Cedarmont Capital Corp. (“
Cedarmont” or the
“
Company” (TSXV:CCCA.P), a capital pool company
under the rules of the TSX Venture Exchange (the
“
TSXV”), and Shiny Bud Inc.
(“
ShinyBud”) are pleased to announce that, further
to the Company’s news release of June 18, 2021, Cedarmont, ShinyBud
and Mihi Inc. (“
mīhī”) have entered into a
definitive agreement (the “
Combination Agreement”)
providing for the terms and conditions of the proposed combination
of the three companies that will result in a reverse take-over of
the Company (the “
Transaction”).
In connection with completion of the Transaction
(“Closing”), the Company expects to change its
name to “ShinyBud Corp.” (the “Resulting Issuer”)
or such other name as may be determined by ShinyBud and mīhī and is
acceptable under applicable laws and to the TSXV. The combined
cannabis retailing business of ShinyBud and mīhī will continue
through the Resulting Issuer.
The parties are also pleased to announce the
initial closing under the previously announced private placement
offering (the “Private Placement”) of ShinyBud
subscription receipts (“Subscription Receipts”) at
a price of $8.00 per Subscription Receipt. Each Subscription
Receipt is automatically convertible for no additional
consideration, prior to Closing, into a unit consisting of one
ShinyBud share (an “Underlying Share”) and one
ShinyBud share purchase warrant (an “Underlying
Warrant”) exercisable at $9.20 per share for a 24-month
period, upon the satisfaction of certain conditions, including all
conditions precedent to Closing.
An aggregate of 697,900 Subscription Receipts
were sold in the initial closing for total gross proceeds of
$5,583,200, which proceeds (net of certain expenses) are held in
escrow by the subscription receipt agent and will be releasable to
the Resulting Issuer upon conversion of the Subscription Receipts
into Underlying Shares and Underlying Warrants in connection with
Closing.
ShinyBud and mīhī anticipate the sale of
additional Subscription Receipts in a subsequent closing.
Transaction Terms
The parties have agreed, pursuant to the terms
and conditions of the Definitive Agreement, to effect the
Transaction by way of a ‘three-cornered’ amalgamation of ShinyBud,
mīhī and a new subsidiary of Cedarmont to be formed for this
purpose (the “Amalgamation”). The Amalgamation
will result in the outstanding shares and other securities of
ShinyBud and mīhī being exchanged for corresponding securities of
the Resulting Issuer, which will thereby become the sole
shareholder of the amalgamated corporation. The current
shareholders of ShinyBud and mīhī will become shareholders of the
Resulting Issuer, as the new parent corporation, and the Cedarmont
shareholders will retain their equity.
Pursuant to the Definitive Agreement, in
connection with Closing, but prior to effecting the Amalgamation,
the Company will consolidate its outstanding common shares (the
“Cedarmont Shares”) on a 54.0259-to-one basis (the
“Consolidation”), which will result in an
aggregate of, subject to rounding, 240,625 post-Consolidation
shares (“Consolidated Shares”) being outstanding
based on there being 13,000,000 Cedarmont Shares currently
outstanding (and assuming no intervening exercise of options or
warrants to purchase Cedarmont Shares).
The Consolidation will also result in an
adjustment to the number of Cedarmont Shares issuable pursuant to
outstanding options (of which there are now 1,300,000 outstanding)
and warrants (of which there are now 300,000 outstanding) to
purchase Cedarmont Shares, from a pre-Consolidation total of
1,600,000 Cedarmont Shares issuable upon exercise thereof to a
post-Consolidation total of, subject to rounding, 29,616
Consolidated Shares issuable upon exercise.
The Amalgamation terms contemplate that the
outstanding shares of ShinyBud and mīhī will be exchanged for
Consolidated Shares according to specified exchange ratios. Based
on the agreed ratios, and before giving effect to the issuance of
securities under the Private Placement but assuming the completion
of certain Acquisition Opportunities (defined below) before
Closing, the Amalgamation will result in the shareholders of
ShinyBud holding approximately 87.8% of the Consolidated Shares,
the shareholders of mīhī holding approximately 9.7% of the
Consolidated Shares, and the current holders of Cedarmont Shares
holding approximately 2.5% of the Consolidated Shares, in each case
on an undiluted basis.
Pursuant to the Definitive Agreement, Cedarmont
has been ascribed a value of $1,925,000 (approximately $0.15 per
share (undiluted)).
Each of ShinyBud and mīhī are party to certain
acquisition opportunities (the “Acquisition
Opportunities”) that, if consummated, will involve the
issuance of additional shares of ShinyBud and mīhī, respectively,
as purchase consideration. The pro forma shareholdings above assume
completion of these Acquisition Opportunities and the corresponding
issue of additional ShinyBud and mīhī shares before Closing.
Outstanding options and warrants of ShinyBud and
mīhī will also be exchanged pursuant to the Amalgamation for
replacement options and replacement warrants of the Resulting
Issuer, which will be exercisable for Consolidated Shares with the
purchase rights thereunder adjusted according to the same ratios as
will apply to the existing ShinyBud shares and mīhī shares. On a
fully-diluted basis, before giving effect to the Private Placement
but assuming completion of the Acquisition Opportunities, the
number of Consolidated Shares outstanding on Closing, and the
number issuable pursuant to outstanding options and warrants, are
expected to represent approximately 94.7% and 5.3%, respectively,
of the fully-diluted share count.
The shareholding percentages in the preceding
paragraphs will be proportionately reduced according to the number
of Consolidated Shares that are ultimately issuable in respect of
the Subscription Receipts sold in the Private Placement, as well as
the compensation options (“Compensation Options”)
granted in connection therewith (as more particularly described
below). This is because: (i) the Underlying Shares and Underlying
Warrants issued on conversion of the Subscription Receipts (or upon
exercise of Compensation Options, as applicable) prior to the time
of Closing will also be exchanged under the Amalgamation, on a
one-for-one basis, for Consolidated Shares and replacement warrants
of the Resulting Issuer (“Replacement Warrant”),
respectively; and (ii) any Compensation Options outstanding at
Closing will be exchanged for replacement compensation options
(“Replacement Compensation Options”) of the
Resulting Issuer, each of which will be exercisable for one
Consolidated Share and one Replacement Warrant. Each Replacement
Warrant will be exercisable for one Consolidated Share at $9.20 per
share for a 24-month period from issuance. Each Replacement
Compensation Option will be exercisable for a unit consisting of
one Consolidated Share and one Replacement Warrant at $8.00 per
unit for a 24-month period from issuance.
Private Placement
The Private Placement involves a brokered “best
efforts” offering through a syndicate of agents led by Cantor
Fitzgerald Canada Corporation and Echelon Wealth Partners Inc. and
including ATB Capital Markets Inc. and Cormark Securities Inc.
(collectively, the “Agents”), with a concurrent
non-brokered offering to persons known to the principals of
ShinyBud and mīhī, in all cases to qualified investors on a private
placement basis pursuant to available exemptions from the
prospectus requirements of applicable securities laws.
The gross proceeds from any sale of Subscription
Receipts under the Private Placement, less 50% of fees payable to
the Agents in respect thereof plus reimbursable costs and expenses,
will be held in escrow with Computershare Trust Company of Canada,
as subscription receipt agent, and are releasable to the Resulting
Issuer only in connection with Closing and provided that the same
shall occur within 120 days of the first issuance of Subscription
Receipts (January 20, 2022) (the “Escrow Release
Deadline”). The balance of amounts payable to the Agents
will be paid from out of such funds, as and when they become
releasable from escrow. If the escrow release conditions are not
satisfied on or before the Escrow Release Deadline, the
Subscription Receipts will be terminated and holders thereof paid
an amount equal to their issue price plus any earned interest
thereon, with any shortfall being the responsibility of
ShinyBud.
Pursuant to the Amalgamation, all Underlying
Shares and Underlying Warrants issued upon the conversion of
Subscription Receipts sold in the Private Placement, which
conversion will occur prior to Closing, will be exchanged, on a
one-for-one basis, for Consolidated Shares and Replacement
Warrants.
Assuming that Closing occurs and all other
escrow release conditions for the Subscription Receipts are
satisfied, the net proceeds from the sale of the Subscription
Receipts released to the Resulting Issuer are expected to be used
for growth initiatives, potential strategic acquisitions, and
working capital and general corporate purposes.
The Subscription Receipts issued under the
Private Placement are subject to a four-month resale restriction
from the date of issuance.
The consideration payable to the Agents in
respect of the Private Placement includes non-transferable
Compensation Options in such number as equals up to 7% of the total
number of Subscription Receipts sold. Each Compensation Option
entitles the holder to purchase a unit of ShinyBud consisting of
one Underlying Share and one Underlying Warrant at the Private
Placement price of $8.00 per unit. Any Compensation Options
outstanding at Closing will be exchanged under the Amalgamation for
Replacement Compensation Options, each exercisable for a unit of
the Resulting Issuer consisting of one Consolidated Share and one
Replacement Warrant at the same $8.00 per unit exercise price and
for the same 24-month period from issuance of the Underlying
Warrant.
Next Steps
Filing Statement
The 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 completion is subject to TSXV approval. In
connection with seeking that approval, the parties will prepare
and, subject to being cleared by the TSXV to do so, ultimately file
on SEDAR a filing statement pursuant to applicable TSXV
requirements. The filing statement will contain further details
about the Transaction, the Private Placement and the Resulting
Issuer (including the business and affairs of ShinyBud and mīhī,
which will become the business of the Reporting Issuer), and its
filing will be announced by news release.
Shareholders’ Meeting
Although the Transaction itself is not subject
to approval by the shareholders of the Company under TSXV Policy
2.4 or otherwise, certain ancillary matters that will be proposed
in connection with the Closing, including the Consolidation and the
reconstitution of the Company’s board of directors with nominees of
ShinyBud and mīhī, will require shareholder approval at a meeting
to be called for such purpose and held in the coming weeks.
Particulars of such matters will be set out in a notice calling
that meeting and accompanying management information circular,
which will be disseminated to shareholders and filed on SEDAR.
Directors and Officers of the Resulting
Issuer
Upon Closing, the board of directors of the
Resulting Issuer is expected to be reconstituted with nominees of
ShinyBud and mīhī, and with the management team of the Resulting
Issuer expected to be drawn from current ShinyBud and mīhī
executives. All directors and officers are subject to TSXV
acceptance.
Following is information on the individuals
proposed by ShinyBud and mīhī to be appointed as directors and
officers of the Resulting Issuer on Closing.
Kevin Reed, Chairman and Chief Executive
Officer
Kevin Reed has over 30 years’ experience in
capital markets, start-ups, investments, mergers and acquisitions,
and turnarounds. He has served as CEO of mīhī since 2020 and
Chairman of BlackShire Capital, its principal investor, since 2017.
Kevin co-founded Equity Transfer & Trust Company, which was
acquired by TMX Group in 2013, and previously served as Executive
Vice Chairman of its parent corporation, Grey Horse, until
2010.
Micah Dass, Executive Vice Chairman &
Director
Micah Dass is co-founder of the ‘ShinyBud’
business and shareholder of ShinyBud. He is an entrepreneur and
investor in the retail/quick service restaurant industry, and owns
14 franchised Tim Hortons locations.
Brad Kipp, Chief Financial Officer
Brad Kipp is a senior financial executive with
over 20 years’ experience in providing financial leadership at
private and public companies. He is a director of mīhī and
Executive Vice President and a director of its principal investor,
BlackShire Capital. Over the course of his career he has served as
chief financial officer and/or a director of various public
companies listed on the Toronto Stock Exchange, the New York Stock
Exchange and the Alternative Investment Market (AIM) of the London
Stock Exchange. Brad has been a director and Audit Committee Chair
of Haventree Bank, a Canadian Schedule 1 bank specializing in
alternative mortgage programs and insured GIC deposits, for almost
15 years, and of Americas Gold and Silver Corporation, a
publicly-traded precious metals company listed on the Toronto Stock
Exchange and NYSE American, since 2014. He is a member of the
Chartered Professional Accountants of Canada and a member of the
Chartered Financial Analyst Institute.
Mike Nadeau, Chief Operating Officer
Mike Nadeau is Chief Operating Officer of
ShinyBud. He previously served as Senior Vice President, Operations
Excellence with RECIPE Unlimited Corporation (formerly Cara
Operations Limited), which operates restaurant chains such as Swiss
Chalet, Montana's, Harvey's, New York Fries, Milestones and East
Side Mario's, where he created and led the Shared Service Division
to drive brand performance. Before that, Mike served as Vice
President, Atlantic Canada and Quebec and in other management roles
with TDL Group (Tim Hortons).
Josh Cooksley, Executive VP, Corporate
Development and Investor Relations
Josh Cooksley joined BlackShire Capital, mīhī’s
principal investor, in 2017 as managing partner, from which he was
instrumental in relaunching and operationalizing mīhī in 2020. He
has more than 20 years’ experience working in senior and executive
management for companies of varying sizes, from private start-ups
to public companies. Josh began his career with RBC Capital Markets
in Toronto after completing his MBA in 1998.
Richard Espinos, Director
Richard Espinos is co-founder of the ‘ShinyBud’
business and owns several cannabis retail stores operating under
the ShinyBud brand. He too is an entrepreneur and investor in the
retail/quick service restaurant industry, and owns six franchised
Tim Hortons locations.
Lyn Christensen, Independent Director
Lyn Christensen founded a business consulting
practice in 2008 and has particular expertise in family office and
human resource practices. She has been an HR advisor to a number of
top technology founders and their family offices, and helped build
two start-ups with Elon Musk (Zip2 and x.com). Lyn is an alumnus of
Johns Hopkins University (Master’s degree in Organizational
Development) and Brigham Young University (Bachelor’s degree in
Psychology).
Jude Pinto, Independent Director
Jude Pinto has more than 25 years’ experience in
retail bank operations, risk and compliance, technology
modernization, currency centers and cash distribution leadership at
Canadian Imperial Bank of Commerce (CIBC). He has led several
functional areas of retail banking, covering retail distribution
and product strategy, innovation, insurance, finance, operational
risk and compliance. Jude previously served as President of INTRIA
Items Inc. (currency management and payment processing services),
Chairman of CIBC Offshore Banking Services Company, Vice Chair of
CIBC Reinsurance and Director of CIBC Mortgages Inc., and spent
five years with CIBC First Caribbean as Chief Information officer
and Managing Director – Technology, Operations & Corporate
Services.
Donald Schroeder, Independent Director
Donald Schroeder spent 20 years at Tim Hortons
(TDL Group), most recently as President and Chief Executive Officer
from March 2008 until his retirement in May 2011. Prior to joining
Tim Hortons in 1991 as Vice President of Human Resources and
International Development, Don had a private law practice. His
tenure at Tim Hortons also included terms as Executive Vice
President, Administration, General Counsel, Secretary and Chief
Compliance Officer. Don is an alumnus of the University of Western
Ontario (Bachelor of Laws) and York University (Master of
Laws).
Roland Walton, Independent Director
Roland Walton has more than 35 years’ experience
in the food service industry, including 18 years as a member of the
executive team at Tim Hortons where he held various key leadership
positions, including President of Tim Hortons Canada from 2012 to
2015, Chief Operating Officer from 2008 to 2012, Executive
Vice-President Operations, Canada and United States, from 2000 to
2008, and Executive Vice-President Operations, Canada, from 1997 to
2000. Before joining Tim Hortons, he spent 13 years with Pizza
Hut/Pepsico in operations and general management positions in
Canada and the United States. Roland has a Bachelor of Commerce
degree from Guelph University.
Other Insiders
Apart from the individuals named above, each of
whom is proposed by ShinyBud and mīhī to be appointed on Closing as
a director and/or officer of the Resulting Issuer, no other
insiders are currently anticipated to result from the
Transaction.
Trading Halt
Trading in the Cedarmont Shares remains halted
in accordance with TSXV policies, and may not resume before
Closing.
Further Information
Further details about the Transaction, the
Private Placement and the Resulting Issuer will also be contained
in the disclosure document (anticipated to be a filing statement)
to be prepared and filed with the TSXV and on SEDAR in connection
with the Transaction. Investors are cautioned that, except as
disclosed in such disclosure document, any information released or
received with respect to the Transaction may not be accurate or
complete and should not be relied upon.
For further information, contact, Josh Cooksley
of mīhī on behalf of ShinyBud, at josh@mihicannabis.ca or at (647)
637-5079, or 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 anticipated
terms of and closing of the Transaction, a proposed second closing
of the Private Placement, the anticipated management team of the
Resulting Issuer and ShinyBud’s and mīhī’s business operations and
prospects. The Company, ShinyBud and mīhī have made certain
material assumptions, including but not limited to: receipt of
subscription agreements for a second closing of the Private
Placement; 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: failure of the TSXV to approve of the Transaction;
failure of the shareholders of Cedarmont, ShinyBud or mīhī to
approve certain matters placed before a shareholders meeting;
adverse market conditions; the inability of the Company, ShinyBud
or mīhī to complete the 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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