Backbone Hosting Solutions Inc. (Bitfarms) Announces up to C $50,000,000 Private Placement of Senior Secured Convertible Debentures


TEL AVIV, Israel and MONTREAL, March 02, 2018 (GLOBE NEWSWIRE) -- Blockchain Mining Ltd. (“BLCM”) (TASE:BLCM) (OTC:BITFY) is pleased to announce that Backbone Hosting Solutions Inc., known by its operating name “Bitfarms”, has executed an engagement letter with GMP Securities L.P. and Powerone Capital Markets Limited (collective, the “agents”) for the offering of up to $50,000,000 Convertible Senior Secured Debentures (the “Debentures”) on “best-efforts” basis. The marketing period is expected to be 14 days.  

Debenture Terms

 Issuer Backbone Hosting Solutions Inc. (the “Company” or “Bitfarms”).

 Issue “Best-efforts” private placement of Convertible Senior Secured Debentures (the

 Issue Amount Up to CAD$50,000,000 aggregate principal amount (the “Offering”).

 Issue Price $1,000 per Debenture.

 Maturity Twenty-four (24) months from the closing of the Offering (the “Maturity Date”).

 Interest The Debentures will bear interest at a rate of 8.00% per annum, payable quarterly in

 Conversion Privilege Upon completion of the acquisition by Blockchain Mining Ltd. (the “Parent”) (a
 company listed on the Tel-Aviv Stock Exchange) of the Company, and the subsequent
 listing of the common shares on the TSX, the Debentures will be convertible into
 common shares or exchangeable common shares on the TSX in the capital of the Parent
 (the “Common Shares”) at the option of the holder at any time prior to the close of
 business on the Maturity Date, at a conversion price that is equal to the current market
 price of the Common Shares.

 Security The Agents, the Company and the Parent will agree on a security package in respect of
 the Debentures that is customary for transactions of this nature.

 Redemption The Debentures will not be redeemable at the option of the Company prior to the
 Maturity Date.

 Use of Proceeds The Company intends to use the net proceeds from the Offering for development capital
 expenditures and general corporate purposes.

 Rank The Debentures will be senior secured indebtedness of the Company and will rank
 senior to all present and future indebtedness of the Company.

 Listing The Parent will use its commercially reasonable best efforts to cause the Common
 Shares to be listed on the Toronto Stock Exchange or an alternative Canadian stock
 exchange that is a “designated stock exchange” for purposes of The Income Tax Act
 (Canada) prior to completion of the Maturity Date.

 Closing Date Payment for, and delivery of the Debentures is to occur on such date as is determined
 by the Company and the Agents (the “Closing Date”). The marketing period is
 expected to be no later than 14 days from the time of announcement.

 Covenants The Debentures will contain covenants, in the favour of the holders thereof, that are
 customary for transactions of this nature.

 Conditions Execution and delivery of standard documentation including subscription agreements
 containing normal representations and warranties, covenants, conditions, indemnities
 and other provisions, delivery of standard closing documents for a transaction of the
 nature of the Offering, and compliance with all applicable legal and regulatory

 Governing Law Province of Ontario.

 Resale Restrictions The Debentures will be subject to resale restrictions under the securities laws of the
 Jurisdictions (as defined herein).  Any resale of the Debentures must be made in
 accordance with applicable Canadian securities laws, which may require resales to be
 made in accordance with prospectus and dealer registration requirements or exemptions
 from the prospectus and dealer registration requirements.  Investors are advised to seek
 legal advice prior to any resale of the Debentures.

 Subscriptions The Offering shall be made pursuant to subscription agreements executed in favour of
 the Company and containing customary representations, warranties, covenants, terms
 and conditions.  Subscriptions may be accepted by the Company up to the Closing
 Date, and with allocations as determined by the Company in its discretion.

 Investor Eligibility Eligible investors under applicable securities laws, including “accredited investors”, as
 such term is defined in National Instrument 45-106 – Prospectus and Exemptions of the
 Canadian Securities Administrators.

 Jurisdictions All of the Provinces of Canada pursuant to the “accredited investor” private placement
 exemption, in the United States on a private placement basis pursuant to an exemption
 from the registration requirements in Rule 144A or Regulation D of the United States
 Securities Act of 1933, as amended and offshore jurisdictions pursuant to relevant
 prospectus or registration exemptions in accordance with applicable laws (all such
 jurisdictions, the “Jurisdictions”).

 Agents GMP Securities L.P. and PowerOne Capital Markets Limited (collectively, the

 Commission The Company shall pay to the Agents a cash commission equal to 6.0% of the gross
 proceeds from the sale of the Debentures. As additional consideration for its services,
 the Agents will be granted compensation options (the “Compensation Options”)
 exercisable to acquire that number of Common Shares equal to the gross proceeds of
 the Debentures divided by the current market price of the Common Shares multiplied
 by 6.0%, which shall be exercisable at a price equal to the current market price of the
 Common Shares at the time of the Offering. Each Compensation Option will be
 exercisable for a period of 24 months following the expiration of the hold period. The
 Compensation Options will be evidenced by certificates. If such Compensation Options
 are unavailable or are unable to be issued for any reason on the terms described herein,
 the Company shall pay the Agents such other compensation of comparable value to the
 Compensation Options as may be agreed between the parties, each acting reasonably.

This news release does not constitute an offer to sell or a solicitation of an offer to sell any of the securities in the United States. The securities 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 U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

General Update Relating to the Business Combination

Blockchain Mining Ltd. and Backbone Hosting Solution Inc.’s proposed transaction is continuing to advance through the regulatory process mandated by the Tel Aviv Stock Exchange. Backbone’s IFRS Audit is in the final stages of completion and a trial balance has already been provided by the Company’s Canadian auditors. The audited financial statements for the period ended December 31, 2017 are being prepared and are expected to be completed by March 15, 2018.

The currently planned Extraordinary General Meeting (“EGM”) Date is set for March 15, 2018 and assuming a simple majority is achieved, the pending transaction will be consummated between the two companies and the necessary director and executive appointments will be made.

“Given our ambitious capital expenditure plans for 2018 and institutional investor demand in the sector, we have made a decision along with our investment bankers to raise debt directly into Backbone while the pending transaction works its way through the final stages of the regulatory process in Tel Aviv. The completion of this raise will allow us to scale our operations and continue to maintain our lead as the largest cryptocurrency mining operation in North America. We look forward to updating our existing and future shareholders with the full plan in the coming weeks. I would like to thank GMP Securities, Gene McBurney, and PowerOne for spending the necessary time to learn about the full extent of our operations and competitive position, proposing and leading this offering, and supporting our long-term vision”, said Emiliano J. Grodzki Founder and CEO of Backbone Hosting Solutions Inc. (Bitfarms).

GMP Securities L.P. and PowerOne Capital Markets Limited acted as financial advisor with respect to the transactions described in this press release.

About Blockchain Mining Ltd.

Blockchain Mining Ltd. (TASE: BLCM) (OTC: BITFY) through its pending transaction with Backbone Hosting Solutions Inc. (Bitfarms) will own and operates blockchain farms that power the global decentralized financial economy. Bitfarms provides computing power to cryptocurrency networks such as bitcoin, bitcoin cash, ethereum, litecoin, and dash earning fees from each network for securing and processing transactions 24/7. Since 2013, Bitfarms has constructed 4 farms in Quebec, Canada which have 27.5 MW of installed capacity and over 200 Ph/s of installed hash-power. Bitfarms construction pipeline includes an additional 3 farms with over 100 MW of power capacity. The Company has been self-funded since its creation and has over 200 shareholders. For more information on Bitfarms, visit:

Cautionary Statement
Completion of the transaction is subject to a number of conditions. 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 BLCM’s regulatory disclosures to be prepared in connection with the transaction, any information released or received with respect to the transactions described herein may not be accurate or complete and should not be relied upon. Trading in the securities of Blockchain Mining Ltd. should be considered highly speculative.

No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein. The Tel Aviv Stock Exchange has in no way passed upon the merits of the proposed transactions and has neither approved nor disapproved the contents of this press release.

Forward-Looking Statements
This news release contains certain “forward-looking information” within the meaning of applicable Canadian securities laws that are based on expectations, estimates and projections as at the date of this news release. The information in this release about the proposed financing, the proposed business combination, and the future plans and objectives of BLCM, are forward-looking information. Other forward-looking information includes but is not limited to information concerning: the intentions, plans and future actions of BLCM following the Bitfarms financing and the business combination, the timing for the implementation of the business combination, the listing of the Common Shares on stock exchanges, the potential benefits of the business combination, the likelihood of the financing and the business combination being completed, and receipt of applicable shareholder approvals, as well as Bitfarms’ ability to successfully mine digital currency, revenue increasing as currently anticipated, the ability to profitably liquidate the current digital currency inventory, fluctuations in digital currency prices and the resulting significant negative impact on Bitfarms’ operations, the volatility of digital currency prices, the construction and operation of blockchain infrastructure as currently planned, and no regulation or law that will prevent Bitfarms from operating its business.

Any statements that involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as “expects”, or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “budget”, “scheduled”, “forecasts”, “estimates”, “believes” or “intends” or variations of such words and phrases or stating that certain actions, events or results “may” or “could”, “would”, “might” or “will” be taken to occur or be achieved) are not statements of historical fact and may be forward-looking information and are intended to identify forward-looking information.

This forward-looking information is based on reasonable assumptions and estimates of management of BLCM at the time it was made, and involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of BLCM to be materially different from any future results, performance or achievements expressed or implied by such forward-looking information. Such factors include, among others, risks relating to the ability to complete the proposed financing; uncertainties associated with the business combination; risks relating to the business combination agreement terminating in certain circumstances; risks relating to certain directors and officers of BLCM possibly having interests in the business combination that are different from other shareholders; risks that other conditions to the consummation of the business combination agreement are not satisfied; global economic climate; dilution; Bitfarms’ limited operating history; future capital needs and uncertainty of additional financing; the competitive nature of the industry; currency exchange risks; the need for Bitfarms to manage its planned growth and expansion; the effects of product development and need for continued technology change; protection of proprietary rights; the effect of government regulation and compliance on Bitfarms and the industry; network security risks; the ability of Bitfarms to maintain properly working systems; reliance on key personnel; global economic and financial market deterioration impeding access to capital or increasing the cost of capital; volatile securities markets impacting security pricing unrelated to operating performance.  In addition, particular factors which could impact future result of the business of Bitfarms include but are not limited to: the construction and operation of blockchain infrastructure may not occur as currently planned, or at all; expansion may not materialize as currently anticipated, or at all; the digital currency market; the ability to successfully mine digital currency; revenue may not increase as currently anticipated, or at all; it may not be possible to profitably liquidate the current digital currency inventory, or at all; a decline in digital currency prices may have a significant negative impact on operations; the volatility of digital currency prices; historical prices of digital currencies and the ability to mine digital currencies that will be consistent with historical prices; and there will be no regulation or law that will prevent Backbone from operating its business. BLCM has also assumed that no significant events occur outside of Bitfarms’ normal course of business.  Although BLCM has attempted to identify important factors that could cause actual results to differ materially, 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 information. BLCM undertakes no obligation to revise or update any forward-looking information other than as required by law.

Mathieu Vachon,  Director of Software Engineering