Le Lézard
Classified in: Business
Subjects: FINANCING AGREEMENTS, MERGERS AND ACQUISITIONS (M&A), Restructuring / Recapitalization

Cedarmont Capital and ShinyBud Announce Definitive Combination Agreement and Initial Closing Under Private Placement Financing


TORONTO, Sept. 23, 2021 (GLOBE NEWSWIRE) -- Cedarmont Capital Corp. ("Cedarmont" or the "Company" (TSXV:CCCA.P), a capital pool company under the rules of the TSX Venture Exchange (the "TSXV"), and Shiny Bud Inc. ("ShinyBud") are pleased to announce that, further to the Company's news release of June 18, 2021, Cedarmont, ShinyBud and Mihi Inc. ("m?h?") have entered into a definitive agreement (the "Combination Agreement") providing for the terms and conditions of the proposed combination of the three companies that will result in a reverse take-over of the Company (the "Transaction").

In connection with completion of the Transaction ("Closing"), the Company expects to change its name to "ShinyBud Corp." (the "Resulting Issuer") or such other name as may be determined by ShinyBud and m?h? and is acceptable under applicable laws and to the TSXV. The combined cannabis retailing business of ShinyBud and m?h? will continue through the Resulting Issuer.

The parties are also pleased to announce the initial closing under the previously announced private placement offering (the "Private Placement") of ShinyBud subscription receipts ("Subscription Receipts") at a price of $8.00 per Subscription Receipt. Each Subscription Receipt is automatically convertible for no additional consideration, prior to Closing, into a unit consisting of one ShinyBud share (an "Underlying Share") and one ShinyBud share purchase warrant (an "Underlying Warrant") exercisable at $9.20 per share for a 24-month period, upon the satisfaction of certain conditions, including all conditions precedent to Closing.

An aggregate of 697,900 Subscription Receipts were sold in the initial closing for total gross proceeds of $5,583,200, which proceeds (net of certain expenses) are held in escrow by the subscription receipt agent and will be releasable to the Resulting Issuer upon conversion of the Subscription Receipts into Underlying Shares and Underlying Warrants in connection with Closing.

ShinyBud and m?h? anticipate the sale of additional Subscription Receipts in a subsequent closing.

Transaction Terms

The parties have agreed, pursuant to the terms and conditions of the Definitive Agreement, to effect the Transaction by way of a ?three-cornered' amalgamation of ShinyBud, m?h? and a new subsidiary of Cedarmont to be formed for this purpose (the "Amalgamation"). The Amalgamation will result in the outstanding shares and other securities of ShinyBud and m?h? being exchanged for corresponding securities of the Resulting Issuer, which will thereby become the sole shareholder of the amalgamated corporation. The current shareholders of ShinyBud and m?h? will become shareholders of the Resulting Issuer, as the new parent corporation, and the Cedarmont shareholders will retain their equity.

Pursuant to the Definitive Agreement, in connection with Closing, but prior to effecting the Amalgamation, the Company will consolidate its outstanding common shares (the "Cedarmont Shares") on a 54.0259-to-one basis (the "Consolidation"), which will result in an aggregate of, subject to rounding, 240,625 post-Consolidation shares ("Consolidated Shares") being outstanding based on there being 13,000,000 Cedarmont Shares currently outstanding (and assuming no intervening exercise of options or warrants to purchase Cedarmont Shares).

The Consolidation will also result in an adjustment to the number of Cedarmont Shares issuable pursuant to outstanding options (of which there are now 1,300,000 outstanding) and warrants (of which there are now 300,000 outstanding) to purchase Cedarmont Shares, from a pre-Consolidation total of 1,600,000 Cedarmont Shares issuable upon exercise thereof to a post-Consolidation total of, subject to rounding, 29,616 Consolidated Shares issuable upon exercise.

The Amalgamation terms contemplate that the outstanding shares of ShinyBud and m?h? will be exchanged for Consolidated Shares according to specified exchange ratios. Based on the agreed ratios, and before giving effect to the issuance of securities under the Private Placement but assuming the completion of certain Acquisition Opportunities (defined below) before Closing, the Amalgamation will result in the shareholders of ShinyBud holding approximately 87.8% of the Consolidated Shares, the shareholders of m?h? holding approximately 9.7% of the Consolidated Shares, and the current holders of Cedarmont Shares holding approximately 2.5% of the Consolidated Shares, in each case on an undiluted basis.

Pursuant to the Definitive Agreement, Cedarmont has been ascribed a value of $1,925,000 (approximately $0.15 per share (undiluted)).

Each of ShinyBud and m?h? are party to certain acquisition opportunities (the "Acquisition Opportunities") that, if consummated, will involve the issuance of additional shares of ShinyBud and m?h?, respectively, as purchase consideration. The pro forma shareholdings above assume completion of these Acquisition Opportunities and the corresponding issue of additional ShinyBud and m?h? shares before Closing.

Outstanding options and warrants of ShinyBud and m?h? will also be exchanged pursuant to the Amalgamation for replacement options and replacement warrants of the Resulting Issuer, which will be exercisable for Consolidated Shares with the purchase rights thereunder adjusted according to the same ratios as will apply to the existing ShinyBud shares and m?h? shares. On a fully-diluted basis, before giving effect to the Private Placement but assuming completion of the Acquisition Opportunities, the number of Consolidated Shares outstanding on Closing, and the number issuable pursuant to outstanding options and warrants, are expected to represent approximately 94.7% and 5.3%, respectively, of the fully-diluted share count.

The shareholding percentages in the preceding paragraphs will be proportionately reduced according to the number of Consolidated Shares that are ultimately issuable in respect of the Subscription Receipts sold in the Private Placement, as well as the compensation options ("Compensation Options") granted in connection therewith (as more particularly described below). This is because: (i) the Underlying Shares and Underlying Warrants issued on conversion of the Subscription Receipts (or upon exercise of Compensation Options, as applicable) prior to the time of Closing will also be exchanged under the Amalgamation, on a one-for-one basis, for Consolidated Shares and replacement warrants of the Resulting Issuer ("Replacement Warrant"), respectively; and (ii) any Compensation Options outstanding at Closing will be exchanged for replacement compensation options ("Replacement Compensation Options") of the Resulting Issuer, each of which will be exercisable for one Consolidated Share and one Replacement Warrant. Each Replacement Warrant will be exercisable for one Consolidated Share at $9.20 per share for a 24-month period from issuance. Each Replacement Compensation Option will be exercisable for a unit consisting of one Consolidated Share and one Replacement Warrant at $8.00 per unit for a 24-month period from issuance.

Private Placement

The Private Placement involves a brokered "best efforts" offering through a syndicate of agents led by Cantor Fitzgerald Canada Corporation and Echelon Wealth Partners Inc. and including ATB Capital Markets Inc. and Cormark Securities Inc. (collectively, the "Agents"), with a concurrent non-brokered offering to persons known to the principals of ShinyBud and m?h?, in all cases to qualified investors on a private placement basis pursuant to available exemptions from the prospectus requirements of applicable securities laws.

The gross proceeds from any sale of Subscription Receipts under the Private Placement, less 50% of fees payable to the Agents in respect thereof plus reimbursable costs and expenses, will be held in escrow with Computershare Trust Company of Canada, as subscription receipt agent, and are releasable to the Resulting Issuer only in connection with Closing and provided that the same shall occur within 120 days of the first issuance of Subscription Receipts (January 20, 2022) (the "Escrow Release Deadline"). The balance of amounts payable to the Agents will be paid from out of such funds, as and when they become releasable from escrow. If the escrow release conditions are not satisfied on or before the Escrow Release Deadline, the Subscription Receipts will be terminated and holders thereof paid an amount equal to their issue price plus any earned interest thereon, with any shortfall being the responsibility of ShinyBud.

Pursuant to the Amalgamation, all Underlying Shares and Underlying Warrants issued upon the conversion of Subscription Receipts sold in the Private Placement, which conversion will occur prior to Closing, will be exchanged, on a one-for-one basis, for Consolidated Shares and Replacement Warrants.

Assuming that Closing occurs and all other escrow release conditions for the Subscription Receipts are satisfied, the net proceeds from the sale of the Subscription Receipts released to the Resulting Issuer are expected to be used for growth initiatives, potential strategic acquisitions, and working capital and general corporate purposes.

The Subscription Receipts issued under the Private Placement are subject to a four-month resale restriction from the date of issuance.

The consideration payable to the Agents in respect of the Private Placement includes non-transferable Compensation Options in such number as equals up to 7% of the total number of Subscription Receipts sold. Each Compensation Option entitles the holder to purchase a unit of ShinyBud consisting of one Underlying Share and one Underlying Warrant at the Private Placement price of $8.00 per unit. Any Compensation Options outstanding at Closing will be exchanged under the Amalgamation for Replacement Compensation Options, each exercisable for a unit of the Resulting Issuer consisting of one Consolidated Share and one Replacement Warrant at the same $8.00 per unit exercise price and for the same 24-month period from issuance of the Underlying Warrant.

Next Steps

Filing Statement

The Transaction is intended to constitute the Company's "Qualifying Transaction" within the meaning of TSXV Policy 2.4 ? Capital Pool Companies ("TSXV Policy 2.4") and completion is subject to TSXV approval. In connection with seeking that approval, the parties will prepare and, subject to being cleared by the TSXV to do so, ultimately file on SEDAR a filing statement pursuant to applicable TSXV requirements. The filing statement will contain further details about the Transaction, the Private Placement and the Resulting Issuer (including the business and affairs of ShinyBud and m?h?, which will become the business of the Reporting Issuer), and its filing will be announced by news release.

Shareholders' Meeting

Although the Transaction itself is not subject to approval by the shareholders of the Company under TSXV Policy 2.4 or otherwise, certain ancillary matters that will be proposed in connection with the Closing, including the Consolidation and the reconstitution of the Company's board of directors with nominees of ShinyBud and m?h?, will require shareholder approval at a meeting to be called for such purpose and held in the coming weeks. Particulars of such matters will be set out in a notice calling that meeting and accompanying management information circular, which will be disseminated to shareholders and filed on SEDAR.

Directors and Officers of the Resulting Issuer

Upon Closing, the board of directors of the Resulting Issuer is expected to be reconstituted with nominees of ShinyBud and m?h?, and with the management team of the Resulting Issuer expected to be drawn from current ShinyBud and m?h? executives. All directors and officers are subject to TSXV acceptance.

Following is information on the individuals proposed by ShinyBud and m?h? to be appointed as directors and officers of the Resulting Issuer on Closing.

Kevin Reed, Chairman and Chief Executive Officer

Kevin Reed has over 30 years' experience in capital markets, start-ups, investments, mergers and acquisitions, and turnarounds. He has served as CEO of m?h? since 2020 and Chairman of BlackShire Capital, its principal investor, since 2017. Kevin co-founded Equity Transfer & Trust Company, which was acquired by TMX Group in 2013, and previously served as Executive Vice Chairman of its parent corporation, Grey Horse, until 2010.

Micah Dass, Executive Vice Chairman & Director

Micah Dass is co-founder of the ?ShinyBud' business and shareholder of ShinyBud. He is an entrepreneur and investor in the retail/quick service restaurant industry, and owns 14 franchised Tim Hortons locations.

Brad Kipp, Chief Financial Officer

Brad Kipp is a senior financial executive with over 20 years' experience in providing financial leadership at private and public companies. He is a director of m?h? and Executive Vice President and a director of its principal investor, BlackShire Capital. Over the course of his career he has served as chief financial officer and/or a director of various public companies listed on the Toronto Stock Exchange, the New York Stock Exchange and the Alternative Investment Market (AIM) of the London Stock Exchange. Brad has been a director and Audit Committee Chair of Haventree Bank, a Canadian Schedule 1 bank specializing in alternative mortgage programs and insured GIC deposits, for almost 15 years, and of Americas Gold and Silver Corporation, a publicly-traded precious metals company listed on the Toronto Stock Exchange and NYSE American, since 2014. He is a member of the Chartered Professional Accountants of Canada and a member of the Chartered Financial Analyst Institute.

Mike Nadeau, Chief Operating Officer

Mike Nadeau is Chief Operating Officer of ShinyBud. He previously served as Senior Vice President, Operations Excellence with RECIPE Unlimited Corporation (formerly Cara Operations Limited), which operates restaurant chains such as Swiss Chalet, Montana's, Harvey's, New York Fries, Milestones and East Side Mario's, where he created and led the Shared Service Division to drive brand performance. Before that, Mike served as Vice President, Atlantic Canada and Quebec and in other management roles with TDL Group (Tim Hortons).

Josh Cooksley, Executive VP, Corporate Development and Investor Relations

Josh Cooksley joined BlackShire Capital, m?h?'s principal investor, in 2017 as managing partner, from which he was instrumental in relaunching and operationalizing m?h? in 2020. He has more than 20 years' experience working in senior and executive management for companies of varying sizes, from private start-ups to public companies. Josh began his career with RBC Capital Markets in Toronto after completing his MBA in 1998.

Richard Espinos, Director

Richard Espinos is co-founder of the ?ShinyBud' business and owns several cannabis retail stores operating under the ShinyBud brand. He too is an entrepreneur and investor in the retail/quick service restaurant industry, and owns six franchised Tim Hortons locations.

Lyn Christensen, Independent Director

Lyn Christensen founded a business consulting practice in 2008 and has particular expertise in family office and human resource practices. She has been an HR advisor to a number of top technology founders and their family offices, and helped build two start-ups with Elon Musk (Zip2 and x.com). Lyn is an alumnus of Johns Hopkins University (Master's degree in Organizational Development) and Brigham Young University (Bachelor's degree in Psychology).

Jude Pinto, Independent Director

Jude Pinto has more than 25 years' experience in retail bank operations, risk and compliance, technology modernization, currency centers and cash distribution leadership at Canadian Imperial Bank of Commerce (CIBC). He has led several functional areas of retail banking, covering retail distribution and product strategy, innovation, insurance, finance, operational risk and compliance. Jude previously served as President of INTRIA Items Inc. (currency management and payment processing services), Chairman of CIBC Offshore Banking Services Company, Vice Chair of CIBC Reinsurance and Director of CIBC Mortgages Inc., and spent five years with CIBC First Caribbean as Chief Information officer and Managing Director ? Technology, Operations & Corporate Services.

Donald Schroeder, Independent Director

Donald Schroeder spent 20 years at Tim Hortons (TDL Group), most recently as President and Chief Executive Officer from March 2008 until his retirement in May 2011. Prior to joining Tim Hortons in 1991 as Vice President of Human Resources and International Development, Don had a private law practice. His tenure at Tim Hortons also included terms as Executive Vice President, Administration, General Counsel, Secretary and Chief Compliance Officer. Don is an alumnus of the University of Western Ontario (Bachelor of Laws) and York University (Master of Laws).

Roland Walton, Independent Director

Roland Walton has more than 35 years' experience in the food service industry, including 18 years as a member of the executive team at Tim Hortons where he held various key leadership positions, including President of Tim Hortons Canada from 2012 to 2015, Chief Operating Officer from 2008 to 2012, Executive Vice-President Operations, Canada and United States, from 2000 to 2008, and Executive Vice-President Operations, Canada, from 1997 to 2000. Before joining Tim Hortons, he spent 13 years with Pizza Hut/Pepsico in operations and general management positions in Canada and the United States. Roland has a Bachelor of Commerce degree from Guelph University.

Other Insiders

Apart from the individuals named above, each of whom is proposed by ShinyBud and m?h? to be appointed on Closing as a director and/or officer of the Resulting Issuer, no other insiders are currently anticipated to result from the Transaction.

Trading Halt

Trading in the Cedarmont Shares remains halted in accordance with TSXV policies, and may not resume before Closing.

Further Information

Further details about the Transaction, the Private Placement and the Resulting Issuer will also be contained in the disclosure document (anticipated to be a filing statement) to be prepared and filed with the TSXV and on SEDAR in connection with the Transaction. Investors are cautioned that, except as disclosed in such disclosure document, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon.

For further information, contact, Josh Cooksley of m?h? on behalf of ShinyBud, at [email protected] or at (647) 637-5079, or Jaimie Grossman, Chief Executive Officer of the Company, at [email protected] or at (416) 369-5265.

Reader Advisories

The information provided in this news release regarding ShinyBud and m?h? has been provided by ShinyBud and ?m?h? and ?has not been independently verified by the Company.

Completion of the Transaction is subject to a number of conditions, including but not limited to, ?TSXV acceptance and if applicable pursuant to TSXV Requirements, majority of the minority ?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 a capital pool company should be considered highly speculative.?

The TSXV has in no way passed upon the merits of the proposed transaction ?and has neither approved nor disapproved the contents of this news release.?


This news release does not constitute an offer to sell or the solicitation of an offer to buy any ?securities in any jurisdiction.?

The securities referred to in this news release have not been, and will not be, registered under the ?United States Securities Act of 1933, as amended, or any state securities laws, and may not be offered or sold within the United ?States or to, or for the account or benefit of, any U.S. person unless they are registered under the ?United States Securities Act of 1933, as amended, and any applicable state securities laws, or an applicable ?exemption from the such U.S. registration requirements is available. This news release does not constitute an offer ?for sale of securities, nor a solicitation for offers to buy any securities. Any public offering of ?securities in the United States must be made by means of a prospectus containing detailed ?information about the company and management, as well as financial statements.?

Cautionary Statement Regarding Forward-Looking Information

This news release contains "forward-looking information" within the meaning of Canadian ?securities legislation. ?Forward-looking information generally refers to information about an ?issuer's business, capital, or operations ?that is prospective in nature, and includes future-oriented ?financial information about the issuer's prospective ?financial performance or financial position. ?The forward-looking information in this news release includes ?disclosure about the anticipated terms of and closing of the ?Transaction, a proposed second closing of the Private Placement, the anticipated management team of the Resulting Issuer and ShinyBud's and m?h?'s business operations and ?prospects.? ?The Company, ShinyBud and m?h? have made certain material assumptions, including but not limited ?to: ?receipt of subscription agreements for a second closing of the Private Placement; prevailing market conditions; general business, economic, competitive, political and social ?uncertainties; ?delay or failure to receive board, shareholder or regulatory approvals; and the ?ability of ShinyBud and m?h? to ?execute and achieve its business objectives, to develop the forward-looking ?information in this news release. There ?can be no assurance that such statements will prove to be ?accurate, as actual results and future events could differ ?materially from those anticipated in such ?statements. Accordingly, readers should not place undue reliance on ?forward-looking statements. ?Actual results may vary from the forward-looking information in this news release due ?to certain ?material risk factors. These risk factors include, but are not limited to: failure of the TSXV to approve of the Transaction; failure of the shareholders of Cedarmont, ShinyBud or m?h? to approve certain matters placed before a shareholders meeting; adverse market conditions; ?the ?inability of the Company, ShinyBud or m?h? to complete the ?Transaction on the terms ?disclosed in this news release, or at all; reliance on key and qualified personnel; regulatory and ?other risks associated with the cannabis industry in general, as well as those risk factors discussed ?or referred to in disclosure documents filed by the Company with the securities regulatory ?authorities in certain provinces of Canada and available at www.sedar.com. The foregoing list of ?material risk factors and assumptions is not exhaustive. Should any factor affect the Company in an ?unexpected manner, or should assumptions underlying the forward looking information prove ?incorrect, the actual results or events may differ materially from the results or events predicted. Any ?such forward-looking information is expressly qualified in its entirety by this cautionary statement. ?Moreover, the Company does not assume responsibility for the accuracy or completeness of such ?forward-looking information. The forward-looking information included in this news release is ?made as of the date of this news release and the Company undertakes no obligation to publicly ?update or revise any forward-looking information, other than as required by applicable law.?

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