will constitute LW CPI's "Qualifying
Transaction", as defined in Exchange policies.
Tweed was incorporated under the Business
Corporations Act (Ontario) on
January 22, 2010 and became a
licensed producer of medical marijuana on January 27, 2014. The principal activities
of Tweed are the production, storage and sale of marijuana out of
its facility in Smiths Falls,
Ontario as regulated by the Marihuana for Medical
Purposes Regulations (the "MMPR").
The Transaction
On closing of the Transaction LW CPI will change
its name to Tweed Marijuana Inc. The Transaction will be structured
as a three cornered amalgamation in which Tweed will amalgamate
with 2405882 Ontario Inc., a wholly owned subsidiary of LW CPI
formed solely for the purpose of facilitating the
Transaction. The amalgamated company will be a wholly owned
subsidiary of Tweed Marijuana Inc., will continue to be named Tweed
Inc., will have the same board of directors and officers as Tweed
(unless and until changed in accordance with the requirements of
the MMPR) and will continue to conduct Tweed's operations.
As of the date hereof, LW CPI has 7,260,000
common shares outstanding and has outstanding options to acquire an
aggregate of 723,000 common shares at an exercise price of
$0.10 per common share.
Pursuant to the terms of the Definitive Agreement, LW CPI will
complete a consolidation of its outstanding common shares on a 1
for 5 basis and accordingly the current holders of common shares of
LW CPI will hold 1,452,000 common shares and LW CPI will then issue
a total of 32,042,612 common shares to the holders of the issued
and outstanding shares of Tweed in exchange for all issued and
outstanding shares of Tweed. In addition, it is expected that
2,980,054 common shares of LW CPI will be reserved for options and
warrants issued to the holders of Tweed options and warrants and a
further 144,600 common shares of LW CPI (as a result of the
consolidation of the 723,000 common shares referred to above) will
be reserved for currently outstanding options to acquire LW CPI
shares. Based on the number of Tweed common shares currently
expected to be outstanding on closing, this provides for an
exchange ratio of 213.10 LW CPI common shares for each outstanding
Tweed common share.
In the event the Tweed Rights (as described
below under the heading "Tweed Private Placements") convert into
common shares, an additional 1,575,567 common shares of LW CPI will
be issued in connection with the Transaction.
Following the Transaction, the current
shareholders of Tweed are expected to hold approximately 95.66% of
the outstanding shares of LW CPI (95.86% if the Tweed Rights
convert) with the current LW CPI shareholders holding the
balance.
The founders and controlling shareholders of
Tweed are Bruce Linton and
Charles Rifici, each resident in
Ottawa, Ontario, who directly and
indirectly hold approximately 11.7% and 25.2% of the outstanding
shares of Tweed, respectively. After closing of the
Transaction Messrs. Linton and Rifici are expected to hold
approximately 10.8% and 23.2% of the outstanding shares of Tweed
Marijuana Inc., respectively (or 10.32% and 22.21%, respectively,
if the Tweed Rights convert).
Based on the price at which Tweed common shares
were issued in connection with a private placement completed by
Tweed on March 7, 2014 (see below
under the heading "Tweed Private Placements"), the transaction
price per LW CPI common share to be issued is $0.89. Such price gives the LW CPI common
shares to be issued on closing an aggregate value of $28,517,924 (or $29,920,179 if the Tweed Rights convert).
The Transaction does not constitute a Non-Arm's
Length Qualifying Transaction (as such term is defined in the
policies of the Exchange). No Insider, promoter or Control Person
(as such terms are defined in the policies of the Exchange) of LW
CPI has any interest in Tweed prior to giving effect to the
Transaction except as follows:
(a) |
Deborah Weinstein, a director of LW
CPI, holds 365 common shares of Tweed, representing approximately
0.33% of the issued and outstanding common shares of Tweed, through
Deborah Weinstein Professional Corporation. Ms. Weinstein
acquired such shares on February 5, 2014 in connection with a
private placement completed by Tweed on that date. |
|
(b) |
Andrew Moffat, a director of LW CPI,
beneficially holds 146 common shares of Tweed, representing
approximately 0.15% of the issued and outstanding common shares of
Tweed, through his family trust. The family trust acquired
such shares on February 5, 2014 in connection with a private
placement completed by Tweed on that date. |
The Transaction is not subject to approval by
the shareholders of LW CPI. However, at a meeting of the
shareholders of LW CPI held on February 20,
2014 the shareholders of LW CPI approved the consolidation
of the outstanding shares of LW CPI on a 1 for 5 basis and approved
the change of name to Tweed Marijuana Inc. on closing of the
Transaction. The Transaction is subject to approval by the
shareholders of Tweed which will be sought at a meeting of the
shareholders of Tweed to be held on March
20, 2014.
Further details about the Transaction and the
combined entity will be provided in the filing statement to be
prepared and filed in respect of the Transaction.
Tweed Private Placements
On December 27,
2013 Tweed completed a brokered private placement of 21,900
"Units" at a price of $137.00 per
Unit for aggregate gross proceeds of $3,000,300. On January 30,
2014 Tweed completed a brokered private placement of 7,297
Units at a price of $137.00 per Unit
for aggregate gross proceeds of $999,689. On February 5,
2014 Tweed completed a non-brokered private placement of
10,526 Units at a price of $137.00
per Unit for aggregate gross proceeds of $1,442,062. On March
7, 2014 Tweed completed a brokered private placement of
34,211 Units at a price of $190.00
per Unit for aggregate gross proceeds of $6,500,090. GMP Securities LP acted as
agent on each of the brokered private placements.
Each Unit was comprised of one Tweed common
share and one Tweed "Right". In the event that the Transaction, or
an alternative liquidity event that provides the holder of such
Tweed Right with freely tradable securities, does not occur prior
to 5:00 p.m. on March 31, 2014, the Tweed Rights entitle the
holder to receive, for no additional consideration, the number of
additional Tweed common shares that is equal to 10% of the total
number of Tweed common shares subscribed for in the private
placements described above by such holder (provided that no
fractional shares will be issued).
Proposed Insiders
The following individuals are currently proposed
to be insiders of Tweed Marijuana Inc. after closing of the
Transaction:
Bruce Linton
Bruce Linton is
Chairman of Tweed and is proposed to serve as Chairman and a
director of Tweed Marijuana Inc. Mr. Linton has had experience
as a director and officer of publicly listed companies. Mr.
Linton is 47 years old and holds an honours BPA degree from
Carleton University.
Charles Rifici
Charles Rifici is
the President and CEO of Tweed and is proposed to serve as
President, CEO and a director of Tweed Marijuana Inc.
Mr. Rifici has experience as an officer of publicly listed
companies. Mr. Rifici is 39 years old and holds a
Baccalaureate in Applied Science, Computer Engineering from the
University of Ottawa and a Masters of
Business Administration from Queen's University. Mr. Rifici
is a Certified Management Accountant.
Mark Zekulin
Mark Zekulin is
the VP Community Engagement and General Counsel of Tweed and is
proposed to hold the same role with Tweed Marijuana
Inc. Mr. Zekulin has practiced law and held government
policy positions in the past. Mr. Zekulin is 34 years
old and holds a Bachelor of Mathematics from the University of Waterloo, a Bachelor of Laws from the
University of Ottawa and a Master in
Law from the University of
Cambridge. Mr. Zekulin is called to the bar of
Ontario as a member of the Law
Society of Upper Canada.
Gerald Leahy
Gerald Leahy is
proposed to be the Chief Financial Officer of Tweed Marijuana
Inc. Mr. Leahy has served in similar positions with
other publicly listed companies. Mr. Leahy is 57 and holds a B.
Comm from Carleton
University. Mr. Leahy is a Certified Management
Accountant.
Chris Schnarr
Chris Schnarr is
proposed to be a director of Tweed Marijuana Inc. Mr. Schnarr
is Managing Director of Lorian Group Inc and has experience as a
director and officer of publicly listed companies. Mr. Schnarr
is 47 years old and holds a BBA from Wilfred Laurier University and
an MBA from the University of British
Columbia.
Andrew Moffat
Andrew Moffat is
a director of LW CPI and is proposed to continue as a director of
Tweed Marijuana Inc. Mr. Moffat is CEO of Keshet Productions
Inc., is age 61 and holds a B. Admin from University of Regina.
Larry Poirier
Larry Poirier is
the CEO and a director of LW CPI and is proposed to continue as a
director of Tweed Marijuana Inc. Mr. Poirier is President of TUC
Brands, is age 48 and holds an MBA from Queen's University.
Deborah Weinstein
Deborah Weinstein
is a director of LW CPI and is proposed to be the Secretary of
Tweed Marijuana Inc. Ms. Weinstein is a partner with LaBarge
Weinstein LLP and has experience as a director and officer of
publicly listed companies. Ms. Weinstein is 54 and holds a
law degree from Osgoode Hall Law School at York University. Ms. Weinstein is called to
the bar of Ontario as a member of
the Law Society of Upper
Canada.
Tweed Financial Information
During its financial year ended December 31, 2013 Tweed had no sales and a net
loss of $932,925. As at
December 31, 2013 Tweed had total
assets of $5,153,439 and total long
term liabilities of $35,099.
The foregoing financial information is unaudited.
Sponsorship
It is expected that pursuant to the policies of
the Exchange the Transaction will be exempt from the requirement to
engage a sponsor to provide a Sponsor Report to the Exchange due to
the fact that Tweed completed a private placement on March 7, 2014 (as described above) in
contemplation of the Transaction, being a concurrent brokered
financing of at least $500,000, and
GMP Securities LP, which acted as agent in such private placement,
will provide the Exchange with confirmation that it has completed
appropriate due diligence on both the Transaction and the filing
statement that is generally in compliance with the relevant
policies of the Exchange.
Trading in the Shares of LW CPI
Trading in the common shares of LW CPI was
halted as of January 2, 2014 and will
remain halted until the Transaction is completed and approved by
the Exchange. Following closing of the Transaction, Tweed
Marijuana Inc. is expected to trade on the Exchange under the
symbol "TWD".
Conditions to Transaction
Completion of the Transaction is subject to a
number of conditions, including but not limited to acceptance by
the Exchange and, if applicable pursuant to Exchange 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 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.
Other conditions to completion of the
Transaction include:
- Preparation and filing of a filing statement outlining the
definitive terms of the Transaction in accordance with the rules of
the Exchange.
- Receipt of all director, shareholder and requisite regulatory
approvals relating to the Transaction, including, without
limitation, Exchange approval.
- Any person who will be a post-closing shareholder of Tweed
Marijuana Inc. which is required by the Exchange to sign an escrow
agreement in accordance with the policies of the Exchange shall
have signed and delivered such agreement.
- Each of LW CPI and Tweed shall have executed, delivered and
performed all covenants on its part to be performed under the
Definitive Agreement and all representations and warranties of each
party contained in the Definitive Agreement shall be true and
correct at the time of closing.
- At the time of closing the Transaction, Tweed's license to
produce and sell medical marijuana must be in effect and in good
standing.
Forward-Looking Information
This press release contains forward-looking
information based on current expectations. Statements about
the closing of the Transaction, expected terms of the Transaction,
the number of securities of LW CPI that may be issued in connection
with the Transaction, the ownership ratio of LW CPI post closing,
the requirement to hold shareholder approval and the parties'
ability to satisfy closing conditions and receive necessary
approvals are all forward-looking information. These
statements should not be read as guarantees of future performance
or results. Such statements involve known and unknown risks,
uncertainties and other factors that may cause actual results,
performance or achievements to be materially different from those
implied by such statements. Although such statements are based on
management's reasonable assumptions, there can be no assurance that
the Transaction will occur or that, if the Transaction does occur,
it will be completed on the terms described above. LW CPI and Tweed
assume no responsibility to update or revise forward-looking
information to reflect new events or circumstances unless required
by law.
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.
SOURCE LW Capital Pool Inc.