Cedarmont Capital Announces Proposed Qualifying Transaction

·10 min read

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TORONTO, June 18, 2021 (GLOBE NEWSWIRE) -- Cedarmont Capital Corp. (“Cedarmont” or the “Company”) (TSXV:CCCA.P), a capital pool company under the rules of the TSX Venture Exchange (the “TSXV”), is pleased to announce that it has entered into a binding letter of intent (the “LOI”) dated June 17, 2021 with Shiny Bud Inc. (“ShinyBud”) and Mihi Inc. (“mīhī”) for the proposed combination of the three companies (the “Proposed Transaction”). The Proposed Transaction is intended to constitute the Company’s “Qualifying Transaction” within the meaning of TSXV Policy 2.4 – Capital Pool Companies (“TSXV Policy 2.4”) and would result in a reverse take-over of the Company.‎

In anticipation of the Proposed Transaction, ShinyBud and mīhī have also entered into an engagement letter with Cantor Fitzgerald Canada Corporation and Echelon Wealth Partners Inc. for a brokered private placement financing (the “Private Placement”) of subscription receipts (“Subscription Receipts”) for gross proceeds of approximately $15 million.

Additional details with respect to the Proposed Transaction and the Private Placement will be announced at a later date.

ShinyBud

Founded in 2019 by Mr. Micah Dass, ShinyBud is a cannabis retailer that has grown quickly from one location in 2020 to a network of 11 stores currently. ShinyBud also has eight retail sales applications filed with the Alcohol and Gaming Commission of Ontario. ShinyBud’s mission is to offer the best of legal cannabis products in an informed, guest centric environment, catering to every spectrum of its customer base in a thoughtful way. Customer satisfaction is ShinyBud’s top priority.

ShinyBud was incorporated under the Canada Business Corporations Act (“CBCA”) in June 2019. Mr. Dass is the sole shareholder of ShinyBud and is expected to become a principal shareholder and be appointed Vice Chair of the Company upon completion of the Proposed Transaction.

mīhī

mīhī is an Ontario-based cannabis retailer with a mission to make cannabis an accepted and positive part of life for the customers and communities it serves. mīhī opened its first two stores in Burlington and Stoney Creek in 2020 and anticipates launching its first mīhī Express store during the third quarter.

mīhī was incorporated under the Business Corporations Act (Ontario) in August 2018. The principal investor in mīhī is BlackShire Capital, a private investment firm founded by Kevin Reed. It is anticipated that Mr. Reed will be appointed Chairman and Chief Executive Officer of the Company on completion of the Proposed Transaction.

Cedarmont

The Company was incorporated under the Business Corporations Act (British Columbia) in February 2021, and completed its initial public offering in May 2021 as a “capital pool company” (CPC) under TSXV Policy 2.4. As a CPC, its objective is to identify, evaluate and acquire an operating business that meets the criteria of a “qualifying transaction” under TSXV Policy 2.4, all in accordance with the provisions thereof. The Company has no commercial operations and no assets other than cash.

Summary of Proposed Transaction

The Proposed Transaction involves the acquisition by the Company of ShinyBud and mīhī in consideration for the common shares of the Company. It is anticipated that the acquisition will be effected by way of an amalgamation of ShinyBud, mīhī and a new subsidiary of the Company to be formed for this purpose (the “Amalgamation”), on a basis that results in the Company becoming the sole shareholder of the amalgamated corporation continuing therefrom (“Amalco”) and the current shareholders of ShinyBud and mīhī becoming shareholders of the Company. The final transaction structure will, however, be determined in connection with entering into a definitive agreement for the Proposed Transaction (“Definitive Agreement”).

In connection with the Proposed Transaction, the Company will seek to change its name to “Shiny Bud Corp.” or such other name as may be determined by ShinyBud and mīhī and is acceptable to the TSXV (the “Resulting Issuer”). Upon completion of the Proposed Transaction (“Closing”), the Resulting Issuer will own 100% of Amalco, which will carry on the business currently conducted by each of ShinyBud and mīhī.

The number of common shares of the Company to be issued to shareholders of ShinyBud and mīhī under the Proposed Transaction and, accordingly, the proportionate share ownership interest in the Resulting Issuer of existing shareholders of the Company, on the one hand, relative to shareholders of ShinyBud and mīhī, on the other, will depend on the final value determined for ShinyBud and mīhī. That value is expected to be based on the contemplated Private Placement, the details of which will be provided in a further announcement as such details are established. Pursuant to the LOI, Cedarmont has been ascribed a value of $1,925,000 (approximately $0.15 per share).‎ ‎Final pro forma ownership percentages will also depend on the size of the Private Placement.

The Proposed Transaction is subject to the parties entering into a Definitive Agreement not later than July 15, 2021 (or such other date as the parties may mutually agree) and execution and delivery of all other definitive transaction documents. Closing is also subject to a number of other conditions, including completion of the Private Placement, the accuracy of representations and warranties, compliance with interim covenants, and receipt of all necessary directors, shareholder, regulatory and third party approvals, including acceptance by the TSXV of the Proposed Transaction as the Company’s qualifying transaction under TSXV Policy 2.4 and the disclosure documents to be filed in respect thereof, and of the proposed new directors, officers and other insiders of the Resulting Issuer.

Pursuant to the LOI, an introductory fee of $20,000 is payable by the Resulting Issuer to an arm’s length party in connection with the Closing.

Private Placement

On or before June 30, 2021, ShinyBud intends to complete the Private Placement for gross proceeds of approximately $15 million. Cantor Fitzgerald Canada Corporation and Echelon Wealth Partners Inc. have been engaged to act as co-lead agents and joint bookrunners on behalf of a syndicate of investment dealers (the “Agents”) to be formed for the Private Placement, under which Subscription Receipts will be offered for sale to qualified investors on a “best efforts” private placement basis pursuant to available exemptions from the prospectus requirements of applicable securities laws.

The gross proceeds from the Private Placement, other than 50% of the total Agents’ commission plus their reimbursable costs and expenses, will be placed in escrow and released to the Resulting Issuer only in connection with Closing.

Each Subscription Receipt will entitle the holder thereof to receive, upon satisfaction or waiver of the applicable escrow release conditions (including all conditions precedent to Closing), for no additional consideration, a unit (“Unit”) consisting of a ShinyBud share and one-half of one share purchase warrant. Such shares and warrants of ShinyBud will in turn be exchanged for common shares and share purchase warrants of the Resulting Issuer pursuant to the Amalgamation. Each whole warrant will entitle the holder to subscribe for and purchase one common share of the Resulting Issuer at an exercise price to be determined in the context of marketing the Private Placement, for a period of 24 months after Closing.

The consideration payable to the Agents in respect of the Private Placement will be comprised of a cash commission equal to 7% of the gross proceeds plus broker warrants equal to 7% of the total number of Subscription Receipts issued under the Private Placement. Each broker warrant will entitle the holder to subscribe for and purchase one Unit, at the price at which the Subscription Receipts are sold, for a period of 24 months after Closing.

Completion of the Private Placement will be subject to the receipt of all necessary regulatory approvals and other customary conditions.

Assuming that Closing occurs and all other escrow release conditions for the Subscription Receipts are satisfied or waived, the net proceeds from the sale of the Subscription Receipts will be released to the Resulting Issuer and are expected to be used for growth initiatives, potential strategic acquisitions and working capital and general corporate purposes.

All securities issued pursuant to the Private Placement will be subject to a four-month resale restriction from the date of issuance of the Subscription Receipts.

Directors, Officers and Other Insiders of Resulting Issuer

In connection with Closing, the Company’s board of directors and officers will be reconstituted with nominees determined by ShinyBud and mīhī to serve as directors of the Resulting Issuer. TSXV acceptance will be required in respect of all such individuals, following review of all materials to be filed in connection with the Proposed Transaction.

The proposed directors are: Micah Dass, Richard, Espinos, Kevin Reed, Lyn Christensen, Jude Pinto, Donald Schroeder and Roland Walton. The proposed management team includes Kevin Reed (Chairman and CEO), Michael Nadeau (COO), Brad Kipp (CFO) and Josh Cooksley (EVP Corporate Development and IR).

The backgrounds of the proposed directors and officers of the Resulting Issuer, together with information regarding other anticipated insiders, will be included in a subsequent news release of the Company to be issued in accordance with TSXV Policy 2.4.

Shareholder Approvals

The Proposed Transaction is not a Non-Arm’s Length Qualifying Transaction as none of the parties, nor any of their respective Associates or Affiliates, is a Control Person of another party (as those terms are defined under TSXV rules). Accordingly, the Proposed Transaction itself is not subject to approval by the shareholders of the Company under TSXV Policy 2.4.

Under the terms of the LOI, ShinyBud and mīhī may also require the Company to seek shareholder approval of such ancillary matters as may be required in connection with the Proposed Transaction, including the reconstitution of the board of directors. Accordingly, the Company may call and hold a special meeting of shareholders to approve all such matters in connection with the Proposed Transaction that require shareholder approval under applicable laws.

Trading Halt

Trading in the Company’s shares has been halted in accordance with TSXV policies, and will remain halted pending TSXV review of the Proposed Transaction, completion of various regulatory filings with the TSXV in connection therewith, and satisfaction of other conditions of the TSXV for the resumption of trading. Trading in the Company’s shares may not resume before Closing.

Sponsorship

Absent an available exemption under TSXV rules, the TSXV generally requires that a member firm provide a sponsor report in respect of CPC’s qualifying transaction. The Company anticipates that it may qualify for an exemption from sponsorship in the circumstances of the Proposed Transaction and intends to seek the same in accordance with TSXV rules. There can, however, be no assurance that an exemption will be granted.

Further Information

A summary of significant financial information with respect to ShinyBud and mīhī, as well as information regarding the expected directors, officers and other insiders of the Resulting Issuer following Closing, will be included in a subsequent news release of the Company to be issued in accordance with TSXV Policy 2.4.

Further details about the Proposed Transaction, the Private Placement and the Resulting Issuer will also be contained in the disclosure document to be prepared and filed with the TSXV and on SEDAR in connection with the Proposed Transaction. Investors are cautioned that, except as disclosed in such disclosure document, any information released or received with respect to the Proposed Transaction may not be accurate or complete and should not be relied upon.

For further information, contact Jaimie Grossman, Chief Executive Officer of the Company, at jaimie.grossman@gmail.com or at (416) 369-5265.

Reader Advisories

The information provided in this news release regarding ShinyBud and mīhī has been provided by ShinyBud and ‎mīhī and ‎has not been independently verified by the Company.

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. There can be no assurance that the 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 TSXV has in no way passed upon the merits of the proposed transaction ‎and has neither approved nor disapproved the contents of this news release.‎

NEITHER THE TSXV NOR ITS REGULATION SERVICES PROVIDER ‎‎(AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSXV) ‎ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.‎

This news release does not constitute an offer to sell or the solicitation of an offer to buy any ‎securities in any jurisdiction.‎

The securities referred to in this news release have not been, and will not be, registered under the ‎United States Securities Act of 1933, as amended, or any state securities laws, and may not be offered or sold within the United ‎States or to, or for the account or benefit of, any U.S. person unless they are registered under the ‎United States Securities Act of 1933, as amended, and any applicable state securities laws, or an applicable ‎exemption from the such U.S. registration requirements is available. This news release does not constitute an offer ‎for sale of securities, nor a solicitation for offers to buy any securities. Any public offering of ‎securities in the United States must be made by means of a prospectus containing detailed ‎information about the company and management, as well as financial statements.‎

Cautionary Statement Regarding Forward-Looking Information

This news release contains “forward-looking information” within the meaning of Canadian ‎securities legislation. ‎Forward-looking information generally refers to information about an ‎issuer’s business, capital, or operations ‎that is prospective in nature, and includes future-oriented ‎financial information about the issuer’s prospective ‎financial performance or financial position. ‎The forward-looking information in this news release includes ‎disclosure about the terms of the ‎Proposed Transaction, a proposed Private Placement, the anticipated management team of the Resulting Issuer and ShinyBud’s and mīhī’s business operations and ‎prospects, including mīhī launching its first mīhī ‎Express store during the third quarter.‎ ‎The Company, ShinyBud and mīhī have made certain material assumptions, including but not limited ‎to: ‎prevailing market conditions; general business, economic, competitive, political and social ‎uncertainties; ‎delay or failure to receive board, shareholder or regulatory approvals; and the ‎ability of ShinyBud and mīhī to ‎execute and achieve its business objectives, to develop the forward-looking ‎information in this news release. There ‎can be no assurance that such 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. ‎Actual results may vary from the forward-looking information in this news release due ‎to certain ‎material risk factors. These risk factors include, but are not limited to: adverse market conditions; ‎the ‎inability of the Company, ShinyBud or mīhī to complete the ‎Proposed Transaction on the terms ‎disclosed in this news release, or at all; reliance on key and qualified personnel; regulatory and ‎other risks associated with the cannabis industry in general, as well as those risk factors discussed ‎or referred to in disclosure documents filed by the Company with the securities regulatory ‎authorities in certain provinces of Canada and available at www.sedar.com. The foregoing list of ‎material risk factors and assumptions is not exhaustive. Should any factor affect the Company in an ‎unexpected manner, or should assumptions underlying the forward looking information prove ‎incorrect, the actual results or events may differ materially from the results or events predicted. Any ‎such forward-looking information is expressly qualified in its entirety by this cautionary statement. ‎Moreover, the Company does not assume responsibility for the accuracy or completeness of such ‎forward-looking information. The forward-looking information included in this news release is ‎made as of the date of this news release and the Company undertakes no obligation to publicly ‎update or revise any forward-looking information, other than as required by applicable law.‎


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