TORONTO, CANADA - YANGAROO Inc. (TSX-V: YOO, OTC: YOOIF), the industry's leading secure digital media management company (the "Company"), is pleased to announce that it has completed the brokered private placement financing (the "Private Placement") of subscription receipts (the "Subscription Receipts") sold at a price of $0.25 per Subscription Receipt, based on the post-consolidation share price, as was previously announced in a news release dated July 3rd, 2013 (the "July 3 Release"), with subsequent updates issued on August 2, 2013 (the "Aug 2 Release") and August 22, 2013 (the "Aug 22 Release", together with the July 3 Release and the Aug 2 Release, the "Releases"). Please see the Releases for details.
The Company is also pleased to announce that it exceeded its original expectations as it neared the closing of the Private Placement. To accommodate an additional investor, and with the approval of the TSX Venture Exchange (the "Exchange") with respect to the increased maximum amount of the Private Placement, the Company raised gross proceeds of CAD $1,600,000 (the "Proceeds"), the majority of which were deposited into escrow with Equity Financial Trust Company ("Equity"), an escrow agent today, September 5th, 2013, to be held until their release upon the satisfaction by the Company of the Release Conditions (as defined in the July 3 Release), or otherwise returned in the event that the Release Conditions are not satisfied, in accordance with the Subscription Receipt Agreement. A small amount of the Proceeds, as delivered by certain insiders of the Company, shall be subject to the same or substantially similar terms and conditions as those delivered under the Subscription Receipt Agreement, but shall not be held by Equity.
Upon satisfaction of the Release Conditions, each Subscription Receipt will be automatically converted into one common share (each the "Common Share") of the Company and one warrant of the Company (each the "Warrant"). Each Warrant will entitle the holder, upon exercise, to purchase one Common Share during a period of thirty-six (36) months (the "Warrant Exercise Period") following the Conversion Date (the Warrant Expiry Date"), at a price of $0.25 within the first year of the Warrant Exercise Period and at a price of $0.35 within the second and third years of the Warrant Exercise Period. The Company's agent, Fraser Mackenzie Limited ("Fraser"), will be entitled to receive its commission upon the release of the escrowed Proceeds, which commission will be comprised of (i) a cash fee equal to eight percent (8%) of the gross subscription proceeds, and (ii) broker warrants (the "Broker Warrants") entitling Fraser, upon exercise of the Broker Warrants, to purchase, in aggregate, Common Shares equal to eight percent (8%) of the number of Common Shares sold pursuant to the Private Placement. Such Broker Warrants shall be exercisable at a price of $0.25 per Common Share until the Warrant Expiry Date.
As certain directors of the Company have participated in the Private Placement, this Private Placement constitutes a related party transaction under Multilateral Instrument 61-101 ("MI 61-101") and TSX Venture Exchange Policy 5.9. The Company is relying on exemptions from the formal valuation and minority approval requirements of MI 61-101, based on a determination that the securities of the Company are listed on the TSX Venture Exchange only and that the fair market value of the Private Placement, insofar as it involves interested parties, does not exceed 25% of the market capitalization of the Company at the time the Private Placement was initially announced. No new insiders have been created, nor has there been any change of control as a result of the Private Placement.
In compliance with applicable securities laws and the rules of the TSX Venture Exchange, (i) the Common Shares, the Warrants and the Broker Warrants will be subject to a hold period of four (4) months following the issuance thereof, and (ii) the Common Shares underlying the Warrants and the Broker Warrants will be subject to a four (4) months hold period following their issuance upon exercise thereof.
The Private Placement is subject to compliance with applicable securities laws and to receipt of the final approval of the TSX Venture Exchange, conditional approval having been obtained as required. The Proceeds from the Private Placement shall be used as working capital, subject to payment of professional fees associated therewith.
The Share Consolidation and the Shares for Debt Transaction (as defined in the July 3 Release), being the Release Conditions, are anticipated to be completed within the month of September, 2013.
Upon the effective date of the Share Consolidation on a ten for one basis, the Company will have approximately 16,324,477 Common Shares outstanding, prior to the issuance of the Common Shares underlying the Subscription Receipts. The change in the number of issued and outstanding Common Shares that will result from the Share Consolidation will not materially affect any shareholder's percentage ownership in the Company, although such ownership will be represented by a smaller number of Common Shares.
Letters of transmittal with respect to the Common Shares to be consolidated under the Share Consolidation have been mailed out to all registered shareholders together with the Notice and Information Circular prior to the Annual and Special Meeting of the Shareholders. All registered shareholders of the Company will be required to send their certificates representing pre-consolidation Common Shares with a properly executed letter of transmittal to Equity, the Company's transfer agent, in accordance with the instructions provided in the letter of transmittal.
Shares for Debt Transaction
The Company intends to enter into a Shares for Debt Agreement with certain of its current debenture holders (collectively the "Debenture Holders"), whereby the Company will issue one (1) Common Share in exchange for each $0.25 of the Debt, in the month of September. In order for this second Release Condition to have been met, 40% or greater of the Debt must be converted into Common Shares in accordance with the pending Shares for Debt Agreement(s).
The Shares for Debt Transaction is subject to approval by the TSX Venture Exchange. As the Shares for Debt Transaction will not result in the creation of a new control person, disinterested shareholder approval was not required or sought. No warrants will be issued with respect to the Shares for Debt Transaction.
Subject to the consent of the Debenture Holders (as defined in the July 3 Release), the Company also intends to complete the Debenture Amendments, as described in the July 3 Release, in the month of September. Subject to TSX Venture Exchange approval, the Company will offer a one-half of one Warrant for every $1.00 of current indebtedness to the Debenture Holders as consideration for amending the Debenture Agreements to reflect more favourable terms, as are described below. Each whole Warrant will be exercisable for a period of thirty-six (36) months from the date of issuance at a price equal to $0.25.
If approved, the Company intends to amend the Debenture Agreements by reducing the interest rate from fourteen percent (14%) to ten percent (10%), extending the term by an additional twelve (12) months to October 3, 2016, and by waiving so called "Cash Sweeps", as defined in the Debenture Agreements. Currently, pursuant to the Cash Sweeps, the Company is required to pay 25% of each equity, debt or equity-like financing, including the Private Placement, to the Debenture Holders. Upon amendment, which the Company proposes to have occurred prior to the Conversion Date, such requirement would be eliminated in connection with the Private Placement and all future debt, equity, and equity-like financings.
Further updates on the Release Conditions will be provided as appropriate.
YANGAROO is a company dedicated to digital media management. YANGAROO's patented Digital Media Distribution System (DMDS) is a leading secure B2B digital cloud based solution focused on the music and advertising industries. The DMDS solution provides more accountable, effective, and far less costly digital management of broadcast quality media via the Internet. It replaces the physical, satellite and closed network distribution and management of audio and video content, for music, music videos, and advertising to television, radio, media, retailers, and other authorized recipients. The YANGAROO Awards platform is now the industry standard and powers most of North America's major awards shows.
YANGAROO has offices in Toronto, New York, and Los Angeles. YANGAROO trades on the TSX Venture Exchange (TSX-V) under the symbol YOO and in the U.S. under OTCBB: YOOIF. For further information, please contact Gary Moss at 416-534-0607 ext.111 or visit www.yangaroo.com.
The statements contained in this release that are not purely historical are forward-looking statements and are subject to risks and uncertainties that could cause such statements to differ materially from actual future events or results. Such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
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