Cedarmont Capital Corp. (“Cedarmont” or the
“
Company”) (TSXV:CCCA.P), a capital pool company
under the rules of the TSX Venture Exchange (the
“
TSXV”), is pleased to announce that it has
entered into a binding letter of intent (the
“
LOI”) dated June 17, 2021 with Shiny Bud Inc.
(“
ShinyBud”) and Mihi Inc.
(“
mīhī”) for the proposed combination of the three
companies (the “
Proposed Transaction”). The
Proposed Transaction is intended to constitute the Company’s
“Qualifying Transaction” within the meaning of TSXV Policy 2.4 –
Capital Pool Companies (“
TSXV Policy 2.4”) and
would result in a reverse take-over of the Company.
In anticipation of the Proposed Transaction,
ShinyBud and mīhī have also entered into an engagement letter with
Cantor Fitzgerald Canada Corporation and Echelon Wealth Partners
Inc. for a brokered private placement financing (the
“Private Placement”) of subscription receipts
(“Subscription Receipts”) for gross proceeds of
approximately $15 million.
Additional details with respect to the Proposed
Transaction and the Private Placement will be announced at a later
date.
ShinyBud
Founded in 2019 by Mr. Micah Dass, ShinyBud is a
cannabis retailer that has grown quickly from one location in 2020
to a network of 11 stores currently. ShinyBud also has eight retail
sales applications filed with the Alcohol and Gaming Commission of
Ontario. ShinyBud’s mission is to offer the best of legal cannabis
products in an informed, guest centric environment, catering to
every spectrum of its customer base in a thoughtful way. Customer
satisfaction is ShinyBud’s top priority.
ShinyBud was incorporated under the Canada
Business Corporations Act (“CBCA”) in June 2019.
Mr. Dass is the sole shareholder of ShinyBud and is expected to
become a principal shareholder and be appointed Vice Chair of the
Company upon completion of the Proposed Transaction.
mīhī
mīhī is an Ontario-based cannabis retailer with
a mission to make cannabis an accepted and positive part of life
for the customers and communities it serves. mīhī opened its first
two stores in Burlington and Stoney Creek in 2020 and anticipates
launching its first mīhī Express store during the third
quarter.
mīhī was incorporated under the Business
Corporations Act (Ontario) in August 2018. The principal investor
in mīhī is BlackShire Capital, a private investment firm founded by
Kevin Reed. It is anticipated that Mr. Reed will be appointed
Chairman and Chief Executive Officer of the Company on completion
of the Proposed Transaction.
Cedarmont
The Company was incorporated under the Business
Corporations Act (British Columbia) in February 2021, and completed
its initial public offering in May 2021 as a “capital pool company”
(CPC) under TSXV Policy 2.4. As a CPC, its objective is to
identify, evaluate and acquire an operating business that meets the
criteria of a “qualifying transaction” under TSXV Policy 2.4, all
in accordance with the provisions thereof. The Company has no
commercial operations and no assets other than cash.
Summary of Proposed
Transaction
The Proposed Transaction involves the
acquisition by the Company of ShinyBud and mīhī in consideration
for the common shares of the Company. It is anticipated that the
acquisition will be effected by way of an amalgamation of ShinyBud,
mīhī and a new subsidiary of the Company to be formed for this
purpose (the “Amalgamation”), on a basis that
results in the Company becoming the sole shareholder of the
amalgamated corporation continuing therefrom
(“Amalco”) and the current shareholders of
ShinyBud and mīhī becoming shareholders of the Company. The final
transaction structure will, however, be determined in connection
with entering into a definitive agreement for the Proposed
Transaction (“Definitive Agreement”).
In connection with the Proposed Transaction, the
Company will seek to change its name to “Shiny Bud Corp.” or such
other name as may be determined by ShinyBud and mīhī and is
acceptable to the TSXV (the “Resulting Issuer”).
Upon completion of the Proposed Transaction
(“Closing”), the Resulting Issuer will own 100% of
Amalco, which will carry on the business currently conducted by
each of ShinyBud and mīhī.
The number of common shares of the Company to be
issued to shareholders of ShinyBud and mīhī under the Proposed
Transaction and, accordingly, the proportionate share ownership
interest in the Resulting Issuer of existing shareholders of the
Company, on the one hand, relative to shareholders of ShinyBud and
mīhī, on the other, will depend on the final value determined for
ShinyBud and mīhī. That value is expected to be based on the
contemplated Private Placement, the details of which will be
provided in a further announcement as such details are established.
Pursuant to the LOI, Cedarmont has been ascribed a value of
$1,925,000 (approximately $0.15 per share). Final pro forma
ownership percentages will also depend on the size of the Private
Placement.
The Proposed Transaction is subject to the
parties entering into a Definitive Agreement not later than July
15, 2021 (or such other date as the parties may mutually agree) and
execution and delivery of all other definitive transaction
documents. Closing is also subject to a number of other conditions,
including completion of the Private Placement, the accuracy of
representations and warranties, compliance with interim covenants,
and receipt of all necessary directors, shareholder, regulatory and
third party approvals, including acceptance by the TSXV of the
Proposed Transaction as the Company’s qualifying transaction under
TSXV Policy 2.4 and the disclosure documents to be filed in respect
thereof, and of the proposed new directors, officers and other
insiders of the Resulting Issuer.
Pursuant to the LOI, an introductory fee of
$20,000 is payable by the Resulting Issuer to an arm’s length party
in connection with the Closing.
Private Placement
On or before June 30, 2021, ShinyBud intends to
complete the Private Placement for gross proceeds of approximately
$15 million. Cantor Fitzgerald Canada Corporation and Echelon
Wealth Partners Inc. have been engaged to act as co-lead agents and
joint bookrunners on behalf of a syndicate of investment dealers
(the “Agents”) to be formed for the Private
Placement, under which Subscription Receipts will be offered for
sale to qualified investors on a “best efforts” private placement
basis pursuant to available exemptions from the prospectus
requirements of applicable securities laws.
The gross proceeds from the Private Placement,
other than 50% of the total Agents’ commission plus their
reimbursable costs and expenses, will be placed in escrow and
released to the Resulting Issuer only in connection with
Closing.
Each Subscription Receipt will entitle the
holder thereof to receive, upon satisfaction or waiver of the
applicable escrow release conditions (including all conditions
precedent to Closing), for no additional consideration, a unit
(“Unit”) consisting of a ShinyBud share and
one-half of one share purchase warrant. Such shares and warrants of
ShinyBud will in turn be exchanged for common shares and share
purchase warrants of the Resulting Issuer pursuant to the
Amalgamation. Each whole warrant will entitle the holder to
subscribe for and purchase one common share of the Resulting Issuer
at an exercise price to be determined in the context of marketing
the Private Placement, for a period of 24 months after Closing.
The consideration payable to the Agents in
respect of the Private Placement will be comprised of a cash
commission equal to 7% of the gross proceeds plus broker warrants
equal to 7% of the total number of Subscription Receipts issued
under the Private Placement. Each broker warrant will entitle the
holder to subscribe for and purchase one Unit, at the price at
which the Subscription Receipts are sold, for a period of 24 months
after Closing.
Completion of the Private Placement will be
subject to the receipt of all necessary regulatory approvals and
other customary conditions.
Assuming that Closing occurs and all other
escrow release conditions for the Subscription Receipts are
satisfied or waived, the net proceeds from the sale of the
Subscription Receipts will be released to the Resulting Issuer and
are expected to be used for growth initiatives, potential strategic
acquisitions and working capital and general corporate
purposes.
All securities issued pursuant to the Private
Placement will be subject to a four-month resale restriction from
the date of issuance of the Subscription Receipts.
Directors, Officers and Other Insiders
of Resulting Issuer
In connection with Closing, the Company’s board
of directors and officers will be reconstituted with nominees
determined by ShinyBud and mīhī to serve as directors of the
Resulting Issuer. TSXV acceptance will be required in respect of
all such individuals, following review of all materials to be filed
in connection with the Proposed Transaction.
The proposed directors are: Micah Dass, Richard,
Espinos, Kevin Reed, Lyn Christensen, Jude Pinto, Donald Schroeder
and Roland Walton. The proposed management team includes Kevin Reed
(Chairman and CEO), Michael Nadeau (COO), Brad Kipp (CFO) and Josh
Cooksley (EVP Corporate Development and IR).
The backgrounds of the proposed directors and
officers of the Resulting Issuer, together with information
regarding other anticipated insiders, will be included in a
subsequent news release of the Company to be issued in accordance
with TSXV Policy 2.4.
Shareholder Approvals
The Proposed Transaction is not a Non-Arm’s
Length Qualifying Transaction as none of the parties, nor any of
their respective Associates or Affiliates, is a Control Person of
another party (as those terms are defined under TSXV rules).
Accordingly, the Proposed Transaction itself is not subject to
approval by the shareholders of the Company under TSXV Policy
2.4.
Under the terms of the LOI, ShinyBud and mīhī
may also require the Company to seek shareholder approval of such
ancillary matters as may be required in connection with the
Proposed Transaction, including the reconstitution of the board of
directors. Accordingly, the Company may call and hold a special
meeting of shareholders to approve all such matters in connection
with the Proposed Transaction that require shareholder approval
under applicable laws.
Trading Halt
Trading in the Company’s shares has been halted
in accordance with TSXV policies, and will remain halted pending
TSXV review of the Proposed Transaction, completion of various
regulatory filings with the TSXV in connection therewith, and
satisfaction of other conditions of the TSXV for the resumption of
trading. Trading in the Company’s shares may not resume before
Closing.
Sponsorship
Absent an available exemption under TSXV rules,
the TSXV generally requires that a member firm provide a sponsor
report in respect of CPC’s qualifying transaction. The Company
anticipates that it may qualify for an exemption from sponsorship
in the circumstances of the Proposed Transaction and intends to
seek the same in accordance with TSXV rules. There can, however, be
no assurance that an exemption will be granted.
Further Information
A summary of significant financial information
with respect to ShinyBud and mīhī, as well as information regarding
the expected directors, officers and other insiders of the
Resulting Issuer following Closing, will be included in a
subsequent news release of the Company to be issued in accordance
with TSXV Policy 2.4.
Further details about the Proposed Transaction,
the Private Placement and the Resulting Issuer will also be
contained in the disclosure document to be prepared and filed with
the TSXV and on SEDAR in connection with the Proposed Transaction.
Investors are cautioned that, except as disclosed in such
disclosure document, any information released or received with
respect to the Proposed Transaction may not be accurate or complete
and should not be relied upon.
For further information, contact Jaimie
Grossman, Chief Executive Officer of the Company, at
jaimie.grossman@gmail.com or at (416) 369-5265.
Reader Advisories
The information provided in this news release
regarding ShinyBud and mīhī has been provided by ShinyBud and mīhī
and has not been independently verified by the Company.
Completion of the 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 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 TSXV has in no way passed upon the merits of
the proposed transaction and has neither approved nor disapproved
the contents of this news release.
NEITHER THE TSXV NOR ITS REGULATION SERVICES
PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSXV)
ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS
RELEASE.
This news release does not constitute an offer
to sell or the solicitation of an offer to buy any securities in
any jurisdiction.
The securities referred to in this news release
have not been, and will not be, registered under the United States
Securities Act of 1933, as amended, or any state securities laws,
and may not be offered or sold within the United States or to, or
for the account or benefit of, any U.S. person unless they are
registered under the United States Securities Act of 1933, as
amended, and any applicable state securities laws, or an applicable
exemption from the such U.S. registration requirements is
available. This news release does not constitute an offer for sale
of securities, nor a solicitation for offers to buy any securities.
Any public offering of securities in the United States must be
made by means of a prospectus containing detailed information
about the company and management, as well as financial
statements.
Cautionary Statement Regarding
Forward-Looking Information
This news release contains “forward-looking
information” within the meaning of Canadian securities
legislation. Forward-looking information generally refers to
information about an issuer’s business, capital, or operations
that is prospective in nature, and includes future-oriented
financial information about the issuer’s prospective financial
performance or financial position. The forward-looking information
in this news release includes disclosure about the terms of the
Proposed Transaction, a proposed Private Placement, the
anticipated management team of the Resulting Issuer and ShinyBud’s
and mīhī’s business operations and prospects, including mīhī
launching its first mīhī Express store during the third quarter.
The Company, ShinyBud and mīhī have made certain material
assumptions, including but not limited to: prevailing market
conditions; general business, economic, competitive, political and
social uncertainties; delay or failure to receive board,
shareholder or regulatory approvals; and the ability of ShinyBud
and mīhī to execute and achieve its business objectives, to
develop the forward-looking information in this news release.
There can be no assurance that such statements will prove to be
accurate, as actual results and future events could differ
materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on
forward-looking statements. Actual results may vary from the
forward-looking information in this news release due to certain
material risk factors. These risk factors include, but are not
limited to: adverse market conditions; the inability of the
Company, ShinyBud or mīhī to complete the Proposed Transaction on
the terms disclosed in this news release, or at all; reliance on
key and qualified personnel; regulatory and other risks associated
with the cannabis industry in general, as well as those risk
factors discussed or referred to in disclosure documents filed by
the Company with the securities regulatory authorities in certain
provinces of Canada and available at www.sedar.com. The foregoing
list of material risk factors and assumptions is not exhaustive.
Should any factor affect the Company in an unexpected manner, or
should assumptions underlying the forward looking information prove
incorrect, the actual results or events may differ materially from
the results or events predicted. Any such forward-looking
information is expressly qualified in its entirety by this
cautionary statement. Moreover, the Company does not assume
responsibility for the accuracy or completeness of such
forward-looking information. The forward-looking information
included in this news release is made as of the date of this news
release and the Company undertakes no obligation to publicly
update or revise any forward-looking information, other than as
required by applicable law.
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