Creation Capital Announces Agreement to Acquire Greenlane Biogas

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TSX-V: CRN.P

VANCOUVER, Dec. 10, 2018 /CNW/ - Creation Capital Corp. (TSX-V: CRN.P) ("Creation Capital" or the "Company"), a capital pool company listed on the TSX Venture Exchange (the "Exchange"), is pleased to announce that it has entered into a binding letter agreement dated December 9, 2018 (the "Letter Agreement") with Pressure Technologies plc (LSE: PRES) ("Pressure Technologies"), a United Kingdom company listed on the AIM market of the London Stock Exchange, to acquire its Alternative Energy Division (the "Acquisition").  The Acquisition will constitute the Company's Qualifying Transaction as defined in Policy 2.4 ? Capital Pool Companies of the Exchange.

About Greenlane

The holding company of Pressure Technologies' Alternative Energy Division is PT Biogas Holdings Limited, a United Kingdom company, and the main operating entity is Greenlane Biogas North America Ltd., a Canadian company ("Greenlane"). Greenlane, headquartered in Vancouver, British Columbia, is a world leader in technology used to upgrade biogas generated from landfills, waste water treatment plants, and agricultural and food waste into a clean and marketable renewable natural gas product. Greenlane has been in operation for over 30 years and has supplied over 100 biogas upgrading units in over 18 countries worldwide, including the first upgrading systems in 11 countries and the world's first and second largest biogas upgrading facilities in Germany and Canada. Greenlane designs and supplies the equipment used to upgrade biogas produced by the anaerobic digestion of organic waste to a high-quality methane product suitable for either injection into the natural gas grid or direct use as vehicle fuel. Financial information of Greenlane for the years ended September 30, 2018 and 2017 will be provided once available.

Summary of the Acquisition

The Letter Agreement contemplates that the detailed steps of the Acquisition will be set out in a definitive agreement between Creation Capital and Pressure Technologies, to be executed on or before January 31, 2019, pursuant to which Creation Capital will acquire 100% ownership of the Alternative Energy Division, including Greenlane, on a cash free debt free basis, for the following purchase price to be paid on the closing date (the "Closing Date"):

• £5.0 million in cash (the "Closing Cash Consideration");
  
  
• £2.0 million in common shares of Creation Capital, issued at a price per share equal to the Private Placement share price, as defined below (the "Closing Share Consideration"); and
  
  
• £4.1 million by way of a secured promissory note to be issued by Creation Capital to Pressure Technologies that will: (i) be denominated 50% in British pounds sterling and 50% in Canadian dollars, (ii) mature on the date that is 24 months from the Closing Date, and (iii) bear interest at the rate of 7% per annum (the "Closing Promissory Note").
  

Prior to the closing of the Acquisition, the Company will change its name to a name to be reflective of the acquisition of the Greenlane business, as approved by the directors of Creation Capital.

The completion of the Acquisition remains subject to a number of terms and conditions, including, among other things:

• completion of the Private Placement described below;
  
  
• the parties obtaining all necessary consents, orders and regulatory and shareholder approvals, including the conditional approval of the Exchange subject only to customary conditions of closing;
  
  
• no material adverse changes occurring in respect of either Creation Capital or Greenlane;
  
  
• completion of a thorough business, legal and financial review by each of the parties of the other party;
  
  
• the appointment of an outside observer to Company board meetings as designated by Pressure Technologies for a term ending upon repayment in full of the Closing Promissory Note; and
  
  
• other standard conditions of closing for a transaction in the nature of the Acquisition.

Upon completion of the Acquisition, the Company will continue the business of Greenlane and be listed as an industrial issuer on the Exchange, with Greenlane as its primary operating subsidiary (the Company after the Acquisition being referred to herein as the "Resulting Issuer").

Private Placement

In connection with the Acquisition, Creation Capital plans to close a brokered private placement of its shares for minimum gross proceeds of C$10.0 million (the "Private Placement"). The Private Placement will be structured as either a private placement of subscription receipts (convertible into common shares on a 1:1 basis upon closing of the Acquisition) or a private placement of common shares that would close concurrent with, and as a condition, to closing of the Acquisition.  The proceeds of the Private Placement will be used to fund (i) the Closing Cash Consideration to be paid to Pressure Technologies, (ii) expenses of the Acquisition and the Private Placement, and (iii) the post-Acquisition working capital requirements of Greenlane.

A further news release will be issued confirming the final terms of the Private Placement once determined.

Appointment of new Director

Creation Capital is also pleased to announce the appointment of Brad Marchant as a director of Creation Capital. The objective of Mr. Marchant's appointment is to enhance the capabilities of the current Board of Directors in completing the Acquisition. As disclosed below under "Summary of Proposed Directors and Officers of the Resulting Issuer", Mr. Marchant is proposed to be a director of the Resulting Issuer on a going-forward basis after completion of the Acquisition.

Summary of Proposed Directors and Officers of the Resulting Issuer

It is currently anticipated that all of the current directors of Creation Capital will remain with the Resulting Issuer as directors. The Board of directors of the Resulting Issuer is expected to consist of Brad Douville (CEO), Wade Nesmith (Chairman), David Demers, David Blaiklock, Patricia Fortier and Brad Marchant.  The following are brief descriptions of the proposed directors and officers of the Resulting Issuer:

Brad Douville ? Chief Executive Officer and Director

Brad Douville was appointed President of Greenlane Biogas in November, 2017. He joined Greenlane after a 25 year career in the natural gas commercial vehicle industry. He was one of the founding members of Westport Fuel Systems Inc., a University of British Columbia spinoff company formed in 1995 that has grown into a leading alternative fuels automotive systems company, supplying CNG and LNG systems to many of the world's leading manufacturers of cars and commercial vehicles. He was also one of the founding members of the Cummins Westport joint venture formed in 2001, which is the preeminent supplier of natural gas engines for trucks and buses in North America. Mr. Douville held various executive positons in engineering and business at Westport and Cummins Westport until November 2017. Brad holds a Master of Applied Science Degree in Mechanical Engineering from the University of British Columbia (1994) and an Executive Program certificate from the Stanford School of Business (2000).

Wade Nesmith ? Chairman and Director

Wade Nesmith was the founder of Primero Mining Corp ("Primero). He served in the capacity of director of the Company from October, 2008 to May, 2018 when Primero was acquired by First Majestic Silver Corp.  He acted as President of Primero from October, 2008 to September, 2009, and Chief Executive Officer from October, 2008 to June, 2010, Executive Chairman of the Board from June, 2010 to March, 2012 and Chairman of the Board from March, 2012 to May, 2018.

Mr. Nesmith obtained his Bachelor of Law degree from York University's Osgoode Hall Law School in 1977. He was the Superintendent of Brokers for the Province of British Columbia (1989 ? 1992), and subsequently a senior partner, specializing in securities law with Lang Michener LLP (now McMillan LLP) (1993 - 1998). Mr. Nesmith was a founding director of Westport Fuel Systems Inc. and from 1998 to 2003 he worked for Westport, helping to lead their public markets activities and retiring as President, Westport Europe. He was a founding director of Wheaton Precious Metals Corp. (formerly Silver Wheaton Corp.) (TSX, NYSE), serving from 2004 to 2016. Mr. Nesmith is also currently a director Westport Fuel Systems Inc. and was appointed to its board in June, 2017.

David Demers ? Director

David Demers was one of the founding members of Westport Fuel Systems Inc., a University of British Columbia spinoff company that has grown into a leading alternative fuels automotive systems company, supplying CNG and LNG systems to many of the world's leading manufacturers of cars and commercial vehicles.  Mr. Demers served as CEO and a director of Westport Fuel Systems Inc. from 1995 until July, 2016, when it merged with Fuel Systems Solutions of New York.  Mr. Demers is currently a director of TIMIA Capital Corp. and was appointed to its board in May, 2017 and he is currently a Director of Augurex Life Sciences Corp. and was appointed to its board in March, 2018.  Mr. Demers was a Director of Primero from October, 2008 until May, 2018.  He has worked as a Director of a number of technology start-ups.  He also served as a Director of Clean Energy Fuels (CLNE) through its NASDAQ listing.  Mr. Demers obtained a Bachelor of Science (Physics) in 1977 and a Juris Doctor in 1978, both from the University of Saskatchewan.

David Blaiklock ? Director

David Blaiklock has over 20 years of public company experience in a senior financial role. He previously served as the Chief Financial Officer of Primero, and as the Corporate Controller for Intrawest Corporation. He has experience in the financial operations of a growth-oriented and acquisition-focused public company. Previously, he was Corporate Controller of a number of public and private companies, primarily involved in real estate development. He received his designation as a Chartered Accountant while working with the international accounting firm Deloitte Touche Tohmatsu Limited. Mr. Blaiklock graduated from the University of Sheffield.

Patricia Fortier ? Director

Patricia Fortier is a former Canadian diplomat whose career has focused on political relations, governance, international security, and trade and investment ? notably involved with the extractive and defence industries abroad. She most recently acted in the role of Assistant Deputy Minister responsible for Security, Consular, and Emergency Management in Global Affairs Canada. She was the past Canadian Ambassador to Peru and Bolivia and the Canadian Ambassador to the Dominican Republic and was also the Minister-Counsellor (Political) at the Canadian Embassy in Washington, D.C. Her past work abroad includes being Senior Advisor to the OAS Electoral Observation Mission to Peru and Chief Advisor to the High Level Mission to Peru. In Costa Rica, she worked with international NGOs on climate change (Earth Council) and human rights/democracy (Instituto Interamericano de los Derechos Humanos). Other diplomatic postings included Chile, Canadian mission to the United Nations in New York, India, Kenya and Zambia. She was also a member of the board of the Pearson Peacekeeping Centre. Patricia was also a director of Primero Mining Corp., a mining company with operations in Mexico and Canada. Patricia has a Master's degree in Public Administration and a BA (Honours) from Queen's University and was a Weatherhead Fellow at Harvard University. She is fluent in English, Spanish and French.

Brad Marchant ? Director

Brad Marchant has over 30 years of experience in the mining and environmental industries both in management and as a director. He has worked with numerous mining and technology companies including Coastech Research Inc., Triton Mining Corporation, Placer Dome Ltd., Equity Silver Mines Ltd. and Wabush Mines Ltd., and was a director of Primero Mining Corp. He founded a water treatment company, BioteQ Environmental Technologies Inc. (now BQE Water), which is focused on finding water treatment solutions for mining companies experiencing metallurgical and environmental challenges and also founded Enterra Feed Corp. Enterra collects pre-consumer organic waste material which is then processed by black soldier fly larvae into protein for use in animal feed, and fertilizer. Wheatsheaf, a subsidiary of the Grosvenor Group, is now the controlling shareholder of Enterra. Mr. Marchant has a B.Sc. in Biochemistry from the University of New Brunswick and an M.A.Sc. in Mining and Mineral Process Engineering from the University of British Columbia.

Other Information relating to the Acquisition

Sponsorship of a qualifying transaction is required by the Exchange unless exempt in accordance with Exchange policies. The Company expects that the Acquisition will be exempt from the sponsorship requirement of the Exchange as a result of the brokered Private Placement to be completed in connection with the Acquisition. If an exemption from sponsorship is not available, the Company will seek a sponsor for the Acquisition.

Pressure Technologies disclosed on June 12, 2018 in its interim report for the six months ended March 31, 2018 that it had determined to explore strategic options for its Alternative Energy division to enhance shareholder value.  As part of this process, Pressure Technologies engaged Creation Partners LLP ("Creation Partners") to provide strategic advice relating to a potential divestiture of Greenlane in consideration for the payment of an advisory fee.  Creation Partners is a limited liability partnership that is controlled by Wade Nesmith, David Demers and David Blaiklock, each of whom is a director of Creation Capital. Creation Partners will receive an advisory fee of up to £440,000 from Pressure Technologies in connection with the Acquisition, 50% of which will be received by Creation Partners on the Closing Date and 50% of which will be deposited in escrow and received by Creation Partners upon repayment of the Closing Promissory Note. This advisory fee will be paid in common shares of Creation Capital by Pressure Technologies assigning a portion of the Closing Share Consideration from the Acquisition to Creation Partners.

Although the Acquisition will not constitute a Non-Arm's Length Qualifying Transaction as defined in Exchange Policy 2.4, in connection with the Acquisition the Company will be seeking majority of the minority shareholder approval for the fees to be paid by Pressure Technologies to Creation Partners as described above.  It is anticipated that shareholder approval will be obtained by way of written consent.

Creation Capital also intends to hold a shareholder meeting in January 2019 at which time the shareholders of Creation Capital will be requested to approve the increase to the number of directors from the current 3 directors to the 6 proposed directors and to appoint the proposed directors conditional upon completion of the Acquisition.

The common shares of the Company were halted on the Exchange effective December 10, 2018 and are expected to remain halted until the completion of the Acquisition.  Subject to obtaining all necessary consents and approvals and satisfying all other conditions of closing, the Company anticipates the Closing Date to be in late January 2019.

In connection with the Acquisition, McMillan LLP is acting as legal counsel to the Company and Sangra Moller LLP is acting as legal counsel to Pressure Technologies.

Additional information concerning the Acquisition, the Company, Greenlane and the Resulting Issuer will be provided in subsequent news release and in the Company's Filing Statement to be filed in connection with the Acquisition and which will be available under the Company's SEDAR profile at www.sedar.com.

About Creation Capital Corp.

The Company is designated as a Capital Pool Company under Exchange Policy 2.4.  The Company has not commenced commercial operations and has no assets other than cash.  The Company's objective is to identify and evaluate businesses or assets with a view to completing a Qualifying Transaction. Any proposed Qualifying Transaction must be approved by the Exchange and, in the case of a Non-Arm's Length Qualifying Transaction, must also receive majority approval of the minority shareholders.  Until the completion of a Qualifying Transaction, the Company will not carry on any business other than the identification and evaluation of businesses or assets with a view to completing a proposed Qualifying Transaction. 

ON BEHALF OF THE BOARD

"Wade Nesmith"                            
Wade Nesmith
CEO and CFO

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 release.

Completion of the Acquisition is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange Requirements, majority of the minority shareholder approval. Where applicable, the Acquisition cannot close until the required shareholder approval is obtained. There can be no assurance that the Acquisition 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 Acquisition, any information released or received with respect to the Acquisition 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 TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed Acquisition and has neither approved nor disapproved the contents of this press release.

This news release does not constitute an offer to sell or a solicitation of an offer to sell any of the securities in the United States.  The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

The information in this news release includes certain information and statements about management's view of future events, expectations, plans and prospects that constitute forward looking statements, including statements relating to the completion of the Acquisition and the proposed business of the Resulting Issuer. These statements are based upon assumptions that are subject to significant risks and uncertainties. Because of these risks and uncertainties and as a result of a variety of factors, the actual results, expectations, achievements or performance may differ materially from those anticipated and indicated by these forward looking statements. Any number of factors could cause actual results to differ materially from these forward-looking statements as well as future results. Although the Company believes that the expectations reflected in forward looking statements are reasonable, it can give no assurances that the expectations of any forward looking statements will prove to be correct. Except as required by law, the Company disclaims any intention and assumes no obligation to update or revise any forward looking statements to reflect actual results, whether as a result of new information, future events, changes in assumptions, changes in factors affecting such forward looking statements or otherwise.

SOURCE Creation Capital Corp.