Cinaport Acquisition Corp. Enters into Letter of Intent with Mettrum Ltd. in Respect of a Proposed Qualifying Transaction
Toronto, Ontario (FSCwire) - Cinaport Acquisition Corp. (CPQ.H: TSX-V) (the “Company”), a capital pool company listed on the NEX board of the TSX Venture Exchange (the “Exchange”), is pleased to announce that it has entered into a binding letter of intent (the “LOI”) on June 18, 2014 with Mettrum Ltd. (“Mettrum”), a corporation existing under the laws of the Province of Ontario and a licensed producer under the Marihuana for Medical Purposes Regulations (the “MMPR”). The LOI outlines the principal terms and conditions pursuant to which the Company and Mettrum intend to complete a transaction that will result in a reverse takeover of the Company by the shareholders of Mettrum. The transaction will constitute the Company’s Qualifying Transaction (the “Qualifying Transaction”) under the policies of the Exchange.
In connection with the announcement of the LOI, which is deemed an Agreement in Principle for the Qualifying Transaction, trading in the common shares of the Company has been halted pursuant to the policies of the Exchange. Trading will remain halted until, among other things, the Company completes certain regulatory filings in connection with the Qualifying Transaction with the Exchange and the Exchange has completed any preliminary background searches on the proposed new insiders of the Company it considers necessary or advisable.
Terms of the Qualifying Transaction
Pursuant to the terms of the LOI, the Company will acquire all of the issued and outstanding shares of Mettrum by way of an amalgamation between Mettrum and a subsidiary of the Company to be formed, with the amalgamated entity becoming a direct, wholly-owned subsidiary of the Company. In consideration, the shareholders of Mettrum will receive common shares in the capital of the Company. However, it is agreed by both parties that the proposed structure may be revised to accommodate tax considerations, accounting treatments and applicable legal and regulatory requirements.
As of the date hereof, the number of common shares of the Company to be issued to shareholders of Mettrum remains subject to the final valuation of Mettrum, which will be based on a private placement to be undertaken by Mettrum concurrently with the Qualifying Transaction as more fully described below. The parties have agreed on the valuation of the Company for the purposes of the Qualifying Transaction and the ownership ratio for the respective shareholders of the Company and Mettrum upon closing of the Qualifying Transaction will be subject to the final valuation of Mettrum.
Closing of the Qualifying Transaction is subject to completion and execution of all definitive transaction documents (including accuracy of representations and warranties, compliance of covenants and satisfaction of customary conditions) and receipt of all requisite approvals and consents for the Qualifying Transaction including (i) approval by the Exchange for the Qualifying Transaction and the proposed new insiders of the Company, (ii) approval by the board of directors of each of Mettrum and the Company, and (iii) approval by the shareholders of Mettrum.
Concurrent Financing
In connection with the proposed Qualifying Transaction, Mettrum has entered into an agreement with Cormark Securities Inc. to act as the lead agent to raise up to $30 million in a private placement (the “Private Placement”). It’s anticipated the Private Placement will be completed prior to the closing of the Qualifying Transaction and the shareholders of Mettrum pursuant to the Private Placement will receive common shares of the Company in accordance with the terms of the Qualifying Transaction. Mettrum intends to use the net proceeds raised from the Private Placement for capital improvements, marketing, patient acquisition, strategic opportunities, product development and general working purposes.
About Mettrum Ltd.
Mettrum Ltd., a Toronto-based company incorporated under the laws of the Province of Ontario on October 22, 2012, is a licensed producer under the MMPR, which came into effect on October 1, 2013. Mettrum received its license from Health Canada on November 1, 2013 and began production of medical cannabis on the same date. Mettrum was the third company in Canada to receive a license under the MMPR. From its fully integrated medical grade facility located in Bowmanville, Ontario, Mettrum commenced sales of medical cannabis under the MMPR in January 2014.
Directors, Officers and Other Insiders of the Resulting Issuer
Upon completion of the Qualifying Transaction, certain senior management of Mettrum will serve in the same capacities as senior officers of the Company.
In addition, it is anticipated that upon completion of the Qualifying Transaction, the board of directors of the Company will be reconstituted to consist of the following six directors: Michael Haines, Trevor Fencott, Donald Wright, Norman Inkster, Dr. Joshua Tepper and William Assini.
The following sets out the names and backgrounds of all persons who are expected to be considered insiders of the Company upon closing of the Qualifying Transaction:
Michael Haines – Chief Executive Officer and Director
Mr. Haines has been a director, executive officer, and entrepreneur in the interactive media industry for over 15 years and has more than 20 years of experience in marketing and communications. He has served as an advisor and director to companies in the interactive media industry, notably: as Chairman of the Board of Blammo Games (wholly owned by Glu Mobile – Nasdaq:Gluu); as Executive Director of ES3, an IPTV application developer; and an advisor to Fuse Powered Inc., a mobile analytics and digital distribution firm. Mr. Haines was Managing Director of Dublin based Groove Games Ltd. and was a founder and COO of Groove Media Inc. Previously, he was a founder of Hip Interactive Corp. which became Canada’s largest video game distribution company that listed on the Toronto Stock Exchange in December 1999 and achieved annual sales of approximately $500 million prior to his departure in 2002.
Donald Wright – Director
Mr. Wright’s career in the financial industry has spanned over 30 years. He has held a number of leadership positions, including President of Merrill Lynch Canada (1990 to 1994), Executive Vice President, director and member of the executive committee of Burns Fry Ltd. (1994), Chairman and Chief Executive Officer of TD Securities Inc. and Deputy Chairman of TD Bank Financial Group (2002). Mr. Wright retired from TD Bank in November 2002. Since his retirement, he has been an active investor in both the private and public equity markets and has been involved in financing small and medium cap companies with an emphasis in oil and gas, resources and technology industries.
Norman Inkster – Director
Mr. Inkster is a recognized expert in national and international law enforcement. Mr. Inkster had a distinguished 36-year career in the Royal Canadian Mounted Police (RCMP). He rose through the ranks to become Commissioner, the highest ranking officer. While serving as Commissioner, Mr. Inkster was also Canada’s delegate to INTERPOL. He was the President of INTERPOL from 1992 to 1994. In 1994, Mr. Inkster joined KPMG Forensic in Canada. He was appointed to manage KPMG Forensic for Canada and subsequently became the Global Managing Partner of KPMG Forensic. In 2003, Mr. Inkster became a partner with Gowling, Lafleur Henderson LLP, an international law firm. He acted as a Special Advisor to the Auditor General of Canada, and following 9/11 was appointed as a Special Advisor to the Government of Ontario. In 2008, Mr. Inkster was appointed by the Prime Minister of Canada as Chair of Canada’s Advisory Council on National Security. Mr. Inkster is also an Officer of the Order of Canada, Canada’s highest civilian honour.
Dr. Joshua Tepper – Director
Dr. Tepper is a family physician and the President and Chief Executive Officer of Health Quality Ontario (HQO). An arm’s length agency of the provincial government, HQO works in partnership with Ontario’s health care system to support a better experience of care, better outcomes for Ontarians and better value for money. Prior to joining HQO, Dr. Tepper was the inaugural Vice President of Education at Sunnybrook Health Sciences Centre. As Vice President, he was responsible for Sunnybrook’s educational strategy and programming for learners, physicians and staff, patients and their families and the community. Prior to joining Sunnybrook, Dr. Tepper was Assistant Deputy Minister (ADM) in the Health Human Resources Strategy Division of the Ministry of Health and Long-Term Care. As the ADM, he led the HealthForceOntario health human resources strategy to ensure that Ontarians have access to the right number and mix of qualified health care providers.
William Assini – Director
Mr. Assini is a Chartered Accountant with over 25 years of management, finance and accounting experience. He was a Partner and Senior Vice President with PricewaterhouseCoopers LLP for 17 years before becoming a Corporate Director. He currently serves as a Director of the subsidiaries companies of the Power Financial Group. Mr. Assini is currently Chair of the Audit Committee of Investors Group Investment Management Ltd. and Investors Group Corporate Class Limited. These entities have in excess of $60 Billion dollars under administration. He also serves as a committee member of the Investment Review and Conduct committees of those companies. In addition, Mr. Assini serves as a Director and a member of various committees of Investors Group Trust Company and M.R.S. Company Ltd., both captive financial trust companies of IGM Financial.
Peter Kampian – Chief Financial Officer
Mr. Kampian, CPA, CA, has over 30 years of experience in public accounting, finance, energy generation, infrastructure and manufacturing, of which the last 14 years have been spent in the renewable energy sector. From 1999 to 2007, Mr. Kampian served as the Chief Financial Officer of Algonquin Power and Algonquin Power Income Fund, which were the predecessors to Algonquin Power and Utilities Corp., a publicly traded corporation (TSX:AQN) where Mr. Kampian was involved in raising more than C$1.0 billion in equity and debt financing.
Trevor Fencott – Chief Legal Officer and Director
Mr. Fencott, BA, LLB, a practicing lawyer and senior executive with 13 years of experience operating, building and financing successful businesses. In addition to his role at Mettrum, he is currently an owner and executive director of bitHeads Inc., a software development company based in Ottawa as well as an investor and strategic business consultant to Fuse Powered, a Toronto-based analytics and digital distribution company. Mr. Fencott was President, co-founder, and a director of Groove Media Inc., a global publisher of interactive games. He was also Chief Executive Officer, co-founder, and a director of Bedlam Games, an interactive software business that was successfully sold in 2011.
Grant Koehler - Vice President, Sales and Marketing
Mr. Koehler has an active career in the pharmaceutical business for more than 23 years. From a sales management perspective, Mr. Koehler played an instrumental role in the development of the synthetic cannabinoid market through the sales success of Cesamet®, a synthetic analogue of THC with annual sales of more than $60 million. For more than 10 years, Mr. Koehler has led pharmaceutical sales teams that have been focused on business growth in the fields of chronic pain, palliative care, cancer supportive care and insomnia. These are key markets that will drive continued growth in the medical marijuana business. Mr. Koehler spent the last 8 years with Valeant Pharmaceuticals Canada where he was recently National Sales Manager of the pain specialty sales team. Previously, he was with McNeil Consumer Healthcare/Johnson & Johnson, where he held positions in medical sales management, medical marketing, and business development.
Shareholder Approval
The proposed Qualifying Transaction is not a “Non-Arm’s Length Qualifying Transaction” within the meaning of Policy 2.4 of the Exchange and, as such, shareholder approval is not required to approve the proposed Qualifying Transaction. No Insider, promoter or Control Person (as such terms are defined in the policies of the Exchange) of the Company has any interest in Mettrum prior to giving effect to the Qualifying Transaction except that John O’Sullivan, a director of the Company, acts as an advisor to Mettrum and currently owns, directly and indirectly, approximately 3.46% of the total issued and outstanding common shares of Mettrum (or 3.93% on a fully diluted basis, taking into account his warrants and options) and a promissory note issued by Mettrum in the amount of $50,000 with an interest rate of 10%. Due to Mr. O’Sullivan’s limited involvement with Mettrum, he is not a “Non-Arms Length Party” or “Insider” of Mettrum within the meanings of such terms under the Exchange policies and the applicable securities laws, unless deemed otherwise by the regulators.
Notwithstanding the foregoing, the Exchange may impose conditions on its approval for the Qualifying Transaction which may require shareholder approval. Under the terms of the LOI, Mettrum may also require the Company to seek shareholder approval to change its name prior to closing of the Qualifying Transaction. In addition, the proposed share exchange under the LOI may require the Company to consolidate its common shares which would also require shareholder approval. Therefore, the Company intends to hold a special shareholders’ meeting after obtaining conditional approval for the Qualifying Transaction from the Exchange to approve all such matters in connection with the Qualifying Transaction that would require shareholder approval.
Sponsorship
Sponsorship of a qualifying transaction of a Capital Pool Company is required by the Exchange unless exempt in accordance with the Exchange policies. The Company is currently reviewing the requirements for sponsorship and may apply for an exemption from the sponsorship requirements pursuant to the Exchange policies. However, there is no assurance that the Company will obtain this exemption.
A comprehensive press release providing details of the terms of the Qualifying Transaction, the terms of the Private Placement and financial information of Mettrum in compliance with the applicable policy of the Exchange will follow at a later date when such information is known.
For more information, please contact:
Avi Grewal
President & Chief Executive Officer
Phone: (416) 213-8118 Ext. 210
E-mail: agrewal@cinaport.com
Completion of the Qualifying Transaction 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 Qualifying Transaction cannot close until the required approval is obtained. There can be no assurance that the Qualifying Transaction will be completed 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 Qualifying Transaction, any information released or received with respect to the Qualifying 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 Qualifying Transaction and has neither approved nor disapproved the contents of this press release.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION: This news release includes certain “forward-looking statements” under applicable Canadian securities legislation. Forward-looking statements include, but are not limited to, statements with respect to: the terms and conditions of the proposed Qualifying Transaction; the terms and conditions of the proposed Private Placement; use of funds; and the business and operations of the Resulting Issuer after completion of the proposed Qualifying Transaction. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general business, economic, competitive, political and social uncertainties; delay or failure to receive board, shareholder or regulatory approvals; and the results of operations. 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. The Company and Mettrum disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Neither the Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Exchange) accepts responsibility for the adequacy or accuracy of this Press release.
To view this press release as a PDF file, click onto the following link:
public://news_release_pdf/cinaport06182014.pdf
Source: Cinaport Acquisition Corp. (TSX Venture:CPQ.H)
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