Mr.
Jean Gosselin reports
PRIME DRINK GROUP CORP. ENTERS INTO DEFINITIVE AGREEMENT TO ACQUIRE TRIANI CANADA INC.
Prime Drink Group Corp. has entered into a share purchase agreement dated May 14, 2024, with 9296-0186 Quebec Inc. (9296), the shareholders of 9296 and Angelpart Ventures Inc., whereby the company will acquire all of the issued and outstanding common shares of Triani Canada Inc., subject to the terms and conditions described therein.
The transaction will constitute a fundamental change for the company pursuant to the rules and policies of the Canadian Securities Exchange. In connection with the closing of the transaction, the company will change its name to Prime Group Corp. and will continue the business of Triani as further described herein.
About Triani
Canada Inc.
Triani is a Quebec-based company specialized in the production, bottling and sale of alcoholic and non-alcoholic beverages to a large client roster, including prestigious brand names across North America, with unaudited non-IFRS (international financial reporting standards) annual sales of $28-million for the year ended Nov. 30, 2023. Founded in 2015, Triani experienced solid growth following the company's successful foray into Quebec grocery stores with its Cantini, Ettaro and Enjoy wine brands. Triani produces and markets Octane, Mojo, Baron, and its well-known Glutenberg, Oshlag and Vox Populi brands and other malt-based alcoholic beverages as well as non-alcoholic products under the Hickson brand. It also markets alcoholic and non-alcoholic microbrewery beers from Brasserie les 2 Freres (Hickson, Serie Decouverte and Charles-Henri) as well as produces several other alcoholic beverages for both the Canadian and American markets.
Transaction summary
Pursuant to the share purchase agreement, Prime will acquire the Triani shares in exchange for (i) $2-million payable in cash or through the issuance of a promissory note in the amount of $2-million and bearing interest at a rate of 10 per cent per annum on the date that is 12 months from the closing date of the transaction; and (ii) 140 million common shares in the capital of Prime having an aggregate value of $17.5-million, with each Prime share to be issued at a deemed price 12.5 cents (on a preconsolidation basis (as defined herein)), subject to adjustment. In addition to the consideration, Prime intends to pay an additional amount up to $18.5-million (the bonus consideration) to the vendors payable in Prime shares if Triani reaches certain EBITDA (earnings before interest, taxes, depreciation and amortization) targets in the financial years ending March 31, 2025, March 31, 2026, and March 31, 2027. The Prime shares payable pursuant to the bonus consideration shall be issued at a deemed price equal to 12.5 cents per Prime share (on a preconsolidation basis) for any bonus consideration payable in the financial years ending March 31, 2025, and March 31, 2026, and 16 cents per Prime share for any bonus consideration payable in the financial year ending March 31, 2027.
It is intended that the transaction will result in the creation of a new control person (as such term is defined in the policies of the CSE) of the resulting entity following completion of the transaction. It is anticipated that the shareholders of 9296 will beneficially own or exercise control or direction over 28 million common shares of the resulting issuer or 49.26 per cent of the outstanding resulting issuer shares on a non-diluted basis.
Pursuant to the share purchase agreement, the company and 9296 shall enter into a licence and option agreement as of the closing date, whereby the company shall be granted: (i) an exclusive licence in favour of the company for the use of any intellectual property (IP), including but not limited to the brands, currently used by the vendor as part of its business that will not be owned by Triani on the closing date; (ii) a right of first refusal to acquire the IP in the event of the disposition of such IP by the owner(s) thereof for the duration of the licence; (iii) an exclusive option to acquire the IP, to be valued by an independent valuation, at a minimum price of $35-million for a period of three years following the closing date. Additionally, the company and 9372-3039 Quebec Inc. shall enter into a property option agreement, whereby the company shall be granted: (i) an exclusive option to acquire the St-Jean sur Richelieu property, for a three-year period starting on the third anniversary of the closing date and ending on the sixth anniversary of the closing date, at a price equal to the higher of $5-million and the fair market value of such property at the time of exercise of the option; and (ii) an exclusive option to acquire the Terrebonne property, for a three-year period starting on the third anniversary of the closing date and ending on the sixth anniversary of the closing date, at a price equal to the higher of $29-million and the fair market value of such property at the time of exercise of the option. The specific terms of the licence and option agreement and the property option agreement shall be finalized by the parties thereto and remain subject to the terms to be contained therein.
Additionally, the company shall make a cash contribution in the amount of $5-million to the operations of Triani on the closing date. Such amount shall be used as working capital by the company in the ordinary course of business. The cash contribution includes an amount of $2-million that will be reinvested in the company by the vendor.
Prior to closing of the transaction, the company intends to consolidate its outstanding Prime shares on a 1:5 basis, resulting in one Prime share outstanding following the consolidation for every five Prime shares outstanding prior to the consolidation. Following the consolidation, the company expects it will have approximately 56,835,492 Prime shares issued and outstanding on a non-diluted basis (and excluding the Prime shares issued as the consideration and pursuant to the company's previously announced concurrent financing of subscription receipts of the company).
In connection with the transaction, Triani intends to complete a non-brokered private placement of convertible debentures in the aggregate principal amount of up to $3-million, bearing interest at a rate of 12.1 per cent per annum, maturing 12 months from the date of issuance and automatically convertible into Prime shares (postconsolidation) immediately following the closing of the transaction, at a deemed price per Prime share equal to 50 cents or such other price as permitted by the CSE. In accordance with applicable securities laws, all securities issued under the bridge convertible debenture offering will be subject to a four-month-and-one-day hold period from the date of issuance. The net proceeds of the bridge convertible debenture offering will be to finance the transaction and for general and corporate working capital purposes.
Completion of the transaction is subject to a number of terms and conditions, including, but not limited to: (i) completion of the concurrent financing; (ii) completion of the consolidation; (iii) the parties obtaining all necessary consents, orders and regulatory and shareholder approvals, including the conditional approval of the CSE, subject only to customary conditions of closing; (iv) no material adverse change occurring in respect of either Prime or Triani; (v) the name change having been effected; (vi) the parties having delivered all documents and other items specified in the share purchase agreement, including, but not limited to, an executed copy of the licence and option agreement, the property option agreement, and an opinion from 9296's legal counsel that the discharge of Triani Canada's waste water complies with the regulations of the City of Terrebonne; (vii) the resignations (as defined herein) being tendered and the 9296 nominees having been elected, subject to the closing of the transaction; and (viii) such other closing conditions as set out in the share purchase agreement.
Board of directors of the resulting issuer
The board of directors of the company presently is made up of six members. Pursuant to the share purchase agreement, two present directors of the company shall resign and the board shall be reconstituted to include Jean-Denis Cote, Antoine Alonzo and Samuel Cousineau-Bourgeois as nominees of 9296. The names of the intended directors and officers of the company following completion of the transaction and their respective positions with the company are as set forth in the attached table.
A brief biographical description of each of the anticipated directors and officers of the company upon completion of the transaction is provided as follows.
Alexandre Cote -- proposed director and chief executive officer
Alexandre Cote has been breaking boundaries in the finance world for over 20 years. Most recently, he is known for being the co-founder and developer of the distribution model of Hybrid Financial Ltd.
(HFL). Alexandre Cote has been a key leader of the growth of HFL in the United States and Canada by developing the unique HFL model and building multiple effective teams. His team also created a substantial positive effect into the distribution of structured products in Canada.
Alexandre Cote was also responsible for launching one of the first traditional fixed-income notes listed in Canada. Formerly a managing director at AXA Canada,
Alexandre Cote helped create a guaranteed investment fund platform. Earlier in his career, he helped to establish and develop OpenSky Capital as the vice-president of sales. OpenSky Capital was the largest independent innovator marketer of structured products in Canada with over $3-billion in assets.
Alexandre Cote made his first step in the finance world at Talvest, where he was responsible for a region with approximately $500-million in assets under management.
Alexandre Cote earned a BA in business from Laval University.
Antoine Alonzo -- proposed director and chief financial officer
Mr. Alonzo holds the title of certified professional accountant (CPA) from l'Ordre des CPA du Quebec. He worked for 20 years in the food industry in Canada and the United States. Mr. Alonzo worked the last 10 years for Solina, a food manufacturer based in France with over 38 plants around the world and very active in acquisitions in North America. He has a strong expertise in lean management, finances, M&A (mergers and acquisitions), IT (information technology), and supply chain management.
Mr. Alonzo has a strong knowledge in task automation and application design. He has led many acquisitions in the United States and Canada. He has re-engineered many operations and financial processes of different companies to improve profitably and increase the value for shareholders. He is a certified Black Belt Kaizen from the Kaizen Institute of America and Black Belt Lean Six Sigma from the DBM institute (United States).
Raimondo Messina, CPA, CA
-- proposed director and chairman of the board of directors
Mr. Messina holds the title of certified professional accountant from l'Ordre des CPA du Quebec and is a Quebec entrepreneur.
Mr. Messina has extensive hands-on experience in conducting partnerships, acquisitions and building brand values in the hospitality and beverage industries. He also currently serves as chief financial officer for the Beach Day Every Day beverage brand and president of Dream Hospitality Group.
Dominique Primeau -- proposed director
Mr. Primeau is a businessman involved in several sectors of economic activity. From taking over the management of the family grocery store in 1990, he built, over the decades, a consortium for the next generation. From his extensive experience as an operator in the food sector, Mr. Primeau will be an asset to the board of directors.
Germain Turpin -- proposed director
Mr. Turpin is a forester by trade. With 26 years of experience working for Maclaren-Noranda Forest while perfecting his management skills and earning a certificate in administration and operations management, he achieved the position of factory director.
In 1992, Mr. Turpin purchased a sawmill and went on to develop the largest hardwood operation in Quebec with revenues of over $40-million. Since 2000, he has applied the same model to develop water resources in Quebec, making him a true pioneer of the spring water sector.
Jean-Denis
Cote
-- proposed director
Jean-Denis Cote is an accountant and a member of the HEC graduate program. A businessman and corporate director, he is active on several boards of private and public companies and economic development organizations. Jean-Denis
Cote
has been a director and member of the ethics and audit committees of subsidiaries of a major Canadian bank. He also was the founder/president of Groupe Paul Masson, a wine and spirits company successfully established in South America, Europe and China; a founder/president of two regional venture capital companies; and chairman of the boards of directors of the Charles Lemoyne Hospital Foundation and the Orchestre symphonique de Longueuil.
Recognized as an outstanding leader by Commerce magazine as Man of the Month, he has also been recognized on two occasions as one of Canada's top 50 managers.
Samuel Cousineau-Bourgeois -- proposed director
Mr. Cousineau-Bourgeois holds a master's degree in business law from Universite de Montreal, a law degree from Universite de Sherbrooke and an international studies orientation in international law from Universite de Montreal. Mr. Cousineau-Bourgeois is a member of the Quebec bar and practises with Therrien Couture Joli-Coeur as a lawyer specializing in property assessment, business law and commercial real estate transactions.
An entrepreneur with a passion for real estate and business law, Mr. Cousineau-Bourgeois has worked as a lawyer in global strategic procurement in the aeronautics sector and gained experience in negotiating contracts and partnerships with government and private organizations. These varied experiences have enabled him to develop his legal versatility and business acumen. He is a director of the Quebec chapter of the Canadian Property Tax Association and the Caisse Desjardins du Haut-Richelieu.
Shareholder consent or meeting
Prior to the completion of the transaction, and as required by corporate legislation or the policies of the CSE, Prime intends to seek shareholder approval for the transaction at a meeting of its shareholders in accordance with applicable corporate and securities laws, to approve: (a) the name change; (b) the consolidation; (c) the size of the board of directors of the company and the election of the directors to the board; (d) the fundamental change of the company in connection with the completion of the transaction; and (e) to the extent required, the adoption of new bylaws, an omnibus equity incentive plan, or such other matters as deemed necessary or desirable by the company or the vendors.
Other information relating to the transaction
The transaction is not a related party transaction, as such term is defined by Multilateral Instrument 61-101, Protection of Minority Security Holders in Special Transactions.
Trading in the Prime shares has been halted and is expected to remain halted pending the satisfaction of the listing requirements of the CSE. There can be no assurance that the trading of Prime shares will resume prior to the completion of the transaction.
The Prime shares to be issued pursuant to the transaction will be issued pursuant to exemptions from the prospectus requirements of applicable securities legislation. The Prime shares to be issued as part of the consideration are expected to be subject to restrictions on resale under applicable securities legislation or escrow conditions as required by policies of the CSE.
Amended and restated investor rights agreement
As previously announced on Sept. 20, 2022, the company is party to an investor rights agreement dated Sept. 19, 2022, whereby 9474 Quebec Inc. was granted, among other things, customary anti-dilution, top-up and demand and piggyback registration rights and certain negotiated governance and director nomination rights, including the right to elect two new directors to the board of directors of the corporation .
The company and 9474 have entered into an amended and restated investor rights agreement effective May 10, 2024, whereby the parties have agreed to limit the rights previously granted to 9474 under the investor rights agreement to the negotiated governance and director nomination rights, including the right to elect two new directors to the board of directors of the corporation, subject to the terms and conditions contained therein.
About Prime Drink Group
Corp.
Prime Drink Group is a Quebec-based corporation that aims to become a leading diversified beverage holding company. The company currently owns more than 3.4 billion litres of Quebec's fresh groundwater reserves volume under permit and is strategically positioned to increase its holding. Under its new leadership team, the company will seek to acquire, integrate and grow beverage businesses in diversified sectors, with a focus on sustainable growth.
We seek Safe Harbor.
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