Mr. Alec Amar reports
DIGIHOST TECHNOLOGY INC. ANNOUNCES CLOSING OF PRIVATE PLACEMENT AND COMPLETION OF REVERSE TAKEOVER TRANSACTION
Digihost Technology Inc. has completed its reverse takeover transaction previously announced by news release on
March 29, 2019, between Digihost International Inc. and Hashchain Technology Inc., and has closed the previously announced non-brokered private placement of old Digihost.
In connection with completion of the RTO transaction, Hashchain has changed its name to Digihost Technology Inc. and reclassified its common shares as subordinate voting shares, entitling holders of Digihost SV shares to one vote per Digihost SV share on matters to be voted on by shareholders, in addition to amending its notice of articles to allow for the issuance of proportionate voting shares. Each Digihost PV share is convertible into 200 Digihost SV shares at the option of the holder. Holders of Digihost PV shares will be entitled to one vote in respect of each Digihost SV share into which the Digihost PV shares may be converted.
Former shareholders of old Digihost and Hashchain are now shareholders of Digihost. Immediately prior to the completion of the RTO transaction, Hashchain completed a consolidation of all of its issued and outstanding
common shares on the basis of one new common share for 40 common shares.
Immediately prior to completion of the RTO transaction, old Digihost issued 164,000 old Digihost shares
in consideration for the purchase of certain assets. Pursuant to the RTO transaction, holders of Digihost asset shares received approximately 181.83 Digihost SV shares in exchange for each Digihost asset share, and holders of common shares of each of Hashchain (on a postconsolidation basis) and old Digihost received one Digihost SV share in exchange for each common share of Hashchain and old Digihost, as applicable. Michel Amar, the chief executive officer and a director of Digihost, received
10,000 Digihost PV shares in
two million common shares of old Digihost. Additionally, directors, officers and consultants of Digihost were granted a total of 1,875,000 options to purchase Digihost SV shares, with each Digihost option exercisable for a Digihost SV share at a price of 96 cents and expiring five years from the date of grant.
Holders of warrants of old Digihost, including all securities issued pursuant to the financing (as described herein), received one equivalent convertible security to purchase Digihost SV shares in exchange for each old Digihost common share purchase warrant. As a result of the RTO and the financing, there are now 40,073,661 Digihost SV shares, 10,000
Digihost PV shares, 856,160 Digihost SV warrants and 1,875,000 Digihost options
issued and outstanding in the capital of the company.
A total of
13,102,657 Digihost SV shares, 10,000 Digihost PV shares, 110,575 Digihost warrants and 1,725,000 Digihost options issued to insiders and consultants of the company
are escrowed in accordance with a TSX Venture Exchange Tier 2 surplus escrow agreement and will be released incrementally over a 36-month period. A total of 16,937,093
Digihost SV shares issued to former old Digihost shareholders and insiders of Hashchain are escrowed as a TSX-V Tier 2 value escrow agreement, and will also be released incrementally over a 36-month period.
Digihost will carry on the business of Hashchain as a Tier 2 technology issuer, and the Digihost SV shares will be listed for trading on the TSX-V on or after Feb. 20, 2020.
Management and board of directors
After completion of the RTO transaction, the company's board of directors includes Michel Amar (chairman and chief executive officer), Alec Amar (president), Adam Rossman, Jon Williams, Manish Z. Kshatriya, Gerard Rotonda, Gerard Guez, Donald H. Christie and Geoffrey Browne. Cindy Davis is the chief financial officer and corporate secretary.
Further details related to the RTO transaction, directors and management of the company are contained in the information circular prepared for shareholders of Hashchain, dated Nov. 29, 2019, and filed on SEDAR.
Private placement closing
Immediately prior to completion of the RTO transaction, Digihost completed its financing for aggregate gross proceeds of $5,395,325.52,
consisting of the sale of 5,481,912
subscription receipts at a price of 96 cents, with each common share subscription receipt exchangeable for one common share of old Digihost, and 110,575
unit subscription receipts at a price of $1.20 per unit subscription receipt, with each unit subscription receipt exchangeable for one unit. Each old Digihost unit consisted of one old Digihost common share and one common share purchase warrant of old Digihost. The old Digihost warrants, which have been exchanged for equivalent securities of Digihost, entitled the holder thereof to acquire one old Digihost share at a price of $1.75 for a period of 18 months following the conversion of the unit subscription receipts.
Each subscription receipt was automatically converted, without payment of additional consideration, into one old Digihost share or one unit, as applicable, upon satisfaction of the conditions precedent to the RTO transaction. Subsequent to the conversion of the subscription receipts, the old Digihost shares and the old Digihost warrants issued pursuant to the financing were exchanged for equivalent Digihost SV shares and Digihost SV warrants, respectively, on a one-for-one basis.
The securities issued pursuant to the financing were subject to a four-month-and-one-day hold period. After completion of the RTO transaction, the securities of Digihost, issued in exchange for old Digihost securities offered pursuant to the financing (including securities issuable thereunder), are free of trading restrictions, subject to TSX-V escrow requirements, applicable U.S. securities laws, and lock-up agreements entered into between purchasers of subscription receipts and old Digihost.
The net proceeds of the financing will be used by Digihost to
purchase cryptocurrency mining equipment, to carry on the business and operations of Hashchain, and for general corporate purposes.
The RTO transaction remains subject to final approval by the TSX-V and fulfilment of all of the requirements of the TSX-V to obtain such approval, including, among other things, submission and acceptance of all documents requested by the TSX-V in its conditional acceptance letter and payment of all outstanding fees to the TSX-V.
We seek Safe Harbor.
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