Mr. Wade Nesmith reports
CREATION CAPITAL ANNOUNCES AGREEMENT TO ACQUIRE GREENLANE BIOGAS
Creation Capital Corp.
has entered into a binding letter agreement dated Dec. 9, 2018, with Pressure Technologies PLC, a United Kingdom company listed on the Alternative Investment Market (AIM) of the London Stock Exchange, to acquire its alternative energy division. The acquisition will constitute the company's qualifying transaction as defined in Policy 2.4 -- capital pool companies of the exchange.
Summary of the acquisition
The letter agreement contemplates that the detailed steps of the acquisition will be set out in a definitive agreement between Creation Capital and Pressure Technologies to be executed on or before Jan. 31, 2019, pursuant to which Creation Capital will acquire 100-per-cent ownership of the alternative energy division, including Greenlane, on a cash-free, debt-free basis, for the following purchase price to be paid on the closing date:
- 5.0 million
pounds sterling in cash;
- 2.0 million
pounds sterling in common shares of Creation Capital, issued at a price per share equal to the private placement share price, as defined herein;
- 4.1 million
pounds sterling by way of a secured promissory note to be issued by Creation Capital to Pressure Technologies that will: (i) be denominated 50 per cent in British pounds sterling and 50 per cent in Canadian dollars, (ii) mature on the date that is 24 months from the closing date, and (iii) bear interest at the rate of 7 per cent per annum.
Prior to the closing of the acquisition, the company will change its name to a name to be reflective of the acquisition of the Greenlane business, as approved by the directors of Creation Capital.
The completion of the acquisition remains subject to a number of terms and conditions, including, among other things:
Completion of the private placement described herein;
- The parties obtaining all necessary consents, orders, and regulatory and shareholder approvals, including the conditional approval of the exchange subject only to customary conditions of closing;
- No material adverse changes occurring in respect of either Creation Capital or Greenlane;
Completion of a thorough business, legal and financial review by each of the parties of the other party;
The appointment of an outside observer to company board meetings as designated by Pressure Technologies for a term ending upon repayment in full of the closing promissory note;
- Other standard conditions of closing for a transaction in the nature of the acquisition.
Upon completion of the acquisition, the company will continue the business of Greenlane and be listed as an industrial issuer on the exchange, with Greenlane as its primary operating subsidiary (the company after the acquisition being referred to herein as the "resulting issuer").
In connection with the acquisition, Creation Capital plans to close a brokered private placement of its shares for minimum gross proceeds of $10.0-million. The private placement will be structured as either a private placement of subscription receipts (convertible into common shares on a 1:1 basis upon closing of the acquisition) or a private placement of common shares that would close concurrent with, and as a condition to, closing of the acquisition. The proceeds of the private placement will be used to finance (i) the closing cash consideration to be paid to Pressure Technologies, (ii) expenses of the acquisition and the private placement, and (iii) the postacquisition working capital requirements of Greenlane.
A further news release will be issued confirming the final terms of the private placement once determined.
Appointment of new director
Creation Capital is also pleased to announce the appointment of Brad Marchant as a director of Creation Capital. The objective of Mr. Marchant's appointment is to enhance the capabilities of the current board of directors in completing the acquisition. As disclosed under "summary of proposed directors and officers of the resulting issuer," Mr. Marchant is proposed to be a director of the resulting issuer on a going-forward basis after completion of the acquisition.
Summary of proposed directors and officers of the resulting issuer
It is currently anticipated that all of the current directors of Creation Capital will remain with the resulting issuer as directors. The board of directors of the resulting issuer is expected to consist of Brad Douville (chief executive officer), Wade Nesmith (chairman), David Demers, David Blaiklock, Patricia Fortier and Brad Marchant. The following are brief descriptions of the proposed directors and officers of the resulting issuer.
Brad Douville -- chief executive officer and director
Mr. Douville was appointed president of Greenlane Biogas in November, 2017. He joined Greenlane after a 25-year career in the natural gas commercial vehicle industry. He was one of the founding members of Westport Fuel Systems Inc., a University of British Columbia spinoff company formed in 1995 that has grown into a leading alternative fuels automotive systems company, supplying compressed natural gas (CNG) and liquefied natural gas (LNG) systems to many of the world's leading manufacturers of cars and commercial vehicles. He was also one of the founding members of the Cummins Westport joint venture formed in 2001, which is the pre-eminent supplier of natural gas engines for trucks and buses in North America. Mr. Douville held various executive positions in engineering and business at Westport and Cummins Westport until November, 2017. Mr. Douville holds a master of applied science degree in mechanical engineering from the University of British Columbia (1994) and an executive program certificate from the Stanford School of Business (2000).
Wade Nesmith -- chairman and director
Mr. Nesmith was the founder of Primero Mining Corp. He served in the capacity of director of the company from October, 2008, to May, 2018, when Primero was acquired by First Majestic Silver Corp. He acted as president of Primero from October, 2008, to September, 2009, and chief executive officer from October, 2008, to June, 2010, executive chairman of the board from June, 2010, to March, 2012, and chairman of the board from March, 2012, to May, 2018.
Mr. Nesmith obtained his bachelor of law degree from York University's Osgoode Hall Law School in 1977. He was the superintendent of brokers for the Province of British Columbia (1989 to 1992), and subsequently a senior partner, specializing in securities law with Lang Michener LLP (now McMillan LLP) (1993 to 1998). Mr. Nesmith was a founding director of Westport Fuel Systems and from 1998 to 2003 he worked for Westport, helping to lead its public markets activities and retiring as president, Westport Europe. He was a founding director of Wheaton Precious Metals Corp. (formerly Silver Wheaton Corp.), serving from 2004 to 2016. Mr. Nesmith is also currently a director of Westport Fuel Systems and was appointed to its board in June, 2017.
David Demers -- director
Mr. Demers was one of the founding members of Westport Fuel Systems, a University of British Columbia spinoff company that has grown into a leading alternative fuels automotive systems company, supplying CNG and LNG systems to many of the world's leading manufacturers of cars and commercial vehicles. Mr. Demers served as chief executive officer and a director of Westport Fuel Systems from 1995 until July, 2016, when it merged with Fuel Systems Solutions of New York. Mr. Demers is currently a director of TIMIA Capital Corp. and was appointed to its board in May, 2017, and he is currently a director of Augurex Life Sciences Corp. and was appointed to its board in March, 2018. Mr. Demers was a director of Primero from October, 2008, until May, 2018. He has worked as a director of a number of technology start-ups. He also served as a director of Clean Energy Fuels (CLNE) through its Nasdaq listing. Mr. Demers obtained a bachelor of science (physics) in 1977 and a juris doctor in 1978, both from the University of Saskatchewan.
David Blaiklock -- director
Mr. Blaiklock has over 20 years of public company experience in a senior financial role. He previously served as the chief financial officer of Primero, and as the corporate controller for Intrawest Corp. He has experience in the financial operations of a growth-oriented and acquisition-focused public company. Previously, he was corporate controller of a number of public and private companies, primarily involved in real estate development. He received his designation as a chartered accountant while working with the international accounting firm Deloitte Touche Tohmatsu Ltd. Mr. Blaiklock graduated from the University of Sheffield.
Patricia Fortier -- director
Ms. Fortier is a former Canadian diplomat whose career has focused on political relations, governance, international security, and trade and investment -- notably involved with the extractive and defence industries abroad. She most recently acted in the role of assistant deputy minister responsible for security, consular and emergency management in Global Affairs Canada. She was the past Canadian ambassador to Peru and Bolivia and the Canadian ambassador to the Dominican Republic and was also the Minister-Counsellor (political) at the Canadian Embassy in Washington, D.C. Her past work abroad includes being senior adviser to the OAS Electoral Observation Mission to Peru and chief adviser to the High Level Mission to Peru. In Costa Rica, she worked with international NGOs on climate change (earth council) and human rights/democracy (Instituto Interamericano de los Derechos Humanos). Other diplomatic postings included Chile, Canadian mission to the United Nations in New York, India, Kenya and Zambia. She was also a member of the board of the Pearson Peacekeeping Centre. Ms. Fortier was also a director of Primero Mining, a mining company with operations in Mexico and Canada. Ms. Fortier has a master's degree in public administration and a BA (honours) from Queen's University and was a Weatherhead fellow at Harvard University. She is fluent in English, Spanish and French.
Brad Marchant -- director
Mr. Marchant has over 30 years of experience in the mining and environmental industries both in management and as a director. He has worked with numerous mining and technology companies including Coastech Research Inc., Triton Mining Corp., Placer Dome Ltd., Equity Silver Mines Ltd. and Wabush Mines Ltd., and was a director of Primero Mining. He founded a water treatment company, BioteQ Environmental Technologies Inc. (now BQE Water), which is focused on finding water treatment solutions for mining companies experiencing metallurgical and environmental challenges, and also founded Enterra Feed Corp. Enterra collects preconsumer organic waste material, which is then processed by black soldier fly larvae into protein for use in animal feed and fertilizer. Wheatsheaf, a subsidiary of the Grosvenor Group, is now the controlling shareholder of Enterra. Mr. Marchant has a BSc in biochemistry from the University of New Brunswick and an MASc in mining and mineral process engineering from the University of British Columbia.
Other information relating to the acquisition
Sponsorship of a qualifying transaction is required by the exchange unless exempt in accordance with exchange policies. The company expects that the acquisition will be exempt from the sponsorship requirement of the exchange as a result of the brokered private placement to be completed in connection with the acquisition. If an exemption from sponsorship is not available, the company will seek a sponsor for the acquisition.
Pressure Technologies disclosed on June 12, 2018, in its interim report for the six months ended March 31, 2018, that it had determined to explore strategic options for its alternative energy division to enhance shareholder value. As part of this process, Pressure Technologies engaged Creation Partners LLP to provide strategic advice relating to a potential divestiture of Greenlane in consideration for the payment of an advisory fee. Creation Partners is a limited liability partnership that is controlled by Mr. Nesmith, Mr. Demers and Mr. Blaiklock, each of whom is a director of Creation Capital. Creation Partners will receive an advisory fee of up to 440,000 pounds sterling from Pressure Technologies in connection with the acquisition, 50 per cent of which will be received by Creation Partners on the closing date and 50 per cent of which will be deposited in escrow and received by Creation Partners upon repayment of the closing promissory note. This advisory fee will be paid in common shares of Creation Capital by Pressure Technologies assigning a portion of the closing share consideration from the acquisition to Creation Partners.
Although the acquisition will not constitute a non-arm's-length qualifying transaction as defined in exchange Policy 2.4, in connection with the acquisition, the company will be seeking majority of the minority shareholder approval for the fees to be paid by Pressure Technologies to Creation Partners as described in this news release. It is anticipated that shareholder approval will be obtained by way of written consent.
Creation Capital also intends to hold a shareholder meeting in January, 2019, at which time the shareholders of Creation Capital will be requested to approve the increase to the number of directors from the current three directors to the six proposed directors and to appoint the proposed directors conditional upon completion of the acquisition.
The common shares of the company were halted on the exchange effective Dec. 10, 2018, and are expected to remain halted until the completion of the acquisition. Subject to obtaining all necessary consents and approvals and satisfying all other conditions of closing, the company anticipates the closing date to be in late January, 2019.
In connection with the acquisition, McMillan LLP is acting as legal counsel to the company and Sangra Moller LLP is acting as legal counsel to Pressure Technologies.
Additional information concerning the acquisition, the company, Greenlane and the resulting issuer will be provided in subsequent news releases and in the company's filing statement to be filed in connection with the acquisition, and which will be available under the company's SEDAR profile.
About Creation Capital Corp.
The company is designated as a capital pool company under exchange Policy 2.4. The company has not commenced commercial operations and has no assets other than cash. The company's objective is to identify and evaluate businesses or assets with a view to completing a qualifying transaction. Any proposed qualifying transaction must be approved by the exchange and, in the case of a non-arm's-length qualifying transaction, must also receive majority approval of the minority shareholders.
About Greenlane Biogas North America Ltd.
The holding company of Pressure Technologies' alternative energy division is PT Biogas Holdings, a United Kingdom company, and the main operating entity is Greenlane Biogas North America, a Canadian company. Greenlane, headquartered in Vancouver, B.C., is a world leader in technology used to upgrade biogas generated from landfills, waste water treatment plants, and agricultural and food waste into a clean and marketable renewable natural gas product. Greenlane has been in operation for over 30 years and has supplied over 100 biogas upgrading units in over 18 countries worldwide, including the first upgrading systems in 11 countries, and the world's first and second largest biogas upgrading facilities in Germany and Canada. Greenlane designs and supplies the equipment used to upgrade biogas produced by the anaerobic digestion of organic waste to a high-quality methane product suitable for either injection into the natural gas grid or direct use as vehicle fuel.
We seek Safe Harbor.
© 2019 Canjex Publishing Ltd. All rights reserved.