/NOT FOR DISTRIBUTION IN THE U.S. OR OVER U.S. NEWSWIRES/
TORONTO, Aug. 16, 2019 /CNW/ - Green Rise Capital Corporation ("Green Rise"), a capital pool company, provides further details and updates on the previously announced (i) transaction whereby Green Rise expects to complete a reverse takeover with Bull Market Farms Inc. ("Bull Market") pursuant to a definitive agreement dated March 1, 2019 as amended on June 7, 2019 and August 2, 2019 between Green Rise, its wholly owned subsidiary, Green Rise Foods (Leamington) Acquisition Corp. ("Subco"), and Bull Market (the "Definitive Agreement") that, if completed, would constitute Green Rise's "Qualifying Transaction" (as such term is defined in TSX Venture Exchange ("TSXV") Policy 2.4 – Capital Pool Companies ("Policy 2.4")) (the "Transaction") and (ii) the Private Placement (as defined herein).
About Bull Market
Bull Market, a company organized under the Business Corporations Act (Ontario) ("OBCA") and based in Leamington, Ontario, carries on the business of the greenhouse production of vegetables. It owns an 81 acre site located at 2100 Road 4 East in the Town of Kingsville, Ontario comprised of approximately 2,196,129 square feet (50.42 acres) of double poly greenhouses with 114,500 square feet of ancillary buildings and 11,000 square feet of housing for workers. On this site, it conducts the business of growing vegetables in its greenhouses situated on approximately 36 acres of the 81 acre parcel and it has leased, pursuant to a lease agreement dated June 15, 2018 (the "Organic Acreage Lease"), a further 15 acres for organic production to an affiliate of one of the largest greenhouse producers and marketers of produce in North America. Such greenhouse producer and marketer is referred to herein as "ProduceCo.". The principal vegetables grown in the 36 acres of greenhouses are hydroponic tomatoes.
Bull Market acquired the assets related to the business it now carries on from an affiliate of ProduceCo. pursuant to an agreement of purchase and sale of assets dated June 15, 2018 (the "Purchase Agreement"). As part of this acquisition which had a C$25 million purchase price, C$17.5 million of secured financing was obtained and ProduceCo. provided through its affiliate C$5 million of vendor take-back secured financing. The parties to the acquisition entered into various other agreements relating to the 81 acre site and other assets including, without limitation, a restrictive covenant agreement, right of first refusal agreement, option agreement and other documents. Further, each of the secured lenders and Bull Market have entered into an intercreditor agreement relating to the relative priorities of the lenders and a cross default agreement in the event of a Bull Market default under the loans.
Bull Market has also entered into an Exclusive Purchase and Marketing Agreement with ProduceCo. dated June 15, 2018 pursuant to which Bull Market agreed to grow tomatoes, peppers, strawberries and/or cucumbers, and ProduceCo. agreed to purchase 100% of the products produced by Bull Market. This agreement has a ten-year term.
A complete description of Bull Market's business will be contained in a filing statement of Green Rise containing further details about the Transaction and the Resulting Issuer (as defined herein) (the "Filing Statement"). The Filing Statement will be prepared and filed by Green Rise on SEDAR at www.sedar.com upon acceptance by the TSXV.
Summary Financial Information for Bull Market
The following table sets forth selected audited financial information for Bull Market as at December 31, 2018 and for the period from March 21, 2018 (incorporation) to December 31, 2018.
| December 31, 2018
|
Revenue
| $8,324,000
|
Cost of sales
| $(5,359,000)
|
Depreciation
| $(1,783,000)
|
Selling, general and administrative expenses
| $(746,000)
|
Earnings from operations
| $436,000
|
Interest expense
| $(566,000)
|
Bargain purchase gain1
| $3,752,000
|
Earnings before income taxes
| $3,622,000
|
Deferred tax recovery
| $33,000
|
Net earnings and comprehensive earnings
| $3,655,000
|
|
|
Total Assets (as at)
| $30,456,000
|
Total Liabilities (as at)
| $26,801,000
|
Shareholder Equity (as at)
| $3,655,000
|
1 The acquisition of the assets that now comprise Bull Market's business from an affiliate of ProduceCo. pursuant to the Purchase Agreement resulted in a bargain purchase gain.
|
About the Transaction
Pursuant to the Transaction, Green Rise and Bull Market will complete a "three-cornered" amalgamation under the provisions of the OBCA, pursuant to which Bull Market will amalgamate with Subco (the "Amalgamation").
Pursuant to the Amalgamation, the outstanding Bull Market Shares (as defined below) will be exchanged for common shares of Green Rise ("Green Rise Shares") on the basis of 315,789.47 Green Rise Shares for each Bull Market Share, resulting in the existing holders of Bull Market Shares (including investors under the Private Placement) becoming holders of Green Rise Shares post-Transaction. The amalgamated entity will be a wholly-owned subsidiary of Green Rise post-Transaction and Green Rise on a post-Transaction basis will be the "Resulting Issuer".
Based on the Definitive Agreement, a total of 30 million common shares of the Resulting Issuer ("Resulting Issuer Shares") will be issued to the Bull Market Shareholders (as defined below), all at a deemed issue price of $0.20 per Resulting Issuer Share.
Assuming closing of the Transaction, the following holders (collectively, the "Bull Market Shareholders") of Bull Market's issued and outstanding Class 1 Common Shares (the "Bull Market Shares") will beneficially own Resulting Issuer Shares as follows:
Bull Market
Shareholder
| Resulting Issuer Shares
| Approximate % of Total Issued
and Outstanding Resulting Issuer
Share at Transaction Closing1
|
Vito Galifi
| 12,631,579
| 21%
|
Matthew Tatomir
| 7,263,159
| 12%
|
Scott Linnell
| 6,315,789
| 11%
|
Danny Farias
| 1,578,947
| 2.5%
|
Adam Suder
| 1,578,947
| 2.5%
|
Larry Sauve
| 631,579
| 1%
|
Total
| 30,000,000
| 50%
|
1 Calculated on a fully-diluted basis. Assumes full subscription under the Private Placement.
|
Material conditions required to be fulfilled or waived (if capable of waiver) prior to completion of the Transaction include the following: (i) Green Rise being satisfied with the results of its due diligence investigation of Bull Market and its business; (ii) the Definitive Agreement being acceptable to the TSXV and all conditions precedent to the Transaction having occurred or having been satisfied or waived; (iii) the Resulting Issuer meeting the applicable minimum listing requirements of the TSXV, including, without limitation, the public float requirements of the TSXV; (iv) the TSXV having conditionally approved the listing of the Resulting Issuer Shares issuable pursuant to the Transaction and the Private Placement; (v) the receipt of all regulatory, shareholder and third-party approvals, if any, required in connection with the Transaction; (vi) Green Rise being satisfied with the audited financial statements of the business of Bull Market for the fiscal years ended 2017 and 2018; and (vii) certain other conditions including customary closing conditions for a transaction of this nature.
GREEN RISE SHAREHOLDERS ARE NOT REQUIRED TO APPROVE THE TRANSACTION.
Following the completion of the Transaction and the Private Placement, the Bull Market Shareholders will own approximately 50% of the issued and outstanding Resulting Issuer Shares and existing Green Rise shareholders and offerees participating in the Private Placement will own approximately 50% of the issued and outstanding Resulting Issuer Shares, in each case calculated on a fully diluted basis.
About the Private Placement
Prior to the completion of the Transaction, Green Rise is expected to complete a non-brokered private placement of up to 18,343,000 subscription receipts of Green Rise (the "Subscription Receipts") for aggregate gross proceeds of approximately $3.67 million at a price of $0.20 per Subscription Receipt (the "Private Placement"). Each Subscription Receipt will be automatically convertible into one Green Rise Share (subject to adjustment for certain events) without further action on the part of the holder thereof upon the satisfaction or waiver of certain release conditions, which will include, among other things, the completion, satisfaction or waiver of all conditions for closing of the Transaction.
The net proceeds of the Private Placement are expected to be used to fund growth of the Resulting Issuer's produce business in Leamington, Ontario, to repay approximately $1.5 million in shareholder loans made to Bull Market, for general working capital and corporate purposes, and may also be used to pay for expenses incurred in connection with the Transaction and for future acquisition opportunities.
Proposed Directors and Officers of the Resulting Issuer
Upon completion of the Transaction, it is anticipated that the persons identified below will serve as directors and officers of the Resulting Issuer.
Vincent Narang – Chief Executive Officer, Corporate Secretary and Director
Mr. Narang is a business executive with extensive experience in professional services business development as Director of Global Business Development, International Tax at Arthur Andersen LLP, a U.S. based international accounting firm. Mr. Narang also previously held the position of Vice-President of Business Development at KPMG, LLP, an international accounting firm. Currently, Mr. Narang is Chief Executive Officer, Secretary and a director of Green Rise as well as a director of Capri Capital Corp and Capital Leasing Investment Corp., privately owned investment companies with investments in multi-tenant residential real estate, commercial lands and retail centres. Mr. Narang was previously also President and Chief Executive Officer of National Manganese Corp, a company involved in the exploration of manganese assets.
Lal Narang – Chief Financial Officer and Director
Lal Narang received his Certified Management Accountant certification from the Institute of Certified Management Accountants in 1974 which is now the Chartered Professional Accountant designation. Mr. Narang previously worked in the oil and gas industry, focusing on natural gas marketing and is an expert in transportation rates and tariffs. He is currently the Chief Financial Officer and a director of Green Rise as well as President of Capital Leasing Investment Corp. and Capri Capital Corp., privately owned investment companies with investments in multi-tenant residential real estate, commercial lands and retail centres. Previously, Mr. Narang was the President, Chief Executive Officer, Chief Financial Officer and Chairman of the Board of Canex Energy Inc. (formerly, TSXV: CXO), a company engaged in the exploration and development of oil and natural gas reserves in Alberta and Saskatchewan. Mr. Narang also served as Chairman of the Board of Canext Energy Ltd. (formerly, TSXV: CST). Mr. Narang also served as a director for Vivione Biosciences Inc. (TSXV: VBIH) and Production Enhancement Group, Inc. (formerly, TSX: WIS) and Mainstreet Equity Corp. (TSX: MEQ). Mr. Narang also served on the board of the Alberta Securities Commission for six years where he served to ensure that those participating in the public markets adhered to its regulations.
Mark Benadiba - Director
Mr. Benadiba currently sits on the board of Green Rise and sat on the board of Cott Corporation (TSX: BCB) a global provider of private label carbonated soft drinks, from May 2017 until 2018. Mr. Benadiba served as executive Vice-President, North American Operations, of Cott Corporation from 1996 until 2006. Mr. Benadiba held several roles during his tenure at Cott from 1990 through 2006, including Executive Vice President and President of Cott Canada from 1990 to 1998. Previously, Mr. Benadiba was a Senior Executive of Pepsi/Seven-Up, Toronto/Canada (a division of Seven-Up Canada Inc.). He has served on Cott's board since June 2008 and was also Executive Chairman of POET Technologies Inc. (TSXV: PTK) from June 2012 to July 2014.
Sandy Basolini – Director
Sandy Basolini has extensive experience with equipment finance. Mr. Basolini has spent the past 9 years with RCAP Leasing a wholly owned subsidiary of Royal Bank of Canada. In his role as senior business development officer, Mr. Basolini is responsible for providing customized leasing programs and financial strategy for his customers in the healthcare vertical. Prior to this Mr. Basolini spent 14 years as director of the MCAP Healthcare Network on behalf of MCAP Leasing, which was a leading Canadian Leasing company focused on the origination and management of both small and mid-ticket leases throughout Canada. Mr. Basolini holds a Bachelor of Arts in Economics from McMaster University.
Significant Shareholders of the Resulting Issuer
Vito Galifi, resident in Ontario, is expected to beneficially own, upon completion of the Transaction and the Private Placement, approximately 12,631,579 Resulting Issuer Shares, or approximately 21% of the total issued and outstanding Resulting Issuer Shares.
Matthew Tatomir, resident in Ontario, is expected to beneficially own, upon completion of the Transaction and Private Placement, approximately 7,263,159 Resulting Issuer Shares, or approximately 12% of the total issued and outstanding Resulting Issuer Shares.
Scott Linnell, resident in Ontario, is expected to beneficially own, upon completion of the Transaction and Private Placement, approximately 6,315,789 Resulting Issuer Shares, or approximately 11% of the total issued and outstanding Resulting Issuer Shares.
Other than as disclosed above, no person is expected to own more than 10% of the Resulting Issuer Shares.
Arm's Length Qualifying Transaction
The Transaction will not constitute a "Non-Arm's Length Qualifying Transaction" (as such term is defined in Policy 2.4). The terms of the Transaction were determined pursuant to arm's length negotiations between the management of each of Green Rise and Bull Market.
No Green Rise director, officer or insider or controlling person of Green Rise currently has any direct or indirect beneficial interest in the assets of Bull Market or are insiders of Bull Market for purposes of applicable securities laws.
Sponsorship
Green Rise has applied for and been granted a waiver by the TSXV from the sponsorship requirements in connection with the Transaction.
Completion of the Transaction is subject to a number of conditions including, but not limited to, TSXV acceptance. 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, 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.
All information in this news release concerning Bull Market has been provided for inclusion herein by Green Rise. Although Green Rise has no knowledge that would indicate that any information contained herein concerning Bull Market is untrue or incomplete, Green Rise assumes no responsibility for the accuracy or completeness of any such information.
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 news release.
Forward-Looking Information
This news release contains "forward-looking information" within the meaning of applicable securities laws relating to the proposal to complete the Transaction and associated transactions, including statements regarding the terms and conditions of the Transaction, the Private Placement and associated transactions. Any such forward-looking statements may be identified by words such as "expects", "anticipates", "believes", "projects", "plans" and similar expressions. Readers are cautioned not to place undue reliance on forward-looking statements. Actual results and developments may differ materially from those contemplated by these statements depending on, among other things, the risks that the parties will not proceed with the Transaction and associated transactions, that the ultimate terms of the Transaction and associated transactions will differ from those that currently are contemplated, and that the Transaction and associated transactions will not be successfully completed for any reason (including the failure to obtain the required approvals or clearances from regulatory authorities). The statements in this news release are made as of the date of this release. Green Rise undertakes no obligation to update any such forward-looking statements if circumstances or management's estimates or opinions should change except as required by applicable securities laws. The reader is cautioned not to place undue reliance on any such forward-looking statements. Green Rise undertakes no obligation to comment on analyses, expectations or statements made by third parties in respect of Green Rise and Bull Market, or their respective financial or operating results or (as applicable), their securities.
SOURCE Green Rise Capital Corporation
View original content: http://www.newswire.ca/en/releases/archive/August2019/16/c7566.html
Vincent Narang, Chief Executive Officer, Green Rise Capital Corporation, (416) 294-2881, vnarang@greenrisecapital.ca; Matthew Tatomir, Bull Market Farms Inc., (519) 999-0343, mtatomir@hotmail.comCopyright CNW Group 2019
