NOT FOR DISSEMINATION IN THE U.S. OR THROUGH U.S. NEWSWIRES
LL One Inc. (" LLO " or the " Company ") (TSXV: LLO.P), a capital pool company, is pleased to announce that it has entered into a definitive agreement dated November 13, 2020 (the " Definitive Agreement ") with The Limestone Boat Company Inc. (" LBC ") and 2790889 Ontario Inc., a wholly-owned subsidiary of the Company (" Subco "), which shall govern the Company's qualifying transaction (the " Qualifying Transaction ") pursuant to Policy 2.4 Capital P ool Companies (the " Policy ") of the TSX Venture Exchange (the " Exchange "). The Definitive Agreement supersedes the non-binding letter of intent dated October 9, 2020 (the " LOI ") entered into between LLO and LBC.
Overview of the Qualifying Transaction
Pursuant to the Definitive Agreement, the parties will complete a three-cornered amalgamation (the " Amalgamation ") whereby LBC will amalgamate with Subco and, pursuant thereto, all of the common shares of LBC and Class A common shares of LBC (collectively, the " LBC Shares ") will be cancelled and LLO will issue 50 common shares in the capital of the Company (the " LLO Shares "), issued at a deemed issue price of $0.16, in consideration for each such LBC Share so cancelled (the " Exchange Ratio "). In addition, each convertible, exchangeable, or exercisable security of LBC shall be exchanged for a convertible exchangeable, or exercisable security, as applicable, of LLO on substantially the same economic terms and conditions as the original convertible, exchangeable or exercisable security of LBC based on the Exchange Ratio.
The board of directors of each of the companies has agreed to relative pre-money valuations of each of LLO and LBC of $1.952 million and approximately $12.49 million respectively, after giving effect to the Concurrent Financing (as defined and described below) and on the basis of raising the minimum amount thereunder. Assuming that minimum amount of Subscription Receipts (as defined below) are issued pursuant to the Concurrent Financing, the number of LLO Shares to be issued by LLO to acquire LBC is anticipated to be approximately 78,038,600 LLO Shares. Following completion of the Qualifying Transaction, and on the basis that the minimum amount is raised under the Concurrent Financing, it is anticipated that there will be approximately 90,238,600 LLO Shares issued and outstanding, with holders of LBC Shares holding approximately 86.5% of such shares and current holders of LLO Shares holding approximately 13.5%. Additional LLO Shares will be issuable in the event that any in-kind dividend payments are made to holders of LBC Shares on or prior to Closing (as defined below).
The Amalgamation is not a Non Arm's Length Qualifying Transaction pursuant to Section 2.1 of the Policy and, as such, the Company is not required to obtain shareholder approval for the Amalgamation. However, the Company intends to hold its annual and special meeting of shareholders to approve certain matters ancillary to the Amalgamation, including a name change and change in the board of directors, effective upon closing of the Qualifying Transaction (" Closing "), as well as standard annual meeting business. The Company has called the annual and special meeting for December 15, 2020.
It is anticipated that all of the current officers and directors of LLO, with the exception of Alan Gertner will resign from their respective positions with LLO. It is currently anticipated that the insiders of the Resulting Issuer will include: Scott Hanson, as a director and Chief Executive Officer, Telfer Hanson, as Chairman, Donald J. Page, as Chief Financial Officer, Taylor Hanson, as Chief Operating Officer, and the following directors: Charmaine Crooks, Brian Pearson and Charles Pennock.
Upon completion of the Amalgamation, LLO will continue the business of LBC with LBC as its wholly‐owned, operating subsidiary (the Company, after the Amalgamation, referred to herein as the " Resulting Issuer "). Effective on Closing, it is anticipated that the name of the Resulting Issuer will be changed to "The Limestone Boat Company Limited" or such other name as may be acceptable to LBC and the Exchange.
All LLO Shares issued pursuant to the Qualifying Transaction, except those certain LLO Shares issued to U.S. persons who are affiliates (as defined in Rule 144(a)(1) under the United States Securities Act of 1933 , as amended (the " U.S. Securities Act ")) of LBC at the time the Qualifying Transaction is submitted for vote or consent by the shareholders of LBC, will be freely tradable under applicable securities legislation but may be subject to Exchange imposed restrictions on resale.
Certain of the LLO Shares to be issued to the holders of LBC Shares pursuant to the Qualifying Transaction, including up to 100% of the securities to be issued to "Principals" (as defined under applicable laws), may also be subject to escrow provisions imposed pursuant to the policies of the Exchange.
None of the securities to be issued pursuant to the Qualifying Transaction have been or will be registered under the U.S. Securities Act, or any state securities laws, and any securities issued pursuant to the Qualifying Transaction are anticipated to be issued in reliance upon available exemptions from such registration requirements pursuant to Section 3(a)(10) of the U.S. Securities Act and applicable exemptions under state securities laws. This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities.
Conditions to the Qualifying Transaction
Completion of the Qualifying Transaction is subject to the following conditions:
- Receipt of all required consents or approvals;
- Receipt of conditional approval from the Exchange;
- Completion of closing on or before February 15, 2021, or such other date as may be agreed upon between LBC and the Company;
- No prohibition at law existing for completion of the Qualifying Transaction;
- Escrow agreements being entered into pursuant to the policies of the Exchange;
- Approval of the Amalgamation by the shareholders of LBC;
- Approval by shareholders of LLO of the Company's stock option plan, amendments to the Company's by-laws and such other matters as may be reasonably requested by LBC;
- The representations and warranties of each of LBC and LLO being true and correct as of the date of Closing;
- No material changes for either of LBC or LLO from the date of signing the Definitive Agreement to the date of Closing;
- All necessary corporate proceedings of each party having been completed and all required closing documents of each of the parties having been delivered as of the date of Closing;
- Completion of the Name Change; and
- Resignation of directors and officers of LLO and the appointment of incoming directors and officers of LBC.
Sponsorship of a qualifying transaction of a capital pool company is required by the Exchange unless exempt in accordance with Exchange policies. The parties will be seeking a waiver of any requirement for a Sponsor, but in the event a waiver is not available, will seek a sponsorship relationship for this transaction with an Exchange member firm, and will update the markets accordingly.
In connection with the Qualifying Transaction, LBC has entered into an engagement letter dated October 8, 2020 with Beacon Securities Limited (" Beacon "), as lead agent and sole bookrunner, on its own behalf and on behalf of a syndicate of agents which may be formed (the " Agents "), pursuant to which the Agents have agreed to sell, on a commercially reasonable best-efforts private placement basis, subscription receipts (the " Subscription Receipts ") of LBC at a price of $8.00 per Subscription Receipt (the " Issue Price ") for aggregate gross proceeds to the Company of a minimum of $2,000,000 and a maximum of $4,000,000, or such other amount as LBC and the Agents may agree. In addition, the Agents have been granted an option to sell up to an additional number of Subscription Receipts at the Issue Price for additional gross proceeds of up to $600,000 (collectively, the " Concurrent Financing ").
LBC has agreed to pay to the Agents a cash fee of 7% of the gross proceeds of the Concurrent Financing and, subject to regulatory approval, to issue to the Agents compensation warrants equal to 10% of the aggregate number of Subscription Receipts issued under the Concurrent Financing. Beacon may, in its sole discretion, elect to receive all of a portion of the cash fee payable to the Agents in Subscription Receipts at the Issue Price.
Advances and Loans
In connection with signing the LOI, LLO advanced $25,000 to LBC, as a non-refundable deposit. Subject to approval from the Exchange, LLO has also agreed to advance to LBC a secured loan in the amount of $200,000. The funds advanced to LBC will be used to cover expenses incurred with the Qualifying Transaction and for general and administrative expenses.
LBC was incorporated under the Business Corporations Act (Ontario) on January 14, 2020. LBC is a closely-held private corporation. Scott Hanson of Collingwood, Ontario currently exercises control over 26.7% of the LBC Shares, Telfer Hanson of Burlington, Ontario currently exercises control over 16.08% of the LBC Shares, and Taylor Hanson of Stoney Creek, Ontario currently exercises control over 15.26% of the LBC Shares currently issued and outstanding. Scott Hanson will exercise control over approximately 16.43% of the Resulting Issuer common shares following completion of the Qualifying Transaction.
LBC owns the global manufacturing rights and use of the Limestone® brand for the manufacturing and sales of premium boats in North America. In August of 2020, The Limestone Boat Company Inc., under the experienced direction of yacht designer and CEO, Scott Hanson acquired all of the fixed assets, being the molds and tooling for the manufacturing of 17', 20', 22', 24' and 26' boats, from Medeiros Boat Works of Oakville, Ontario. Until the sale to LBC, Medeiros Boat Works had been manufacturing boats under the Limestone® brand for more than 25 years, pursuant to a license from Mark Ellis Designs. Scott Hanson, with the support of the management team, board of directors of LBC and Mark Ellis have modernized the configuration of the Limestone® line of boats to outboard power and beautiful interior configurations, and, in October 2020, transitioned manufacturing to facilities in Tennessee, where Ebbtide Holdings, LLC is manufacturing the boats under contract. The LBC team has successfully marketed the new Limestone® line of boats to dealers in the US and Canada and is on pace to sell out their 2021 build capacity by the end of the 2020 calendar year. The demand for boats worldwide has seen considerable growth in 2020, which demand is not expected to subside in the near future.
Summary of Financial Information of LBC
The following table sets out selected financial information of LBC derived from the audited financial statements of LBC for the 260-day period from the date of incorporation to September 30, 2020. Further information will be included in the filing statement being prepared in connection with the Qualifying Transaction, which will be filed on www.sedar.com in due course.
|Balance Sheet|| As at September 30, 2020 |
| Current Assets |
Total Shareholder's Equity
| $305,703 |
|Income Statement|| 260 - day period ended |
September 30, 2020 (C$)
| Revenue |
Net Income (Loss)
| nil |
Proposed Board and Man agement of the Resulting Issuer
Subject to Exchange approval, on completion of the Qualifying Transaction, it is currently anticipated that the board of directors of the Resulting Issuer will consist of six directors, including Telfer Hanson, Scott Hanson, Charmaine Crooks, Alan Gertner, Bryan Pearson and Charles Pennock. Biographies of the proposed directors and officers of the Resulting Issuer are set out below.
Proposed Chairman and Director of the Resulting Issuer (Age 57)
Telfer Hanson is an experienced capital markets professional having served 22 years in senior investment banking positions, including covering healthcare and medical technology companies. Most recently, Telfer co-founded and is Chairman of Mimi's Rock Corp. (TSXV: MIMI). Prior to that Telfer held senior investment banking positions at several independent brokerage firms.
Proposed CEO and Director of the Resulting Issuer (Age 55)
Scott Hanson holds an honors degree in Marine Design, Engineering and Boatbuilding from the Landing School in Kennebunk, Maine. He also brings over 28 years of marketing and business management experience to Limestone ® , including taking the helm of Rossiter Boats in 2007, where he took it from two part time employees, to the viable, international Boat Brand that it has become in just over a decade.
Donald J. Page
Proposed CFO of the Resulting Issuer (Age 6 7 )
Don Page is a CPA, CA and has over 35 years working with entrepreneurs as a CFO, investment banker, or director in both the US and Canada. Don brings a wealth of operations experience to the team and will assist the CEO in the long-term development of the Company.
Proposed COO of the Resulting Issuer (Age 29)
Taylor Hanson has the unique combination of experience as an associate investment banker, as well as both industrial management and construction. Taylor has brought that passion for excellence in the research, development and implementation of the product development and manufacturing of the company's products in Tennessee. Prior to Taylor's engagement as COO of Limestone, he worked in the Hanson Family Office, researching investment opportunities, as well as the development of the Limestone® acquisition since September 2019. Following time as an Investment Banking Associate at International Capital Management and then Gravitas Securities, Taylor was a Corporate Development Associate at Medic Holdings.
Proposed Director of the Resulting Issuer (Age 58 )
Charmaine Crooks, CM, Five time Olympian, is an Entrepreneur and Community Leader, based in West Vancouver, with over 20 years Governance experience as a Director on several National and International non-profit and public boards. Charmaine is the President and founder of NGU Consultants Inc (1997), providing strategic advisory and corporate development to a variety of sectors including health, technology, sports and major events. In 2018, the Women's Executive Network recognized Charmaine as one of Canada's Top 100 Most Powerful Women.
Proposed Director of the Resulting Issuer (Age 36 )
Alan Gertner is a proven leader in strategy and operations and most recently served as the Chief Retail Officer for Canopy Growth and as Managing Director of Hiku Brands, a portfolio of premium cannabis brands, including Tokyo Smoke, Van der Pop, DOJA and Maitri. Alan was a founding member of Google's first Global Business Strategy team while based in Mountain View, California and led a $100M+ organization at Google in Asia. Prior to Google, Alan was a management consultant at Oliver Wyman in New York and graduated Dean's List from the Richard Ivey School of Business in 2006.
Director of the Resulting Issuer (Age 57)
Bryan Pearson is the former CEO of LoyaltyOne Co. and currently serves as a Corporate Director and strategic advisor to a number of for profit and charitable organizations. Bryan is a global leader in customer loyalty, retail marketing and analytics, and a passionate advocate for the ability of marketing, leadership and culture to transform business performance. Under Bryan's leadership, LoyaltyOne expanded beyond its AIRMILES business and grew to a company employing over 2,000 associates in over 28 countries. LoyaltyOne was recognized repeatedly as a leading employer, a most admired corporate culture, one of the greenest companies and one of Canada's top employers for millennials and women. Bryan is a best-selling author and frequent contributor to Forbes magazine. He holds an MBA and a BScH (Microbiology and Biochemistry) from Queen's University in Kingston.
Director of the Resulting Issuer (Age 62 )
Charles Pennock is a Principal with Origin Merchant Partners and has over 30 years of investment banking experience at both Canadian and international investment banks. Charlie has extensive investment banking experience in public and private debt & equity financings, M&A and advisory services with Origin, Blackmont Capital, Midland Walwyn/Merrill Lynch, TD Securities and Richardson Greenshields. Charlie is currently on the board of Urbana Corporation. He graduated with a Bachelor of Commerce (Honours) from Queens University.
For further information contact:
LL One Inc.
Alan Gertner, Director
The Limestone® Boat Company Inc.
Telfer Hanson, Chairman
All information contained in this news release with respect to LLO and LBC was supplied by the parties, respectively, for inclusion herein, and LLO and its directors and officers have relied on LBC for any information concerning such party.
Completion of the Qualifying Transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange requirements, majority of the minority shareholder approval. Where applicable, the Qualifying Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Qualifying Transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the management information circular or filing statement 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 Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.
Neither the Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Exchange) accepts responsibility for the adequacy or accuracy of this press release.
This news release contains forward-looking statements relating to the timing and completion of the Qualifying Transaction , the future operations of the Company, LBC , and the Resulting Issuer and other statements that are not historical facts. Forward-looking statements are often identified by terms such as " will " , " may " , " should " , " anticipate " , " expects " and similar expressions. All statements other than statements of historical fact, included in this release, including, without limitation, statements regarding the Qualifying Transaction and the future plans and objectives of the Company, LBC , and the Resulting Issuer are forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from the expectations of the Company, LBC, and the Resulting Issuer include the failure to satisfy the conditions to completion of the Qualifying Transaction set forth above and other risks detailed from time to time in the filings made by the Company, LBC , and the Resulting Issuer with securities regulations.
The reader is cautioned that assumptions used in the preparation of any forward-looking information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Company, LBC , and the Resulting Issuer. As a result, the Company, LBC , and the Resulting Issuer cannot guarantee that the Qualifying Transaction will be completed on the terms and within the time disclosed herein or at all. The reader is cautioned not to place undue reliance on any forward-looking information. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement. The forward-looking statements contained in this news release are made as of the date of this news release and the Company, LBC , and the Resulting Issuer will update or revise publicly any of the included forward-looking statements as expressly required by Canadian securities law.