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Resinco Capital Partners Inc (2)
Symbol C : RIN
Shares Issued 122,186,007
Close 2019-08-12 C$ 0.02
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Resinco enters LOI to merge with Gen X in RTO

2019-08-13 17:58 ET - News Release

Mr. Alexander Somjen reports

RESINCO AND GEN X BIOSCIENCES ENTER INTO LETTER OF INTENT FOR PROPOSED REVERSE TAKEOVER TRANSACTION

Resinco Capital Partners Inc. and Gen X Biosciences Corp. have entered into a letter of intent to complete a business combination by way of a reverse takeover by the shareholders of Gen X. Upon completion of the RTO transaction, the combined entity will continue to carry on the business of Gen X. The closing of the RTO transaction is subject to the receipt of all necessary approvals, including, without limitation, regulatory approval for the listing of the common shares of the resulting issuer on the Canadian Securities Exchange. The LOI was negotiated at arm's length and is effective Aug. 12, 2019.

In connection with the RTO transaction, Gen X intends to complete a private placement of subscription receipts to raise aggregate gross proceeds of not less than $2-million. Subject to any necessary regulatory approvals, Resinco has also agreed to provide a loan to Gen X, in the amount $150,000, for working capital purposes.

Description of Gen X

Gen X Biosciences is a cannatech firm focused on using innovative technology and scalable extraction methodologies to deliver premium cannabis products, specifically best-in-class distillate to the world.

Gen X was built on its scientific approach to extracting cannabis products and uses its proprietary molecular perfection system to distill cannabis oil several times until the final product has THC (tetrahydrocannabinol) potency of over 90 per cent. The scalability of Gen X's technology allows it to sustain adaptable production capacity. Shea Alderete, the chief executive officer, chief scientific officer and co-founder of Gen X, has over 15 years of experience in creating high-quality products, and learned his trade with some of the first premium cannabis brands, such as Moxie -- the first company in California to receive a temporary licence in the now-legal cannabis market.

Private placement of subscription receipts

In connection with the RTO transaction, Gen X will conduct a private placement basis to sell not fewer than 3,333,333 subscription receipts at a price of 60 cents per subscription receipt, for aggregate gross proceeds of not less than $2-million.

Each subscription receipt shall entitle the holder to receive, upon satisfaction of certain escrow release conditions and without payment of additional consideration, one resulting issuer share. The final terms of the offering remain subject to final negotiation between Gen X and the private placement investors.

Net proceeds of the offering will be used to finance the buildout of Gen X's Long Beach facility and for general working capital purposes.

Terms of the RTO transaction

The RTO transaction is expected to be completed by way of an amalgamation between Gen X and a subsidiary of Resinco, following which the resulting issuer will continue the business of Gen X and will change its name to Gen X Biosciences Corp. or such other name as may be determined by Gen X. The parties anticipate entering into a definitive amalgamation agreement by the end of August, following the completion of satisfactory due diligence. The RTO transaction constitutes an arm's-length transaction under the policies of the exchange.

As of the date hereof, Resinco has 122,186,007 Resinco shares outstanding, as well as an aggregate of 37,384,304 convertible securities to acquire Resinco shares. Prior to the completion of the RTO transaction, the Resinco shares will be consolidated on the basis of one new Resinco share for 30 old Resinco shares, with the Resinco convertible securities adjusted accordingly, resulting in approximately 4,072,867 Resinco shares outstanding on a non-diluted postconsolidation basis.

Upon completion of the RTO transaction and following the consolidation, the holders of Gen X common shares will receive one resulting issuer share for every two common shares held. Gen X currently has 123,048,000 common shares outstanding (not including shares to be issued upon conversion of the subscription receipts).

Any convertible securities of Gen X then outstanding (including any warrants issuable upon the automatic exchange of the subscription receipts) shall be exchanged on the same economic basis, for equivalent securities of the resulting issuer.

Subject to the receipt of applicable regulatory approvals, the resulting issuer will pay a finder's fee to certain third parties in connection with the RTO transaction.

Management and directors of the resulting issuer

When the RTO transaction is completed, it is anticipated that the board of directors of the resulting issuer shall be reconstituted to consist of such directors as Gen X shall determine, and each of the officers of Resinco shall resign and be replaced with officers appointed by the new board of directors. Further details will be provided in subsequent news releases, as such appointments have been agreed.

Conditions to the RTO transaction

The RTO transaction is subject to the satisfaction of customary closing conditions, including as follows:

  • Each of Resinco and Gen X obtaining any requisite director and shareholder approvals, including for the RTO transaction;
  • In the case of Resinco, shareholder approval for the consolidation and necessary changes to its board of directors;
  • Completion of the consolidation;
  • The disposition of certain assets and investments currently held by Resinco, on terms acceptable to Gen X;
  • The completion of due diligence investigations to the satisfaction of each of Resinco and Gen X;
  • Completion of the offering on terms satisfactory to Gen X and Resinco;
  • Payment of the finder's fee;
  • Resinco and Gen X entering into the definitive agreement;
  • All requisite regulatory and stock exchange approvals relating to the RTO transaction and exchange approval for the listing of the resulting issuer shares having been obtained.

Additional information regarding the RTO transaction

The transaction will constitute a change of business under the rules of the exchange. The final legal structure for the RTO transaction will be determined after the parties have considered all applicable tax, securities law and accounting efficiencies.

Resinco and Gen X shall use their commercially reasonable efforts to complete the RTO transaction by Oct. 31, 2019.

We seek Safe Harbor.

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