/THIS NEWS RELEASE IS INTENDED FOR DISTRIBUTION IN CANADA ONLY AND IS NOT INTENDED FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR DISSEMINATION IN THE UNITED STATES./
TORONTO, Aug. 6, 2019 /CNW/ -- QUALITY GREEN INC. ( "Quality Green") and Rockshield Acquisition Corp. ("RAC") are pleased to jointly announce that Quality Green has appointed Canaccord Genuity Corp. as lead agent (the "Agent"), to sell on a commercially reasonable efforts private placement basis, subscription receipts of Quality Green (the "Subscription Receipts"), for aggregate gross proceeds of up to C$6,600,000 at a price of C$0.55 per Subscription Receipt (the "Offering"). The Agent will also have an option (the "Agents' Option"), exercisable, in whole or in part, up to 48 hours prior to the closing date of the Offering, to increase the size of the Offering by up to an additional 15% of the number of Subscription Receipts sold under the Offering for additional gross proceeds to Quality Green of up to C$990,000.
The Offering will consist of a private placement of Subscription Receipts. Each Subscription Receipt will be automatically exchangeable without any further action on the part of the holder or payment of any additional consideration, for one unit of Quality Green (a "Quality Green Unit"). Each Quality Green Unit will consist of one common share in the capital of Quality Green (a "Quality Green Share") and one common share purchase warrant (a "Quality Green Warrant"). Each Quality Green Warrant will entitle the holder thereof to acquire on additional Quality Green Share for a period of 12 months from the date of issuance at a price of C$1.00 per Quality Green Share, and will ultimately entitle the holder thereof to one common share (the "Resulting Issuer Shares") and one common share purchase warrant on equivalent terms (the "Resulting Issuer Warrants") in the capital of the Resulting Issuer (as such term is defined below) upon satisfaction of the Escrow Release Conditions (as defined below) and completion of the Proposed Transaction (as defined below).
The Subscription Receipts will be offered by way of private placement pursuant to exemptions from prospectus requirements to residents of the Provinces of British Columbia, Alberta, Ontario and such other Canadian jurisdictions as may be agreed to by the Quality Green, RAC and the Agent. Subject to applicable laws and the provisions of the agency agreement to be entered into among Quality Green, RAC and the Agent with respect to the Offering, the Agent may offer the Subscription Receipts outside of Canada, including in the United States in reliance on applicable private placement exemptions under United States federal and state securities laws. The Offering is anticipated to close on or before August 30, 2019, or on such other date as Quality Green and the Agent may agree.
The gross proceeds of the Offering will be held in escrow pending satisfaction of conditions including, among others, the satisfaction or waiver of all conditions to the completion of the Proposed Transaction. The Subscription Receipts and the underlying Quality Green Shares will be subject to an indefinite hold period. The Resulting Issuer Shares and Resulting Issuer Warrants issuable upon satisfaction of the Escrow Release Conditions and completion of the Proposed Transaction in exchange for Quality Green Shares and Quality Green Warrants, respectively, will not be subject to any statutory Canadian hold periods upon issuance.
The Offering is being completed in connection with a proposed business combination that will result in a reverse takeover of RAC, a reporting issuer, by the security holders of Quality Green through a three-cornered amalgamation involving a wholly-owned RAC subsidiary (the "Proposed Transaction"). If required, shareholder meetings of each of RAC and Quality Green will be called to approve, among other things, all required matters in connection with the Proposed Transaction and the listing of RAC common shares on the TSX Venture Exchange (the "TSXV") following a change of name yet to be identified (the "Resulting Issuer"). It is intended that the completion of the Proposed Transaction will take place prior to October 31, 2019. Subject to shareholder approval and necessary filings being accepted by applicable regulatory authorities, upon completion of the Proposed Transaction, the common shares of the Resulting Issuer will be listed for trading on the TSXV and holders of Quality Green Shares will receive Resulting Issuer Shares and shareholders of Quality Green will hold a majority of the outstanding common shares of the Resulting Issuer. The TSXV has not yet conditionally approved the listing of the Resulting Issuer's shares.
The gross proceeds of the Offering (the "Escrowed Funds"), will be deposited in escrow at closing of the Offering with an escrow agent. Upon waiver or satisfaction of all conditions precedent to the Proposed Transaction and as may be required by the TSXV (together, the "Escrow Release Conditions"), the Escrowed Funds (less Agent's Fee, other fees and reimbursable expenses (the "Agent's Funds") will be released from escrow by the Escrow Agent to Quality Green. The Escrow Agent shall also release from escrow the Agent's Funds to the Agent immediately before the Proposed Transaction is completed.
In the event that the Escrow Release Conditions are not satisfied or are incapable of being satisfied on or before October 31, 2019 (or such later date as may be agreed to by Quality Green, RAC and the Agent), the Escrowed Funds, as well as any accrued interest earned thereon (less any applicable withholding taxes), will be returned to purchasers of the Subscription Receipts, which will then be cancelled..
Use of Proceeds
The Resulting Issuer intends to use the net proceeds of the Offering for capital expenditures for expansion and business development activities and general working capital and corporate purposes. Management will have discretion in the use of proceeds and there may be circumstances where a reallocation of funds from the expected use of proceeds may be necessary for sound business reasons.
The Quality Green has agreed to pay the Agent a cash commission equal to 6% of the aggregate gross proceeds of the Offering (including on exercise of the Agents' Option) (the "Agents' Fee"), and to issue to the Agents that number of non-transferable broker warrants to purchase Quality Green Shares as is equal to 6% of the number of Subscription Receipts sold under the Offering (the "Broker Warrants"). Each Broker Warrant will be exercisable to purchase one Quality Green Share at a price of $1.00 per Quality Green Share for a period of 12 months from the closing of the Offering. Pursuant to the Proposed Transaction, the Broker Warrants will be exchanged for warrants of the Resulting Issuer on equivalent terms.
"We are delighted to have Canada's leading independent brokerage firm support Quality Green. This financing will serve to strengthen our capitalization and advance our strategic initiatives focused on bringing quality cannabis products and derivatives to market" said Robert Dziedzic, CEO."
About Quality Green
Founded in 2013, Quality Green, a licensed cultivator under the Cannabis Act (Ontario), and strives for the perfect trifecta of optimized production efficiency, best practices, and standards, to result in the finest product. With an extensive expansion plan and a clear vision across all channels of their business, Quality Green is poised to capture vast opportunities within the cannabis space. With considerable momentum and a team focused on delivering on strategy and innovation, Quality Green demonstrates its commitment to owning its position as a leading cannabis producer.
For further information about Quality Green, please visit www.qualitygreen.ca
Cautionary Note Regarding Forward-Looking Statements
This release includes certain statements and information that may constitute forward-looking information within the meaning of applicable Canadian securities laws or forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. All statements in this news release, other than statements of historical facts, including statements regarding the size, timing and completion of the Offering, the use of proceeds thereof, the Proposed Transactions and the anticipated completion of future tranches of the Offering, are forward-looking statements and contain forward-looking information. Generally, forward-looking statements and information can be identified by the use of forward-looking terminology such as "intends" or "anticipates", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "should", "would" or "occur". Forward-looking statements are based on certain material assumptions and analysis made by the Company and the opinions and estimates of management as of the date of this press release, including that the Company will be successful in completing the Offering in the timeframe currently contemplated, if at all, that the Company will be able to use the proceeds of the Offering as anticipated, that the Company will be able to complete the Proposed Transactions and that the Company will be able to complete future tranches of the Offering. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements or forward-looking information. Important factors that may cause actual results to vary, include, without limitation, that the Company will be unable to obtain the necessary approvals to complete the Offering, that the Company will be unable to complete the Offering on the terms and conditions as anticipated by management, that the Company will not be able to use the proceeds of the Offering as anticipated, that the Company will not be able to complete the Proposed Transactions, that the Company will be unable to obtain the necessary approvals to complete the future tranches of the Offering or to complete the future tranches of the Offering on the terms and conditions as anticipated by management. Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements or forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. 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 and forward-looking information. Readers are cautioned that reliance on such information may not be appropriate for other purposes.
Except as required by law, neither Quality Green nor RAC undertake any obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. However, any further disclosures made on related subjects in subsequent reports should be consulted.
This news release does not constitute an offer to sell or a solicitation of an offer to sell any of securities in the United States. The securities to be issued in connection with the Offering and the Proposed Transaction 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 or for the account or benefit of U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available. For more information, please visit www.QualityGreen.ca.
SOURCE Quality Green Inc.