OTTAWA, Ontario, Feb. 26, 2018 (GLOBE NEWSWIRE) -- Mercal Capital Corp. (“Mercal” or the “Corporation” - TSX Venture Exchange Symbol MUL.P), a capital pool company, announces that it has terminated its agreement in principle with Folia Biotech Inc. (“Folia”) entered into by Mercal and Folia on June 24, 2016, by which Mercal intended to acquire all of the issued and outstanding securities of Folia, and that Mercal has entered into a new arm’s length agreement in principle to purchase all of the issued and outstanding securities of Serenity CBD Canada Inc. (“Serenity”). Serenity is a corporation incorporated under the Canada Business Corporations Act and intends to build one of the largest North American seed-to-sale manufacturing facility for the production of Cannabidiol (“CBD”) oils and isolates from industrial Hemp. The parties intend that the proposed transaction will constitute its qualifying transaction (the “Qualifying Transaction”) under the policies of the TSX Venture Exchange (the “Exchange”).
Qualifying Transaction
Pursuant to a letter of intent dated February 22, 2018, Mercal and Serenity intend to enter into a share exchange agreement (the “Share Exchange Agreement”) whereby Mercal shall purchase from Serenity shareholders all of the issued and outstanding shares in the capital of Serenity (the “Purchased Shares”) in consideration for the issuance to Serenity shareholders of a certain number of common shares in the capital of Mercal, at a price to be determined prior to the execution of the Share Exchange Agreement, such that the number of shares issued to Serenity shareholders shall equal 95% of the issued and outstanding shares of Mercal.
Prior to the execution of the Share Exchange Agreement, all issued and outstanding preferred shares and fully vested stock options of Serenity shall be converted to common stock of Serenity The proposed Qualifying Transaction is not a Non-Arm’s Length Qualifying Transaction. The Qualifying Transaction will not be subject to shareholder approval Completion of the Qualifying Transaction is contingent on completion of an offering or private placement raising a minimum amount of $10,000,000 (or such other amount as the parties may agree) (the “Minimum Offering”). All investors in such private placement or offering shall be accredited investors or otherwise exempt under securities laws and regulations. Serenity shall participate in presentations as reasonably required to facilitate the completion of any such private placement. Conditions precedent to the Closing of the Qualifying Transaction include closing the Minimum Offering and Mercal and Serenity obtaining all necessary regulatory approvals and consents to complete the Qualifying Transaction.
Directors and Management of the Resulting Issuer
The parties shall agree on the resignations of some of the directors of Mercal and the appointment of some new directors to Mercal's board (the “New Directors”) may be made. The foregoing resignations of the Mercal directors and appointment of the New Directors are conditional on the approval of same by the TSX Venture Exchange. The resignations shall be held in escrow and delivered at such time as the TSXV Form 2A – Personal Information Forms (PIFs) for the New Directors are approved. Appointment of further directors on the closing of the Qualifying Transaction, if so desired, provided however that no less than two of the existing directors of Mercal shall remain as Mercal directors for at least one year following closing of the Transactions. All original Mercal directors shall retain their options and the Parties intend to create an employee share option plan for the resulting issuer, subject to TSXV requirements.
About Mercal
Mercal was incorporated under the Canada Business Corporations Act on August 31, 2015 and its fiscal year end is December 31. Mercal is classified as a CPC as defined in CPC Policy 2.4 and as such Mercal has not commenced commercial operations and has no assets other than cash with which to identify and evaluate businesses or assets with a view to completing a Qualifying Transaction. As a result, Mercal’s current business is to identify and evaluate businesses and assets with a view to completing a Qualifying Transaction.
The common shares of Mercal have traded on the Exchange (under the symbol “MUL.P”) since May 17, 2016. Trading in the common shares of Mercal was halted at the Corporation’s request June 24, 2016, pending the announcement of the previously proposed transaction between Mercal and Folia, which has now been terminated.
Further information about Mercal can be found in its prospectus dated March 31, 2016 and other filings of the Corporation with the Canadian securities regulators, which filings are available at www.sedar.com.
Completion of the Qualifying Transaction is subject to a number of conditions, including but not limited to, completion of satisfactory due diligence, completion of the Minimum Offering, execution of definitive agreements, receipt of all applicable consents to and approvals of the Qualifying Transaction including approval of the Exchange, and if applicable pursuant to Exchange Requirements, majority of the minority shareholder approval. The Qualifying Transaction cannot close until the required approvals and exemptions are obtained. 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 of Mercal to be prepared in connection with the Qualifying 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 securities of a capital pool company should be considered highly speculative.
The Exchange has in no way passed upon the merits of the Qualifying Transaction and has neither approved nor disapproved the contents of this press release.
Neither the 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 press release.
Certain information in this press release may contain forward-looking statements. This information is based on current expectations that are subject to significant risks and uncertainties that are difficult to predict. Actual results might differ materially from results suggested in any forward-looking statements. These and all subsequent written and oral statements containing forward-looking information are based on the estimates and opinions of management on the dates they are made and expressly qualified in their entirety by this notice.
The Corporation assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those reflected in the forward looking-statements unless and until required by securities laws applicable to the Corporation. Readers are cautioned not to place undue reliance on any statements of forward-looking information that speak only as of the date of this release. Additional information identifying risks and uncertainties is contained in the Corporation's filings with the Canadian securities regulators, which filings are available at www.sedar.com.
This is not an offer for sale, or solicitation of an offer to buy, in the United States or to any U.S. Person (as defined in Regulation S under the U.S. Securities Act of 1933, as amended) of any equity shares or any other securities of the Corporation or Folia.
For more information, please contact:
Timothy McCunn, President
Mercal Capital Corporation
T: (613) 238-2022
F: (613) 238-8775
E: TMcCunn@perlaw.ca