Acasta Enterprises Announces Completion of Private Placement

Jun 07, 2019 06:00 pm

Acasta Enterprises Inc. (TSX: AEF) (“Acasta” or the Corporation”) announced today that it has completed a private placement (the “Initial Private Placement”) of 4,502,490 Class B Shares of the Corporation (the “Shares”) to corporations controlled by the co-CEOs of the Corporation at a price of $0.68 per share for aggregate gross proceeds of $3,061,693 which is intended to be used to reduce the Corporation’s outstanding bank indebtedness. The private placement was effected at the market price.

The Corporation intends to offer to certain of its larger shareholders (the “Offered Shareholders”) an opportunity to participate in a subsequent private placement of an aggregate of up to 2,166,017 Shares on the same terms on a pro rata basis, for additional aggregate gross proceeds of up to $1,472,891 subject to Toronto Stock Exchange approval and the execution of customary subscription agreements. This second private placement financing offer to subscribe is being left open for acceptance by applicable shareholders until 5:00 p.m. (Toronto time) on June 14, 2019 (the “Acceptance Deadline”) and is expected to be completed shortly thereafter. The Corporation reserves the right to offer any unsubscribed for Shares to third parties (including insiders) in the event that any of the Offered Shareholders do not accept all or a portion of the offer to subscribe on or before the Acceptance Deadline. The proceeds of the subsequent private placement are also intended to be used to reduce the Corporation’s outstanding bank indebtedness.

Following the completion of the Initial Private Placement (and before the completion of the subsequent private placement), the co-CEO’s of the Corporation will indirectly control an aggregate of 27,890,886 Class B Shares or approximately 40% of the outstanding Shares. The completion of the Initial Private Placement did not materially affect control of the Corporation and has received the conditional approval of the Toronto Stock Exchange.

The Initial Private Placement may be considered a “related party transaction” pursuant to Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”). The Initial Private Placement was approved by the independent directors of the Corporation and is exempt from the formal valuation and minority approval requirements, respectively, of MI 61-101 as neither the fair market value of the Private Placement, nor the fair market value of the applicable Shares, exceeds 25% of the Corporation’s market capitalization (as calculated pursuant to MI 61-101).

The Corporation remains focused on streamlining operations, reducing expenses and overall indebtedness and is examining a number of alternatives to further recapitalize its balance sheet and enhance shareholder value.

Cautions Regarding Future Plans and Forward Looking Information

Certain statements contained in this press release constitute forward-looking statements within the meaning of applicable Canadian securities laws which reflect the Corporation’s current expectations and projections about future results. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “outlook”, “objective”, “may”, “will”, “expect”, “intent”, “estimate”, “anticipate”, “believe”, “consider”, “should”, “plans”, “predict”, “estimate”, “potential”, “could”, “likely”, “approximately”, “scheduled”, “forecast”, “variation” or “continue”, or similar expressions suggesting future outcomes or events. The forward-looking statements made in this press release relate only to events or information as of the date on which the statements are made in this press release. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this press release. Such forward-looking statements are based on a number of assumptions that may prove to be incorrect.

Except as specifically required by applicable Canadian securities law, the Corporation undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. These forward-looking statements should not be relied upon as representing the Corporation’s views as of any date subsequent to the date of this press release. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. There can be no assurance that the Conversion will be completed as proposed or at all.

Acasta Enterprises Inc.
Fred Leigh