M3 Metals Corp.TSXV: MT

Qualifying Transaction Update: Cinaport and Mettrum Announced Terms of Brokered Concurrent Private Placement and Terms of Qualifying Transaction

· Issued by M3 Metals Corp.

Qualifying Transaction Update: Cinaport and Mettrum Announced Terms of Brokered Concurrent Private Placement and Terms of Qualifying Transaction


Toronto, Ontario (FSCwire) - Cinaport Acquisition Corp. (CPQ.H: TSX-V) (“Company”), a capital pool company listed on the NEX board of the TSX Venture Exchange (the “Exchange”), and Mettrum Ltd. (“Mettrum”) announced that further to the Company’s press release issued on June 18, 2014 with respect to its qualifying transaction (the “Qualifying Transaction”), Mettrum has finalized the terms of its previously announced brokered private placement (the “Private Placement”) and the remaining principal terms of the Qualifying Transaction have therefore also been settled. 

Private Placement

The Private Placement will consist of the sale by Cormark Securities Inc. (as lead agent), GMP Securities L.P., Paradigm Capital Inc. and Jacob Securities Inc. (collectively, the “Agents”) of up to 12,000,000 subscription receipts (the “Subscription Receipts”) at a price of $2.50 per Subscription Receipt for aggregate gross proceeds of up to $30 million.  The Agents will be granted an option (the “Over-Allotment Option”), exercisable up to 48 hours prior to the closing of the Private Placement, to sell up to an additional 1,800,000 Subscription Receipts on the same terms as the Private Placement.

The Private Placement is expected to close on or about July 29, 2014 (the “Closing Date”).  On the Closing Date, the gross proceeds from the Private Placement less the estimated costs and expenses of the Agents payable by Mettrum (the “Escrowed Funds”) will be delivered to and held by an escrow agent mutually acceptable to Mettrum and Cormark Securities Inc. (the “Escrow Agent”) subject to the following material escrow release conditions, among others, (collectively, the “Escrow Release Conditions”):

  1. the completion, satisfaction or waiver of all conditions precedent to the Qualifying Transaction other than the release of the Escrowed Funds and such other procedural conditions that are customarily fulfilled immediately prior to the closing of a transaction in the nature of the Qualifying Transaction;
  2. the receipt of all shareholder and regulatory approvals required for the Qualifying Transaction;
  3. there shall not have been discovered any previously undisclosed material fact relating to either of Mettrum or the Company which, in the reasonable opinion of the Agents, would reasonably be expected to have a material adverse effect on Mettrum taken as a whole after giving effect to the Qualifying Transaction, which shall be confirmed to be true to the Agents in a certificate of a senior officer of Mettrum and the Company; and
  4. the post-Share Consolidation shares (including those underlying the post-Share Consolidation warrants, each as described below) of the Company being conditionally approved for listing on the Exchange and the completion, satisfaction or waiver of all conditions precedent to such listing (other than those to be completed or satisfied upon completion of the Qualifying Transaction).

Upon satisfaction of the Escrow Release Conditions, the Escrowed Funds will be released to Mettrum net of the Cash Commission (defined below), which will be paid to the Agents, and each Subscription Receipt will be automatically exchanged, without payment of any additional consideration, for one unit of Mettrum (each a “Unit”), with each Unit comprising of one common share of Mettrum (each a “Unit Share”) and one warrant (each a “Unit Warrant”) exercisable to purchase one common share of Mettrum at an exercise price of $3.50 per share at any time on or before the date that is 12 months after the listing of the resulting issuer shares on the Exchange.

In the event that the Escrow Release Conditions are not satisfied prior to the date that is 120 days following the Closing Date (the “Termination Time”), the issued and outstanding Subscription Receipts shall be cancelled and the Escrowed Funds will be used to pay holders of Subscription Receipts an amount equal to the issue price per Subscription Receipt plus a pro rata portion of any interest accrued on the Escrowed Funds, if any, less any applicable withholding tax.  To the extent that the Escrowed Funds (plus accrued interest) are not sufficient to refund in full the aggregate issue price of all of the outstanding Subscription Receipts, Mettrum shall contribute on or before the second business day following the Termination Time all such amounts as are necessary to satisfy any shortfall.

In connection with the Private Placement, Mettrum has agreed to pay the Agents a cash commission (the “Cash Commission”) equal to 6.0% of the gross proceeds of the Private Placement and to issue to the Agents non-transferrable warrants (the “Broker Warrants”) exercisable for the number of additional Subscription Receipts equal to 6.0% of the number of Subscription Receipts sold under the Private Placement.  The Broker Warrants will be exercisable at a price of $2.50 per Subscription Receipt at any time on or before the date that is 24 months after the Closing Date.

The net proceeds raised from the Private Placement will be used by Mettrum for capital improvements, marketing, patient acquisition, strategic opportunities, product development and general working purposes. 

Qualifying Transaction

The Private Placement will be completed in connection with the Qualifying Transaction to be completed by way of a three-cornered amalgamation whereby Mettrum will amalgamate with a wholly-owned subsidiary of the Company and shareholders of Mettrum will receive common shares of the Company. 

Pursuant to the terms of the binding letter of intent dated June 18, 2014 between the Company and Mettrum, the parties have agreed that prior to the closing of the Qualifying Transaction, the Company will consolidate its common shares on a 14.5625 to 1 basis (the “Share Consolidation”).  The terms of the Qualifying Transaction will provide that, upon completion of the three-corned amalgamation amongst Mettrum, the Company and a wholly-owned subsidiary of the Company, shareholders of Mettrum will receive one post-Share Consolidation common share of the Company for every Mettrum common share.  In addition, options and warrants of Mettrum that are outstanding at the time of closing of the Qualifying Transaction will be exchanged for equivalent instruments of the Company exercisable for or convertible into the Company’s post-Share Consolidation common shares.  For greater certainty, All Unit Shares, Unit Warrants and Brokers Warrants will be similarly exchanged for equivalent post-Share Consolidation securities of the Company on the same one-for-one basis.

The Company currently has 6,090,000 common shares issued and outstanding, as well as 900,000 options to acquire common shares of the Company at an exercise price of $0.10 per share.  After giving effect to the Share Consolidation, the Company will have 418,197 common shares and 61,803 options issued and outstanding, with each option exercisable to purchase one common share of the Company at an exercise price of $1.46 per share.  

Mettrum currently has 19,416,200 common shares, 1,861,836 options and 203,400 warrants issued and outstanding.  Subject to Exchange approval and assuming full subscription of the Private Placement and full exercise of the Over-Allotment Option, it is expected that the current shareholders of the Company will hold approximately 1.2% of the total issued and outstanding common shares of the Company (or 0.9% on a fully diluted basis) upon closing of the Qualifying Transaction.

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. 

Sponsorship

Sponsorship of the Qualifying Transaction is required by the Exchange, unless exempt in accordance with Exchange policies.  The Company will apply for an exemption from the sponsorship requirements pursuant to Exchange policies.  However, there is no assurance that the Exchange will grant this exemption. 

For more information, please contact:

Cinaport Acquisition Corp.

Avi Grewal, President & Chief Executive Officer

Phone: (416) 213-8118 Ext. 210

E-mail: agrewal@cinaport.com

Mettrum Ltd.

Keelan Green

Phone: (613) 220-2016

E-mail: green@prospectusassociates.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/cinaport07212014.pdf
Source: Cinaport Acquisition Corp. (TSX Venture:CPQ.H)

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