Le Lézard
Classified in: Business
Subject: TNM

Calvin Ayre Acquires Beneficial Ownership of Over 10% of TAAL Distributed Information Technologies Inc.


ST. JOHN'S, Antigua, March 11, 2020 /CNW/ - Calvin Ayre ("Mr. Ayre") announces that he has acquired 2,279,215 non-voting participating shares ("NVPS") in the capital of TAAL Distributed Information Technologies Inc. (the "Issuer" or "TAAL"). The NVPS were acquired pursuant to an asset purchase agreement dated February 7, 2020 between Mr. Ayre, the Issuer, Tansley Equipment Limited ("Tansley"), Fractical Sense Limited ("Fractical") and Laser Lollypop Limited (together with Tansley and Fractical, the "Sellers"), which closed on March 9, 2020, and pursuant to which the Issuer acquired over 50,000 non-operational cloud computing units (the "Cloud Computing Assets") from the Sellers (the "Transaction").

In satisfaction of the aggregate purchase price of the Transaction (the "Purchase Price") of US$4,093,374 (C$5,493,717 at a rate of US$1 = C$1.3421, being the average daily rate of exchange for United States dollars expressed in Canadian dollars on March 6, 2020, being the date the agreed to volume weighted average price ("VWAP") was determined, as promulgated by the Bank of Canada (the "Exchange Rate")) payable by the Issuer to the Sellers as consideration for the Cloud Computing Assets, 2,279,215 NVPS were issued to Mr. Ayre at a price of C$2.41 per share. The price per share was calculated by dividing the Purchase Price, as converted based on the Exchange Rate, by the VWAP of the Common Shares trading on the Canadian Stock Exchange over the 10 trading days preceding the closing date of the Transaction. The closing of the Transaction was disclosed by TAAL in a press release on March 9, 2020.

The NVPS will be exchangeable for Common Shares in accordance with an exchange agreement ("Exchange Agreement") between TAAL and Mr. Ayre dated March 9, 2020. Pursuant to the Exchange Agreement, if, on or after May 2, 2020, the percentage of Common Shares held by Mr. Ayre falls below 40% of all of the issued and outstanding Common Shares (a "Trigger Event"), the NVPS will be exchanged on a one-for-one basis for such number of Common Shares issued by TAAL (the "Exchanged Shares") as will result in Mr. Ayre owning, together with any Common Shares already held by him, 45% of all of the issued and outstanding Common Shares. In the event of a Trigger Event where Mr. Ayre does not hold a sufficient number of NVPS required to result in Mr. Ayre owning 45% of all of the issued and outstanding Common Shares, then all of the remaining NVPS held by Mr. Ayre will be exchanged for Exchanged Shares. On March 9, 2020, in connection with closing of the Transaction, TAAL and the Sellers entered into a pledge agreement, the result of which was a pledge following closing of the NVPS issued pursuant to the Transaction as security for the release of the Cloud Computing Assets to the Issuer free and clear of liens on or before September 4, 2020.

In addition, on May 1, 2019, TAAL, Mr. Ayre and Freschette Limited closed on a share purchase agreement (the "Share Purchase Agreement") dated March 22, 2019, whereby TAAL acquired all of the issued and outstanding securities of Freschette Limited, a company wholly-owned by Mr. Ayre. The purchase price in connection with the Share Purchase Agreement was C$24,148,077.01, to be satisfied by way of an unsecured convertible debenture (the "Debenture") maturing on May 1, 2020. The Debenture may be satisfied on maturity (or at any time that is nine months from May 1, 2019), in whole or in part, at the option of Mr. Ayre, by the Issuer issuing Common Shares at a valuation of C$0.45 per Common Share or, at the option of TAAL (at any time after March 27, 2020), pursuant to a formula based on its then current trading price and subject to a floor of C$0.30.

Prior to the Transaction, Mr. Ayre beneficially owned 1,162,500 Common Shares, representing 8.41% of the issued and outstanding Common Shares.

On December 11, 2019, the Issuer announced its completion of a consolidation of its Common Shares on the basis of one post-consolidation Common Share for each 10 pre-consolidation Common Shares (the "Consolidation"). Subsequent to the Consolidation, pursuant to the Debenture, an aggregate of 8,049,359 Common Shares would be issuable at a conversion price of C$3.00 and an aggregate of 5,366,239.33 Common Shares would be issuable at a conversion price of C$4.50. If the Debenture is fully converted into Common Shares at a conversion price of C$3.00, following such conversion Mr. Ayre will hold 9,211,859 Common Shares, representing approximately 66.64% of the issued and outstanding Common Shares on a non-diluted basis, assuming no further issuances of Common Shares.

Pursuant to the Transaction, Mr. Ayre acquired beneficial ownership over all of the 2,279,215 issued and outstanding NVPS of TAAL. As of May 2, 2020, the NVPS held by Mr. Ayre will be subject to the Exchange Agreement, providing that if at any time Mr. Ayre's holdings of Common Shares falls below 40% of the issued and outstanding Common Shares, that number of NVPS that brings his holdings of Common Shares to 45% will be exchanged on a one-for-one basis until such time that there are no more NVPS held by Mr. Ayre available for exchange.

The purpose of the Transaction was to enable TAAL to acquire the Cloud Computing Assets and to enable Mr. Ayre to acquire the NVPS exchangeable into Common Shares for investment purposes. Mr. Ayre expects to monitor the business, prospects, financial condition and potential capital requirements of the Issuer, and depending on its evaluation of these and other factors, Mr. Ayre may from time to time in the future increase or decrease its direct or indirect ownership, control or direction over the Common Shares through market transactions, private agreements, subscriptions from treasury or otherwise.

The Issuer's head office address is located at 1800 - 510 West Georgia Street, Vancouver, British Columbia, V6B 0M3.

SOURCE Calvin Ayre


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