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TORONTO, July 30, 2019 /CNW/ - OV2 Investment 1 Inc. (the
"Corporation") (TSXV: OVO.P), a capital pool company under Policy
2.4 (the "CPC Policy") of the TSX Venture Exchange ("Exchange"), is
pleased to announce that it has entered into a non-binding Letter
of Intent dated as of today's date with Freightera Logistics Inc.
("Freightera") for the purposes of completing a Qualifying
Transaction ("QT") as defined in the CPC Policy. The QT is an arm's
length transaction and will be completed by way of an amalgamation,
share sale, asset sale or similar transaction whereby the
Corporation and Freightera will complete a business combination and
shareholders of Freightera immediately prior to the QT will acquire
a controlling interest in the resulting issuer (the "Resulting
Issuer"). The final structure of the QT is subject to the receipt
of tax, corporate and securities law advice for both the
Corporation and Freightera. Upon completion of the QT, the
Resulting Issuer will carry on the business of Freightera.
Freightera is a private company formed under the laws of the
Province of British Columbia, and
based in Vancouver, BC. Freightera
is a leading freight shipping marketplace offering instant freight
quotes, online shipment bookings and lower emission transportation
options in North America. Freightera currently has 32,703,854
common shares (the "Freightera Shares") outstanding, 3,209,585
share purchase warrants exercisable into Freightera Shares at an
average price of $0.64 per share
and $279,464 in outstanding
convertible debt that is convertible into Freightera Shares at a
price of $2.40 per share.
Terms of the QT
The QT is currently expected to proceed by way of a business
combination transaction pursuant to which Freightera will become a
wholly-owned subsidiary of the Corporation. In consideration of the
Corporation's acquisition of Freightera, each Freightera Share that
is issued and outstanding immediately prior to completion of the QT
will be exchanged for 2.59909 common shares of the Corporation (the
"Corporation Shares") based on an agreed fully-diluted valuation of
Freightera of $34 million. The
Corporation may seek to complete a consolidation of the Corporation
Shares prior to completion of the QT, in which case the number of
Corporation Shares to be issued in exchange for each Freightera
Share (the "Exchange Ratio") would be adjusted accordingly.
In addition, all of Freightera's warrants, options and
convertible debt will, to the extent outstanding upon completion of
the QT, be converted into or exchanged for warrants, options and
convertible debt that are exercisable or convertible into shares of
the Resulting Issuer on the same terms, with necessary adjustments
to give effect to the Exchange Ratio.
In conjunction with the QT, Freightera intends to complete a
brokered private placement to secure a minimum of $3,500,000 gross proceeds from an equity
financing (the "Financing"). The net proceeds of the Financing will
be used to expand marketing to freight shippers and transport
companies, add new automated services to the Freightera platform,
repay all or a portion of outstanding indebtedness (including the
Bridge Note), provide working capital, and for general and
administrative expenses.
Completion of the QT is subject to a number of conditions,
including but not limited to:
- completion of satisfactory due diligence reviews by the
Corporation and Freightera of the business and affairs of the other
party;
- execution of a binding definitive agreement between the
Corporation and Freightera;
- receipt of all applicable regulatory, shareholder and TSXV
approvals;
- completion of the issuance of the Freightera Restructuring
Transaction (as defined below); and
- completion of the Financing for gross proceeds of at least
$3,500,000.
Freightera Restructuring Transaction
Prior to or concurrent with the execution of a definitive
agreement in respect of the QT, Freightera intends to complete a
restructuring transaction with a company ("Holdco") controlled by
Sheldon Pollack, a director and
Chief Executive Officer of the Corporation, to secure access to
funding via Holdco as contemplated below (the "Freightera
Restructuring Transaction").
In connection with the Freightera Restructuring Transaction,
Freightera will, through a series of steps, acquire Holdco. At the
time of the transaction, Holdco's assets will include $2 million in cash and a $2 million promissory note payable to it on or
prior to completion of the QT by another corporation controlled by
Mr. Pollack (the "Holdco Note"). In exchange, Freightera will issue
to Mr. Pollack, or a trust controlled by him, (i) a $2.5 million secured non-convertible promissory
note (the "Bridge Note") and (ii) a $1.5
million secured convertible promissory note (the
"Convertible Note").
The Bridge Note will be secured, bear interest at the rate of
12% per annum and will mature on the earlier of (i) nine months
from the date of issuance and (ii) completion of the QT.
The Convertible Note will secured, bear interest at a rate of 2%
per annum until completion of the QT (and 10% per annum thereafter)
and will mature five years from the date of issuance. In addition,
starting on the completion of the QT, the Convertible Note will be
convertible at Mr. Pollack's option into common shares of
Freightera at a price equal to, subject to the receipt of any
required stock exchange approvals, the price at which Freightera's
common shares are valued for the purposes of the QT less a 25%
discount.
Freightera shall also be entitled to raise up to an additional
$1,000,000 by issuing additional
secured promissory notes, having terms that are substantially
similar to the Bridge Note and which will rank pari passu with the
Bridge Note, to other investors identified by Freightera.
Management and Board of Directors of Resulting Issuer
Upon completion of the QT, it is anticipated that all of the
existing directors and officers of the Corporation will
resign. Eric Beckwitt,
founder, Chair and CEO of Freightera will lead the new management
team. Further information with respect to the identity of
each of the proposed directors and officers of the Resulting Issuer
will be provided separately, once determined.
Trading Halt
Trading in the common shares of the Corporation has been has
been halted and the shares are not expected to resume trading until
the QT has been completed, or until the Exchange receives the
requisite documentation to resume trading. If the QT is completed,
the Corporation expects to be listed on the Exchange as a
technology issuer.
Sponsorship
The Corporation intends to make an application for exemption
from the sponsorship requirements of the TSXV in connection with
the QT, however there is no assurance that the TSXV will exempt the
Corporation from all or part of applicable sponsorship
requirements.
Further Information
The Corporation will issue a subsequent press release in
accordance with the policies of the TSXV providing further details
in respect of the Qualifying Transaction, including information
relating the transaction structure, the Freightera Restructuring
Transaction and the Financing and summary financial information of
Freightera.
Forward Looking Information
Statements in this press release regarding Freightera's business
which are not historical facts, are "forward-looking statements"
that involve risks and uncertainties, such as terms and completion
of the proposed transaction. Since forward-looking statements
address future events and conditions, by their very nature, they
involve inherent risks and uncertainties. Actual results in each
case could differ materially from those currently anticipated in
such statements.
Completion of the 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 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 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 press release."
NEITHER TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES
PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX
VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR
ACCURACY OF THIS RELEASE.
SOURCE OV2 Investment 1 Inc.