Friday Capital Inc. enters into non-binding letter of intent with Hit Technologies Inc. to complete qualifying transaction
TORONTO, Dec. 17, 2014 /CNW/ - Friday Capital Inc. ("Friday Capital") (TSXV: FYC.P) announced today that it has entered into a non-binding letter of intent with Hit Technologies Inc. ("Hit Tech") which outlines the general terms and conditions of a proposed transaction pursuant to which Friday Capital will acquire all of the issued and outstanding securities of Hit Tech in exchange for securities of Friday Capital (the "Transaction"). The letter of intent was negotiated at arm's length and is effective as of December 16, 2014.
Friday Capital is a capital pool company listed on the TSX Venture Exchange (the "TSXV"). Friday Capital has not commenced commercial operations and has no assets other than cash. The Transaction, if completed, will constitute Friday Capital's "Qualifying Transaction", as defined in TSXV policies and the Transaction will be an arm's length transaction for Friday Capital.
Hit Tech, operating as "HITCASE", based in Vancouver, British Columbia and governed by the laws of the Province of British Columbia, is in the business of designing and manufacturing protective cases, mounting systems and professional lenses for Apple Inc.'s iPhones (series 5 and 6). Hit Tech has created a full iPhone 5 product line focused on enhancing iPhone customers' ruggedized needs in the global "extreme-use" iPhone market. Hit Tech is also in the process of developing a full iPhone 6 product line, which is expected to be on the market in the first quarter of 2015.
The Transaction terms outlined in the letter of intent are non-binding on the parties (other than certain covenants such as a non-solicit that are binding on the parties) and the letter of intent will be superseded by a definitive agreement to be signed between the parties. Subject to final structuring and the execution of the definitive agreement, the transaction is proposed to be structured as a three-cornered amalgamation whereby Hit Tech will amalgamate with a wholly-owned subsidiary of Friday Capital, with the resulting amalgamated entity becoming a wholly-owned subsidiary of Friday Capital. Following completion of the Transaction, all of the securityholders of Hit Tech will become securityholders of Friday Capital.
Trading in the common shares of Friday Capital (the "Friday Capital Shares") will be halted as a result of this announcement and will remain halted until the resumption of trading is approved by the TSXV.
The Proposed Transaction
As of the date hereof, (i) Friday Capital has 7,423,000 Friday Capital Shares outstanding and has issued options to acquire an aggregate of 462,300 Friday Capital Shares, which options will be cancelled without the issuance of any additional Friday Capital Shares prior to the closing of the Transaction; and (ii) Hit Tech has 26,200,000 standard A shares (the "Hit Tech Shares") issued and outstanding and convertible notes (the "Hit Tech Notes") convertible into 4,374,995 Hit Tech Shares outstanding. The Hit Tech Notes will be automatically converted into Hit Tech Shares prior to the closing of the Transaction. In addition, options (the "Hit Options") to acquire an aggregate of up to 1,300,000 Hit Tech Shares may be issued and outstanding at an exercise price equivalent to the Private Placement Price (as defined below) prior to the closing of the Transaction. On completion of the Transaction, each outstanding Hit Option will instead become exercisable for one Friday Capital Share at the Private Placement Price.
Pursuant to the Transaction, the holders of the issued and outstanding Hit Tech Shares will receive one post-Consolidation (as defined below) Friday Capital Share for each Hit Tech Share held immediately prior to the Transaction. The deemed exchange price for the post-Consolidation Friday Capital Shares to be issued in exchange for the Hit Tech Shares shall be the Private Placement Price per post-Consolidation Friday Capital Share.
Prior to the completion of the Transaction, Friday Capital will call a meeting of its shareholders for the purpose of approving, among other matters, (i) a change of name of Friday Capital; (ii) a consolidation of the issued and outstanding Friday Capital Shares so that the value of each Friday Capital Share is equal to the Private Placement Price per share, meaning that the number of Friday Capital Shares then outstanding will be consolidated (the "Consolidation") such that each post-consolidation Friday Capital Share will have a deemed value equal to the Private Placement Price; (iii) election of individuals to the board of directors of Friday Capital; and (iv) such other matters that may be reasonably required in order to give effect to the Transaction.
On completion of the Transaction, the board of directors of Friday Capital shall be reconstituted to consist of five directors, all of whom will be determined by Hit Tech, subject to the receipt of applicable regulatory and shareholder approvals. Brooks Bergreen, the current Chief Executive Officer of Hit Tech will be Chief Executive Officer and director of Friday Capital. Mr. Bergreen founded Hit Tech in 2008. Prior to Hit Tech, Mr. Bergreen spent 5 years building advanced satellite communications systems in places like Afghanistan and Kosovo as a private contractor for the United States Army and NATO. He has also worked for four years as a consultant in technical design, sales and implementation of web and information technologies systems and has completed two award winning humanitarian documentaries. Mr. Bergreen, residing in Vancouver, British Columbia, currently owns an approximate 27% interest in Hit Tech.
Details with respect to additional proposed directors, including the background of each such proposed director, will be announced in a subsequent press release.
Sponsorship of a Qualifying Transaction is required by the TSXV unless exempt in accordance with TSXV policies. Friday Capital is currently reviewing the requirements for sponsorship and may apply for an exemption from the sponsorship requirements pursuant to the policies of the TSXV; however, there is no assurance that Friday Capital will ultimately obtain this exemption. Friday Capital intends to include any additional information regarding sponsorship in a subsequent press release
Concurrent Financing
It is expected that prior to the completion of the Transaction, Hit Tech will complete a private placement (the "Private Placement") of Hit Tech Shares for gross proceeds of a minimum of $4.5 million at a price (the "Private Placement Price") to be determined by Hit Tech and the agents for such offering. Upon closing of the Transaction, all Hit Tech Shares offered pursuant to the Private Placement will automatically be exchanged for post-Consolidation Friday Capital Shares.
Conditions to the Transaction
Completion of the Transaction is subject to a number of conditions, including, but not limited to, TSXV acceptance and, if applicable pursuant to TSXV requirements, majority of the minority shareholder approval. Where applicable, the Transaction cannot close until the required shareholder approval is obtained. Other conditions to completion of the Transaction include, but are not limited to, standard closing conditions, including the completion of due diligence investigations to the satisfaction of each of Friday Capital and Hit Tech, execution of a definitive agreement, receipt of all requisite approvals from shareholders, regulatory authorities and third parties relating to the Transaction, no material adverse change occuring prior to completion of the Transaction and completion of the Private Placement. There can be no assurance that the Transaction will be completed as proposed, or at all.
Further Information
Further details about the proposed Transaction and the resulting issuer will be provided in a comprehensive press release when the parties enter into a Definitive Agreement and in the disclosure document to be prepared and filed in respect of the Transaction.
Investors are cautioned that, except as disclosed in the disclosure document 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.
Forward-Looking Information
This press release contains forward-looking information based on current expectations. Statements about the closing of the Transaction, expected terms of the Transaction, the number of securities of Friday Capital that may be issued in connection with the Transaction, the Private Placement, shareholder approval and the parties' ability to satisfy closing conditions and receive necessary approvals are all forward-looking information. These statements should not be read as guarantees of future performance or results. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those implied by such statements. Although such statements are based on management's reasonable assumptions, there can be no assurance that the Transaction will occur or that, if the Transaction does occur, it will be completed on the terms described above. Friday Capital assumes no responsibility to update or revise forward-looking information to reflect new events or circumstances unless required by law.
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: Friday Capital Inc.
Friday Capital Inc., Michael Robert Davidson, Chief Executive Officer and Chief Financial Officer, (647) 970-2829; Hit Technologies Inc., Brooks Bergreen, Chief Executive Officer, (888) 423-4124 x. 520
Share this article