Tickers: PINX:CWNHF, XTSX:CNH
VANCOUVER, BRITISH COLUMBIA - TheNewswire - September 11, 2019 - Crownia Holdings Ltd. (TSXV:CNH) (OTCQB:CWNHF) ("Crownia" or the "Company") is pleased to announce that it has entered into a non-binding letter of intent (the "LOI") dated August 31, 2019 with Thena Potash Corporation ("Thena"). The Company will complete a business combination (the "Transaction") with Thena by acquiring all of the issued and outstanding securities of Thena from its shareholders. The proposed Transaction is intended to constitute a "Reverse Takeover" of Crownia, as such term is defined in policy 5.2 (the "Policy") of the TSX Venture Exchange (the "TSXV").
On closing (the "Closing") of the Transaction, it is anticipated that the resulting issuer (the "Resulting Issuer") will be listed as a Tier 2 "Mining" issuer on the TSXV.
Pursuant to the LOI, the Transaction will be effected by the Company issuing 25,800,000 common shares (the "Consideration Shares") to the shareholders of Thena to acquire all of the issued and outstanding securities of Thena, which will result in Thena becoming a wholly-owned subsidiary of the Resulting Issuer. It is currently anticipated that the 25,800,000 common shares will be issued at a deemed price of $0.55 per share for an aggregate deemed purchase price of $14.19 million. Currently, there are no deposits, advances or loans contemplated to be made from Crownia to Thena.
In addition to the Consideration Shares, the Company will issue 12,000,000 convertible preferred shares (the "Convertible Preferred Shares") to the shareholders of Thena whereby each Convertible Preferred Share will, subject to the Release Schedule as hereinafter defined, entitle the holder thereof to convert into one additional common share from the Resulting Issuer without additional consideration. Until converted into common shares of the Resulting Issuer, the Convertible Preferred Shares will not carry any voting rights and not be entitled to receive any dividends or payouts. The Convertible Preferred Shares will be escrowed and subject to the following release schedule (the "Release Schedule"): (a) 60% of the Convertible Preferred Shares will be released on the date when the Resulting Issuer completes the Thenardite Drilling Program at Camp Verde and updates its existing Camp Verde report in compliance with National Instrument 43-101 ("NI 43-101"); and (b) The remaining 40% of the Convertible Preferred Shares will be released on the date when the Resulting Issuer completes and files the Camp Verde report in compliance with NI 43-101.
The Company intends to complete the following financing plans, and the numbers and prices referred herein in this section are on a post Share Consolidation basis:
1.The Company intends to conduct a brokered or non-brokered private placement (the "Bridge Financing"), pursuant to which the Company intends to issue an aggregate of approximately 700,000 units (the "Bridge Financing Unit") at a price of $0.50 per share to arm's length subscribers for gross proceeds of $350,000 to be used for interim working capital, due diligence costs, audit and legal fees and other necessary documentation costs for the Transaction and general corporate purposes of the Resulting Issuer. It is expected that a majority of the subscribers in the Bridge Financing will be arm's length parties. It is the intention of both Parties that the Bridge Financing might be conducted via a convertible debenture (the "Convertible Debenture"). It is intended that the Convertible Debenture will have a principal amount of C$1,000 per debenture with a 3-year term to maturity, carrying an eight-percent (8.0%) coupon rate paying on an annual basis to be paid in cash or shares at the total discretion of Crownia. or the Resulting Issuer, pre-payable at any time prior to maturity without penalty. The total amount of the principal and the total amount of accrued interest can be converted into one (1) common share (the "Convertible Debenture Share") and one-half (1/2) common share purchase warrant (the "Convertible Debenture Warrant") of the Resulting Issuer prior to or concurrent to the completion of the Transaction at a conversion price of C$0.50 (the "Conversion Price"). A total of 700,000 Convertible Debenture Shares and 350,000 Convertible Debenture Warrants will be issued by the Resulting Issuer to the holders based on the conversion of 700,000 Convertible Debenture Units. Each whole Convertible Debenture Warrant entitles the holder thereof to purchase one additional common share of the Resulting Issuer at an exercise price of C$0.60 per share for a period of 24 months from the conversion date.
The finders for the Bridge Financing (the "Concurrent Financing Finders") are entitled to receive a proposed cash commission equal to 7.0% of the gross proceeds of the Bridge Financing associated with the Bridge Financing Finders (the "Bridge Financing Finder's Commission") and will be granted warrants (the "Bridge Financing Finder's Warrant") by the Resulting Issuer to acquire the number of common shares equal to 7.0% of the aggregate number of Bridge Financing Units associated with the Bridge Financing Finders under the Bridge Financing, exercisable at a price of C$0.60 per Bridge Financing Finder's Warrant for a period of 24 months from the closing date of the Bridge Financing. A maximum amount and number of the Bridge Financing Finder's Commission and Bridge Financing Finder's Warrants are C$24,500 and 49,000 respectively, based on the gross proceeds of C$350,000 from the Bridge Financing. Any payments in cash and shares pursuant to this Bridge Financing will be subject to the approval from the TSXV.
2.The Company also intends to complete a brokered or non-brokered private placement (the "Concurrent Financing") which will close concurrently with the Closing of the Transaction, pursuant to which the Company intends to raise a minimum amount gross proceeds of C$3,600,000 which will lead to an issuance of an aggregate amount of 6,545,455 units of the Resulting Issuer (the "Concurrent Financing Unit") at a price of $0.55 per unit to arm's length subscribers. Each Concurrent Financing Unit consists of one (1) common share (the "Concurrent Financing Share") and one-half (1/2) common share purchase warrant (the "Concurrent Financing Warrant"). A total of 6,545,455 Concurrent Financing Shares and 3,272,728 Concurrent Financing Warrants will be issued by the Resulting Issuer to the subscribers based on the maximum issuance of 6,545,455 Concurrent Financing Units. Each Concurrent Financing Warrant entitles the holder thereof to purchase one additional common share of the Resulting Issuer at an exercise price of C$0.65 per share for a period of 24 months from the conversion date. The Concurrent Financing is intended to be used for the geological exploration work program to be recommended in a 43-101 report in the first year after completion of the RTO, working capital and general corporate purposes of the Resulting Issuer.
The finders for Concurrent Financing (the "Concurrent Financing Finders") are entitled to receive a proposed cash commission equal to 7.0% of the gross proceeds of the Concurrent Financing associated with the Concurrent Financing Finders (the "Concurrent Financing Finder's Commission") and will be granted warrants (the "Concurrent Financing Finder's Warrant") by the Resulting Issuer to acquire the number of common shares equal to 7.0% of the aggregate number of Concurrent Financing Units associated with the Concurrent Financing Finders under the Concurrent Financing, exercisable at a price of C$0.65 per Concurrent Financing Finder's Warrant for a period of 24 months from the closing date of the Concurrent Financing. A maximum amount and number of the Concurrent Financing Finder's Commission and Concurrent Financing Finder's Warrants are C$252,000 and 458,182 respectively based on the gross proceeds of C$3,600,000 from Concurrent Financing.
Concurrent to or immediately prior to the completion of the Transaction, the Company intends to effect a share consolidation (the "Share Consolidation") whereby every ten old shares Crownia existing as of the date hereof will be consolidated to one new share of Crownia. All the outstanding options and warrants of Crownia existing as of the date hereof will be adjusted based on the same 10-to-1 ratio of the Share Consolidation. The Share Consolidation shall not apply to the securities issued in connection with the Bridge Financing, the Consideration Shares, the Convertible Preferred Shares or the Concurrent Financing.
Upon Closing of the Transaction and subject to acceptance of the TSXV, a finder's fee (the "Finder's Fee") is payable to Faber Hill Capital Management Pte Ltd. (the "Finder"), a private company registered in Singapore and an arm's length party to Crownia and Thena, subject to policies and acceptance of the TSXV. The Finder's Fee will be in the amount of 1,290,000 common shares of the Resulting Issuer at the deemed price of $0.55 per share.
The proposed Transaction is expected to be subject to shareholder approval. The proposed Transaction constitutes an Arm's Length Transaction, as such term is defined in policy 1.1 of the TSXV. There is no direct or indirect beneficial interest of any of the non-arm's length parties of Crownia in Thena. There are no non-arm's length parties of Crownia who are insiders or non-arm's length parties of Thena.
The Company currently has 55,278,944 common shares issued and outstanding (5,527,894 - post Share Consolidation basis). The Company currently also has outstanding incentive stock options to acquire 1,775,000 common shares (177,500 - post Share Consolidation basis) at an average price of $0.31 per share ($3.11 - post Share Consolidation basis) and outstanding warrants to acquire 10,913,866 common shares (1,091,386 - post Share Consolidation basis) at a price of $0.15 per share ($1.54 - post Share Consolidation basis).
Following the Closing of the Transaction, the completion of the Bridge Financing and Concurrent Financing, the issuance of the Finder's Shares and the Share Consolidation, approximately 39,863,349 common shares of the Resulting Issuer would be issued and outstanding on a non-diluted basis. Shareholders of the Company will hold common shares representing approximately 13.9% of the capital of the Resulting Issuer following the Closing of the Transaction on a non-diluted basis. On a partially diluted basis assuming all the Convertible Preferred Shares are converted into common shares, the shareholding of Crownia's current shareholders is expected to represent 10.7% of the capital of the Resulting Issuer.
The proposed Transaction is subject to a number of terms and conditions, including the execution of the Definitive Agreement; the completion of the Concurrent Financing; the receipt of all necessary regulatory, corporate and third party approvals, including the approval of shareholders from both Parties, the approval of the Exchange, and compliance with all applicable regulatory requirements and conditions in connection with the Transaction; the confirmation of the representations and warranties of each Party to the Definitive Agreement as set out in such agreement; the absence of any material adverse effect on the financial and operational condition or the assets of each of the Parties to the Definitive Agreement; the delivery of updated technical reports by Thena to be prepared in compliance with NI 43-101; the delivery of standard closing documentation from both Parties including, but not limited to, legal opinions from Canadian, BVI and Hong Kong legal counsels, officers' certificates and certificates of good standing or compliance; the settlement by cash from the Bridge Financing or write-off of the liabilities of Crownia, except those items as agreed by Thena prior to Closing; the disposition of Crownia's BVI subsidiary and all the subsidiaries of Crownia's BVI subsidiary (the "Disposition") to the major shareholders or their nominees of Crownia; and other condition precedents customary for a transaction such as this Transaction. The Disposition will be subject to certain disclosure requirements pursuant to the TSXV Policy 5.9 and Multilateral Instrument 61-101 which will be disclosed in a follow-on news release.
The completion of the Transaction is expected to occur following the satisfaction or waiver of the conditions precedent. The parties have agreed to use best efforts to close the Transaction as soon as possible. Each of the Company and Thena will be responsible for the payment of their own professional fees and the Company has agreed to bear the sponsorship fee, listing fee and any other expenses in connection with the foreign due diligence searches required by the TSXV.
Trading in the common shares of the Company is halted and will remain halted pending the satisfaction of all applicable requirements of the TSXV. There can be no assurance that trading in the common shares of the Company will resume prior to the completion of the Transaction.
Information concerning THENA
Thena is a private company incorporated under the laws of Ontario, Canada. Thena controls 100% of Thena Corp. (the "Subsidiary"), a Delaware private corporation which owns a 100% interest in potash and thenardite properties in the United States of America (USA).
Based on Thena's August 31, 2018 unaudited financial statements, which were not prepared in accordance with International Financial Reporting Standards, for the fiscal year ending August 31, 2018, Thena had no revenue and a net loss of $40,507. As at August 31, 2018, Thena's total assets and liabilities were approximately $85,000 and $9,000, respectively.
Based on the Subsidiary's December 31, 2018 unaudited financial statements, which were not prepared in accordance with International Financial Reporting Standards, for the fiscal year ending December 31, 2018, the Subsidiary had no revenue and a net loss of $73,460. As at December 31, 2018, the Subsidiary had total assets with insignificant value and approximately $86,000 of liabilities.
Board of Directors and Management of the Resulting Issuer
Upon Closing, the board of directors of the Resulting Issuer shall consist of five (5) members, two of whom will be independent directors. The names and backgrounds of four director nominees and proposed senior officers who will constitute principals or insiders of the Resulting Issuer are as follows:
Carl Di Placido: Chief Executive Officer, President and Director
Mr. Di Placido is a founder of Thena. He is also president and director of Bathurst Resources Corp. which is a private mineral exploration engaged in base metals exploration projects in New Brunswick. Mr. Di Placido has been a director of Noravena Capital Corporation (TSXV: NRV.P) which is a capital pool company and has recently completed a qualifying transaction with 3MV Energy Inc. which focused on light oil resource project in Kindersley, Saskatchewan. He is also involved in Onsino Capital Corporation (TSXV: OS.H) which has recently completed a qualifying transaction with Quia Resources Inc. which is a gold exploration company presently developing gold properties in San Lucas Orogenic Gold Belt of Colombia. Quia Resources Inc. currently trades on the TSX Venture under the symbol "QIA". Mr. Di Placido is a director of Paradox Basin Resources Corp., a Delaware company holding potash prospects in Utah. Mr. Di Placido graduated from Humber College of Applied Arts and Technology.
Raymond Joseph Mongeau: Chief Operating Officer and Director
Mr. Mongeau is a founder of Paradox Basin Resources Corp. since 2007, a Delaware company holding potash prospects in Utah. From 2004 to 2007, he is involved in Creston Mining Corporation, a private Canadian mining company owning 100% of the Creston molybdenum property located in Sonora, Mexico. Creston Mining sold its molybdenum property to Georgia Ventures, a TSX Venture listed company for US$20 million, US$10.0 million in shares and a 3% Net Profit Interest. From 2004 to 2006, Mr. Mongeau was president and CEO of Virgin Metals Inc., a TSX listed company. From 1989 to 2004, Mr. Mongeau is president and director of Morgain Minerals Inc., a TSX Venture listed company engaged in acquisition and development of El Cairo Gold Property, State of Durango, Mexico and that of the Cuatro Hermanos Property, a porphyry copper-molybdenum deposit, State of Sonora, Mexico. Mr. Mongeau graduated from St. Francis Xavier University with a BSc degree in geology.
Mr. Allan Raeside: Chief Financial Officer, Corporate Secretary and Director
Mr. Allan Raeside is a founder of Thena and as a seasoned entrepreneur has been involved in the entire business cycle including the start up to sale of several successful businesses. Mr. Raeside, as an owner and officer of Quiettouch Inc. was responsible for the delivery of services and equipment to both the offices and mining operations of Centerra Gold, Lakeshore Gold, FNX and Quadra amongst other businesses. Earlier in his career, Mr. Raeside was involved in the coding and support of Computer Methods fast ticket and accounting solutions for mining operations including the delivery of product to the end consumer. Mr. Raeside is currently a government documented and recognized farmer in Ontario, Canada who owns farmland that uses sulphite of Potash (SOP) and nutrients to condition the soil and increase the yield of his cash crops.
Mr. Oren S. Gatten: Director
Mr. Gatten has over 20 years of experience in construction management, mineral exploration permitting, mine development and reclamation. He is current president of North American Miner Services, LLC. Mr. Gatten is proficient in land tenure research and mineral rights. Mr. Gatten graduated with a Bachelor degree in construction management from Weber State University.
The Company will disclose the background of the fifth director is a follow-on news release.
The Company intends to apply to the TSXV for a waiver from the sponsorship requirements if no exemption is available under the policies of the TSXV.
As a specialty steel trading company, Crownia provides value-add by identifying suitable suppliers for products that best suit customer needs, establishing distribution centers in optimal locations, and providing superior sales and after-sale services to customers.
On behalf of the Board of Directors,
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 news release.
This press release may contain "forward-looking information" within the meaning of applicable Canadian securities legislation. All statements, other than statements of historical fact, included herein may be forward-looking information. Generally, forward-looking information may be identified by the use of forward-looking terminology such as "plans" "expects" or "does not expect", "proposed", "is expected", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases, or by the use of words or phrases which state that certain actions, events or results may, could, would, or might occur or be achieved. This forward-looking information in respect of the Company reflects the Company's as the case may be, current beliefs and is based on information currently available to the Company and on assumptions the Company as the case may be, believes are reasonable.
Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. Accordingly, readers should not place undue reliance on forward-looking information as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur. 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 press release are expressly qualified by this cautionary statement.
Completion of the transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable, disinterested 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 Crownia Holdings Ltd. should be considered highly speculative.
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