Subject: FINANCING AGREEMENTS
Solegear Completes Private Placement for 1,892,197 Units and Announces Grant of Stock Options
VANCOUVER, BRITISH COLUMBIA--(Marketwired - May 5, 2017) -
NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
Solegear Bioplastic Technologies Inc. (the "Company" or "Solegear") (TSX VENTURE:SGB) announced today that it has completed a private placement (the "Private Placement") for aggregate gross proceeds of $283,830. This Private Placement includes 1,892,197 units at a price of $0.15 per unit. As a result, the Company has a total of 74,806,854 common shares issued and outstanding. Insider and related party participation in the private placement totaled 305,531 units.
Each unit is comprised of one common share of the Company (each, a "Share") and one common share purchase warrant (each, a "Warrant", and together, a "Unit"). Each Warrant entitles its holder to acquire one additional Share of the Company at a price of $0.20 per Share within the 24-month period following the closing of the Private Placement. The net proceeds of the Private Placement will be used for working capital and ongoing commercial activities.
"This Private Placement allows Solegear to fill new customer orders and expand our good naturedtm product assortment as announced earlier this spring," said Paul Antoniadis, CEO of Solegear.
In connection with the completion of the Private Placement, the Company paid Mackie Research Capital Corporation (the "Agent"), plus certain members of the selling group, an aggregate cash commission and expense reimbursement of $8,228, inclusive of HST. The Company also issued to the Agent and certain members of the Agent's selling group non-transferable options to acquire 44,000 Units from treasury at a price of $0.15 per Unit, exercisable at any time within the 24-month period following the closing date. Further information about the Company's relationship with the Agent was provided in the Company's September 22, 2016 press release.
The closing of the Private Placement is subject to approval by the TSX Venture Exchange (the "TSX-V"). The securities issued by the Company in connection with the Private Placement are subject to a four month "hold period" expiring on September 6, 2017 (the "Hold Period") as prescribed by the TSX-V and applicable securities laws.
Terms of the Warrants
The issued Warrants are subject to a Warrant Indenture made as of November 10, 2016 between the Company and the TSX Trust Company, which can be found on the Company's SEDAR profile at www.sedar.com. As previously announced, the expiry date of the Warrants will be subject to an acceleration right in favour of the Company that is exercisable if the common shares of the Company trade on the TSX-V at or above a volume-weight average trading price of $0.30 per share on any 20 consecutive or non-consecutive trading days, following the expiry of the Hold Period. If the acceleration right is exercised by the Company, the warrants will expire on the 30th day after the Company provides notice thereof.
Related Party Participation in the Private Placement
Paul Antoniadis, Chief Executive Officer and director of the Company, through Scenario Creation Ltd., subscribed for 100,000 Units having a subscription price of $15,000. Jim Zadra, director of the Company, subscribed for 66,666 Units having a subscription price of $10,000. Noel Harvey, VP Business Development of the Company, subscribed for 86,666 Units having a subscription price of $13,000. Laura Pichon and Emily Pichon, both insiders of Ex-Tech Plastics Inc., an insider of the Company, subscribed for 8,866 and 43,333 Units respectively, having a subscription price of $1,330 and $6,500 respectively.
Following the closing of the Private Placement, Paul Antoniadis will beneficially own or control 3,538,886 Shares, representing approximately 4.8% of the issued and outstanding Shares on an undiluted basis. Jim Zadra will beneficially own or control 268,568 Shares, representing approximately 0.36% of the issued and outstanding Shares on an undiluted basis. Noel Harvey will beneficially own or control 129,550 Shares, representing approximately 0.18% of the issued and outstanding Shares on an undiluted basis. Laura Pichon will beneficially own or control (through Ex-Tech Plastics, Inc., which holds 6,650,000 Shares) 6,658,866 Shares, representing approximately 8.9% of the issued and outstanding Shares on an undiluted basis. Emily Pichon will beneficially own or control (through Ex-Tech Plastics, Inc., which holds 6,650,000 Shares) 6,693,333 Shares, representing approximately 8.9% of the issued and outstanding Shares on an undiluted basis.
As insiders of Solegear participated in this private Placement, it is deemed to be a "related party transaction" as defined under Multilateral Instrument 61-101-Protection of Minority Security Holders in Special Transactions ("MI 61-101").
Each common share of the Company provides the holder with the right to one vote per common share. The Warrants do not entitle the holders to any voting rights. Therefore, all Warrants subscribed for pursuant to this Private Placement provide the subscriber, including the related party, with no additional votes at present but the holders thereof will have one vote per common share when issued upon the exercise of the Warrants. The Private Placement was unanimously approved by the directors of the Company.
Other than the subscription agreement between the aforementioned insiders and the Company relating to the issuance of the Units pursuant to the Private Placement, the Company has not entered into any agreement with an interested party or a joint actor with an interested party in connection with the Private Placement. Neither the Company, nor to the knowledge of the Company after reasonable inquiry, a related party, has knowledge of any material information concerning the Company or its securities that has not been generally disclosed.
The Private Placement is exempt from the formal valuation and minority shareholder approval requirements of MI 61-101 (pursuant to subsections 5.5(c) and 5.7(1)(b)) as it was a distribution of securities for cash and neither the fair market value of the Shares distributed to, nor the consideration received from, interested parties exceeded $2,500,000. The material change report in connection with the Private Placement was not filed 21 days in advance of the closing of the Private Placement for the purposes of Section 5.2(2) of MI 61-101 on the basis that the subscriptions under the Private Placement were not available to the Company until shortly before the closing.
Solegear provides update on $5,000,000 Subscription
Further to the Company's press release of November 2, 2016, the Company continues to work towards closing a separate $5,000,000 subscription agreement received from a private investor, regarding a proposed purchase of 33,333,333 Units at a price of $0.15 per Unit. The private investor's subscription will require approval of Solegear's board, completion of due diligence, and, under TSX Venture Exchange policies, Solegear shareholder approval. Solegear expects to provide further details in advance of its annual general meeting this year.
Solegear Grants Stock Options
Solegear also announces that its Board of Directors has authorized the grant of stock options to purchase a total of 3,611,664 Shares to certain directors, employees and consultants of Solegear, which grant represents approximately 4.8% of the total outstanding Shares. These options were granted in accordance with Solegear's stock option plan (the "Option Plan"), are exercisable for ten years at a price of C$0.15 per Common Share, and are subject to the terms and conditions of the Option Plan, a stock option agreement on the Company's standard form, and the approval of the TSX Venture Exchange. One-quarter of each of the options will vest on the one-year anniversary of the date of grant and the balance will vest in equal monthly installments over the following 36 months.
Paul Antoniadis, Chief Executive Officer, received 666,666 options, Don Holmstrom, EVP and Chief Financial Officer received 450,000 options, Noel Harvey, VP of Business Development received 166,666 options and Michel Labonte, Chief Technology Officer received 166,666 options and certain other employees of Solegear received an aggregate of 511,666 options.
Options granted to Solegear's non-executive directors were as follows: Michael Thomson and Jim Zadra received 100,000 options, and Salil Munjal, Chairman received 200,000 options.
100,000 options were granted to Kin Communications Inc., an entity providing investor relations services to the Company. 1,150,000 options were granted to other individuals and companies providing services to Solegear on a consulting basis.
About Solegear Bioplastic Technologies Inc.
Solegear Bioplastic Technologies Inc. (TSX VENTURE:SGB) is an innovator in the field of next generation bioplastics made from annually renewable plant-based sources. Committed to the principles of Green Chemistry, Solegear is driven by its mission to create healthier, safer and stronger communities by fundamentally changing the way plastics are made.
Solegear's proprietary bioplastic formulations are designed to meet today's social and corporate requirements to lower carbon emissions, reduce waste and remove toxicity typically associated with traditional petroleum-based plastics. Together with its partners, Solegear custom engineers, produces and distributes its high-performance bioplastics as resin, sheets and finished goods with some of the highest percentages of renewable, plant-based materials currently available in the industry.
For more information: www.solegear.ca
On behalf of the Company:
"Paul Antoniadis" Chief Executive Officer and Director
Contact: 604-566-8466
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibilities for the adequacy or accuracy of this release.
This press release does not constitute an offer of securities for sale in the United States. The securities being offered have not been, nor will be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States absent U.S. registration or an applicable exemption from U.S. registration requirements.
Cautionary Statement Regarding Forward-Looking Information
Information in this news release that is not current or historical factual information may constitute forward-looking information within the meaning of securities laws. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.
Such factors include, among others, the risk that: (i) the bioplastics market may not grow as anticipated by the Company, and (ii) the economic circumstances of the Company may change and result in the proceeds of the Private Placement being used other in the manner described above.
When relying on the Company's forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. The Company has assumed that the material factors referred to in the previous paragraph will not cause such forward-looking statements and information to differ materially from actual results or events. However, there can be no assurance that such assumptions will reflect the actual outcome of such items or factors.
Other than as required under securities laws, we do not undertake to update this information at any particular time.
Forward-looking information contained in this news release is based on our current estimates, expectations and projections, which we believe are reasonable as of the current date. The reader should not place undue importance on forward-looking information and should not rely upon this information as of any other date. All forward-looking information contained in this news release is expressly qualified in its entirety by this cautionary statement.
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