NIAGARA FALLS, ON / ACCESSWIRE / May 12, 2021 / EnerDynamic Hybrid Technologies Corp. ("EHT" or the "Company") (TSXV:EHT) is pleased to announce that it has entered into a definitive business combination agreement (the "Definitive Agreement"), providing for the acquisition of Windular Research and Technologies Inc. ("Windular") (the "Acquisition").
Terms of the Acquisition
The Acquisition will proceed by way of a three-cornered amalgamation pursuant to which Windular and certain special purpose corporate shareholders of Windular (collectively the "Holdcos") will amalgamate with a wholly-owned subsidiary of EHT ("Subco 1"), and all of the issued and outstanding common shares of Windular (the "Windular Shares") held by shareholders of Windular (other than the Holdcos) and all of the issued and outstanding common shares of the Holdcos (the "Holdco Shares") will be exchanged for common shares of EHT (the "EHT Shares") on the basis of one (1) EHT Share for each nine (9) Windular Shares (except for those held by the Holdcos) and one (1) EHT Share for each nine (9) Holdco Shares. The resulting amalgamated entity will be a wholly-owned subsidiary of EHT.
In connection with, and immediately preceding, completion of the Acquisition, a special purpose vehicle ("Finco") will complete a brokered private placement of subscription receipts (the "Subscription Receipts"), at a price of $0.70 per Subscription Receipt, to raise targeted gross proceeds of $15,000,000 subject to a minimum of $5,000,000 (the "Offering"). The Offering will be undertaken by Canaccord Genuity Corp. as lead agent (the "Lead Agent") on behalf of a syndicate of agents that may be formed (together with the Lead Agent, the "Agents") to offer the Subscription Receipts for sale on a "best efforts" agency basis. The gross proceeds from the sale of the Subscription Receipts will be held in escrow by an escrow agent acceptable to EHT and the Lead Agent.
Immediately prior to completion of the Acquisition and upon satisfaction of the conditions which will be set forth in the subscription receipt agreement governing the Subscription Receipts, the gross proceeds will be released from escrow and, each Finco Subscription Receipt shall be converted into one unit (a "Unit"), consisting of one common share of Finco (a "Finco Share") and one Finco share purchase warrant (a "Finco Warrant"). Each Finco Warrant will entitle the holder thereof to acquire an additional Finco Share at a price of C$1.00 until the date that is 24 months following the conversion of the Subscription Receipts (the "Escrow Release Date"), subject to customary anti dilution provisions.
Immediately following the escrow release, a newly formed wholly-owned subsidiary of EHT ("Subco 2") and Finco will amalgamate, and all of the issued and outstanding Finco Shares will be exchanged for EHT Shares on the basis of one EHT Share for each one Finco Share and all of the outstanding Finco Warrants will be exchanged for share purchase warrants of EHT on a one for one basis (the "Finco Amalgamation").
The net proceeds from the Offering are expected to be used to fund EHT's Puerto Rico project and for general working capital purposes.
Officers and Board of Directors
Upon completion of the Acquisition, Gerald Foster, the President of Windular, will be appointed as the President and Corporate Secretary of the Company, subject to the prior approval of the TSX Venture Exchange (the "TSXV"). EHT's current directors and officers will retain their positions, other than John Gamble, who will resign as President of EHT but remain the CEO and a director.
Conditions to Acquisition
The Acquisition is subject to various conditions, including as follows:
- Gerald Foster shall be appointed as President and Corporate Secretary of EHT and shall have entered into an employment agreement and indemnification agreement with EHT;
- the conversion of EHT's outstanding debentures (the "Debt Conversion") shall have been completed substantially on the terms set out below;
- completion of the Offering;
- the Finco Amalgamation shall have been completed;
- certain Windular Shareholders shall have entered into voluntary lock-up agreements, agreeing not to trade their EHT Shares issued pursuant to the Acquisition, except in accordance with the following release schedule: (i) 25% of their EHT Shares will be released upon completion of the Acquisition; (ii) 25% of their EHT Shares will be released on the date that is four months after the completion of the Acquisition; and (iii) 50% of their EHT Shares will be released on the date that is eight months after the completion of the Acquisition;
- the accuracy of the respective representations and warranties of each of EHT and Windular in the Definitive Agreement; and
- receipt of all requisite shareholder, third party and regulatory approvals relating to the Acquisition, including, without limitation, approval of the TSXV, will have been obtained.
The Debt Conversion
EHT has secured debentures with an aggregate outstanding balance of approximately $17,447,597.17 and Series 2-1 secured debentures with an aggregate outstanding balance of approximately $4,119,246.50. EHT is in negotiations with the debentureholders to complete the conversion of the total $21,566,843.67 in debentures into EHT Shares at a deemed share price of $0.70 per EHT Share, resulting in the issuance of approximately 30,809,777 EHT Shares.
As of the date hereof, (i) EHT has 22,198,721 EHT Shares issued and outstanding, as well as 11,795,515 warrants (each exercisable to acquire one EHT Share) and options to acquire an aggregate of 1,692,750 EHT Shares; and (ii) Windular has 193,140,150 Windular Shares issued and outstanding.
Based upon the number of issued and outstanding shares in each of EHT and Windular on the date hereof, upon completion of the Acquisition but prior to the completion of the Offering, it is expected that EHT will have approximately 74,437,069 EHT Shares issued and outstanding (non-diluted), of which the current shareholders and debenture holders (assuming completion of the Debt Conversion) of EHT will hold 53,008,498 EHT Shares representing approximately 71.21%, the former shareholders of Windular (other than Holdcos) and the former shareholders of the Holdcos will hold 21,428,571 EHT Shares representing approximately 28.79% (assuming no exercise of any convertible securities of EHT or Windular prior to closing).
Based upon the number of issued and outstanding shares in each of EHT and Windular on the date hereof, upon completion of the Acquisition and the Offering to raise a minimum aggregate gross proceeds of $5,000,000, it is expected that EHT will have approximately 81,579,926 EHT Shares issued and outstanding (non-diluted), of which the current shareholders and debenture holders (assuming completion of the Debt Conversion) of EHT will hold 53,008,498 EHT Shares representing approximately 64.98%, the former shareholders of Windular (other than Holdcos) and the former shareholders of the Holdcos will hold 21,428,571 EHT Shares representing approximately 26.27%, and the purchasers under the Offering will hold 7,142,857 EHT Shares representing approximately 8.76% (assuming no exercise of any convertible securities of EHT or Windular prior to closing).
In addition, upon completion of the Acquisition and the Offering to raise minimum aggregate gross proceeds of $5,000,000, EHT will also have 1,692,750 outstanding stock options, 11,795,515 share purchase warrants (each exercisable to acquire one EHT Share and one share purchase warrant of EHT), not accounting for any exercises thereof prior to closing of the Acquisition or any compensation options to be issued in connection with the Offering.
Additional Information Regarding the Acquisition
The Definitive Agreement contains representations and warranties of the parties, restrictions on the conduct of business until closing, and mutual confidentiality and non-solicitation obligations.
The Acquisition is expected to be completed as soon as reasonably practicable. The Definitive Agreement may be terminated in specified circumstances, including in the event the Acquisition has not been completed by June 30, 2021.
The Acquisition, the Offering, the Debt Conversion and the Finco Amalgamation remain subject to the receipt of all applicable shareholder, regulatory and third-party approvals, including the approval of the TSXV.
For further details on Windular, please see the Company's news release dated January 28, 2021.
About EnerDynamic Hybrid Technologies
EHT delivers proprietary, turn-key energy solutions which are intelligent, bankable and sustainable. Most energy products and solutions can be implemented immediately wherever they are needed. EHT stands above its competitors by combining a full suite of solar PV, wind and battery storage solutions, which can deliver energy 24 hours per day in both small-scale and large-scale format. In addition to traditional support to established electrical networks, EHT excels where no electrical grid exists. The organization supplies advanced solutions for various industries in combination with energy saving and energy generation solutions. EHT's expertise includes the development of module structures with full integration of smart energy solutions. These are processed through EHT's production technologies into attractive applications: modular homes, cold storage facilities, schools, residential and commercial out buildings and emergency/temporary shelters.
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.
This news release contains forward-looking statements. Forward-looking statements are statements that contemplate activities, events or developments that the Company anticipates will or may occur in the future. Forward-looking statements in this news release include, but are not limited to, those regarding EHT's products and solutions; completion of the Offering, the Acquisition, and the Finco Amalgamation; regulatory and shareholder approvals for the Acquisition; completion of the Debt Conversion; and the projected capitalization of EHT following the Acquisition and the Offering. The assumptions used to develop these forward-looking statements include non-binding arrangements and informal understandings that the Company has with third parties, including creditors, and potential investors will develop into binding agreements to complete the Debt Conversion, the Finco Amalgamation and the Offering. Although the Company believes that the assumptions inherent in these forward-looking statements are reasonable, they are not guarantees of future performance and, accordingly, they should not be relied upon and there can be no assurance that any of them will prove to be accurate. These forward-looking statements reflect the Company's current expectations based on information currently available to management and are subject to a number of risks and uncertainties that may cause outcomes to differ materially from those projected. Risks and uncertainties include, but are not limited to, risks associated with general economic conditions, adverse industry events, marketing costs, loss of markets, future legislative and regulatory developments, the inability to access sufficient capital on favourable terms, the risk that the non-binding arrangements and informal understandings the Company has with third parties with respect to the Debt Conversion and the Offering will not develop into binding contracts, that the TSXV may not approve the Debt Conversion, the Acquisition, the Finco Amalgamation or the Offering on terms acceptable to the Company or third parties involved in the forgoing transactions, and that the creditors participating in the Debt Conversion will not agree to complete the Debt Conversion or will propose terms that are unacceptable to the Company. Readers should refer to the risk disclosure included from time-to-time in the documents the Company files on SEDAR, available at www.sedar.com. Readers are further cautioned not to place undue reliance on forward-looking statements as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ from those anticipated. Forward-looking statements are not guarantees of future performance. The purpose of forward-looking information is to provide the reader with a description of management's expectations, and such forward- looking information may not be appropriate for any other purpose. Finally, these forward-looking statements are made as of the date of this news release and the Company assumes no obligation to update them except as required by applicable law. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement.
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SOURCE: EnerDynamic Hybrid Technologies Corp.