VANCOUVER, British Columbia, Feb. 25, 2019 (GLOBE NEWSWIRE) -- J55 Capital Corp. (“J55” or the “Company”) (TSX-V: FIVE.P) is pleased to announce that it has entered into a Letter of Intent dated February 22, 2019 (the “LOI”) with Aquilini GameCo Inc. (the “Target”) to acquire all of the issued and outstanding securities of the Target (the “Transaction”).
The Transaction is subject to TSX Venture Exchange (“TSXV”) approval and is intended to constitute J55’s Qualifying Transaction (as defined in the policies of the TSXV). It is intended that the Transaction shall be completed by way of a share exchange between J55 and the Target, provided however that, by mutual agreement, the parties may revise the structure to comply with all necessary legal and regulatory requirements, to minimize or eliminate any adverse tax consequences or to increase cost effectiveness. The Transaction is intended to result in a reverse takeover of J55 by the Target’s shareholders. The Transaction will be a Non Arm’s Length Qualifying Transaction, as defined in the policies of the TSXV and, as such, it is anticipated that the approval of the disinterested shareholders of J55 will be required. In connection with closing of the Transaction (the “Closing”), the Company intends to consolidate its issued and outstanding common shares on the basis of 1.25 pre-consolidation shares for every one post-consolidation share (the “Consolidation”) and to change its name to “Luminosity Gaming Inc.” or to such other name as agreed to by the Company and the Target. It is expected that the Resulting Issuer will be listed on the TSXV as a Tier 2 Industrial issuer.
Aquilini GameCo Inc.
The Target, an eSports organization, is a private company incorporated under the federal laws of Canada. Prior to completing the Transaction, the Target intends to complete its acquisition of Luminosity Gaming Inc. (“Luminosity Canada”) and Luminosity Gaming (USA), LLC (“Luminosity USA”, which together with Luminosity Canada, is herein referred to as ‘Luminosity”). Luminosity Canada was founded in 2015 and is a private Ontario corporation, and Luminosity USA was founded in 2017 and is a limited liability company governed by the laws of the State of California.
Luminosity is a globally recognized eSports organization operating in North America and based in Toronto, Canada. Luminosity provides management and support services to players involved in professional gaming. Luminosity also manages and provides support services to the Vancouver Titans, which recently commenced its first season of competition in the Overwatch League, an eSports competition with 20 teams across six countries and three continents, all centered on the popular first-person shooter game Overwatch.
Luminosity is wholly-owned by Steve Maida, a businessman residing in Ontario. The Target entered into a share purchase agreement dated February 14, 2019 (the “Luminosity SPA”) pursuant to which the Target agreed to acquire Luminosity on the terms and conditions of Luminosity SPA, including the payment of $1.5 million cash by the Target to Steve Maida, the issuance of 60 million Target Shares to Steve Maida (at a deemed issued price of $0.30 per share) and the issuance of a $2.0 million unsecured promissory note by the Target to Steve Maida, which is repayable immediately upon completion of a go-public transaction.
On Closing, it is expected that the business of the Target will be the operation of an eSports organization which will provide management and support services to players involved in professional gaming through its wholly-owned subsidiary Luminosity. In addition, the Target intends to enter into a long-term management services agreement with the Vancouver Titans to manage the team, as well as a long term services support agreement with Vancouver Arena Limited Partnership (the “VALP”) whereby VALP will provide the Target with a broad range of marketing and business support services, including corporate partnership and selling support, retail support, brand association and marketing support (to be provided by Canucks Sports and Entertainment), eSports planning and execution, digital and social media support and back office support. It is expected that following Closing, the Target will continue to identify and pursue opportunities to acquire or invest in complementary businesses which would support the growth of its eSports organization.
Capitalization of the Target
There are currently 159,011,600 common shares of the Target (collectively, the “Target Shares”) issued and outstanding as well as 2,181,690 broker warrants (collectively, the “Broker Warrants”) exercisable until October 10, 2020 for 2,181,690 Target Shares at an exercise price of $0.10 per Target Share. In addition, the Target has agreed to issue 60,000,000 Target Shares as partial consideration in respect of the acquisition of Luminosity. It is expected that prior to the Closing, the Target will complete a private placement (the “Target Financing”) to raise gross proceeds of approximately $15,000,000 by the issuance of approximately 50,000,000 subscription receipts (each, a “Target Subscription Receipt”) at a price of $0.30 per Target Subscription Receipt, with each Target Subscription Receipt being automatically converted into one Target Share immediately prior to Closing. Canaccord Genuity Corp. will act as sole-lead agent in connection with the Target Financing. The proceeds of the Target Financing are expected to be used towards completing the acquisition of Luminosity, for strategic growth initiatives, working capital and general corporate purposes. Assuming the Target Financing is fully subscribed and the Target Subscription Receipts are converted, an additional 50,000,000 Target Shares will be issued prior to Closing, and assuming that the acquisition of Luminosity is completed and 60,000,000 Target Shares are issued pursuant to that transaction, there will be 269,011,600 Target Shares outstanding as at the Closing. There are no other options, warrants or other convertible securities to acquire Target Shares currently outstanding.
Terms of the Transaction
Subject to the terms of the LOI and receipt of all requisite approvals on or prior to the Closing, the Company, or a subsidiary of the Company, will purchase all of the Target Shares outstanding as at the Closing (which will represent all of the issued and outstanding securities in the capital of the Target) from the shareholders of the Target (the “Vendors”) in exchange for the issuance of an aggregate of 269,011,600 post-Consolidation Purchaser Shares (the “Consideration Shares”), on a one for one basis. The Consideration Shares will be issued at a deemed price of $0.30 per share. Upon the Closing, the Target will become a wholly-owned subsidiary of the Company. The Transaction will be completed pursuant to, and in strict accordance with, available exemptions under applicable securities legislation. In addition, the Company will issue replacement broker warrants in connection with the acquisition and cancellation of the Broker Warrants, which Broker Warrants will be exercisable into post-Consolidation common shares of the Company on the terms of the original Broker Warrants. It is anticipated that the Consideration Shares to be issued to the Vendors will represent approximately 95% of the total issued and outstanding common shares of the Company immediately following Closing.
The LOI provides that Closing is subject to several conditions including, among other things: (i) receipt of all regulatory approvals, including that of the TSXV; (ii) receipt of all requisite corporate approvals for the various transactions contemplated by the Transaction from the directors and shareholders of the Company and the Target, including approval of the majority of minority shareholders of the Company; (iii) completion of the acquisition by the Target of Luminosity; (iv) completion of the Target Financing; (v) the parties being satisfied with their respective due diligence of each other; (vi) completion of the Consolidation; (vii) entry into a definitive agreement; and (viii) certain other conditions that are customary in transactions of this nature.
The parties have agreed to undertake commercially reasonable efforts to close the Transaction on or before July 31, 2019. The LOI will terminate in the event the parties fail to enter into a definitive agreement on or prior to May 31, 2019, unless a later date is otherwise mutually agreed to by the parties.
Non-Arm’s Length Qualifying Transaction
The Transaction will be a Non-Arm’s Length Qualifying Transaction (as the term is defined in the policies of the TSXV) and a related party transaction for the purposes of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions since the Company and the Target have certain directors, officers and significant shareholders in common. Adrian Montgomery, a resident of Ontario, is the CEO, a director and significant shareholder of both the Company and the Target. Francesco Aquilini, a resident of British Columbia, is a director and significant shareholder of the Company and a significant shareholder of the Target. Roberto Aquilini, a resident of British Columbia, is a significant shareholder of both the Company and the Target. In determining the shareholders of the Company eligible to vote on approval of the Transaction, the shares held by any interested parties will be excluded in accordance with MI 61-101. It is expected that the following shareholders of the Company who collectively hold approximately 63% of the currently issued and outstanding common shares of the Company will be excluded from the voting on the disinterested shareholder approval of the Transaction: Francesco Aquilini – 4,001,000 shares (21.1%); Adrian Montgomery - 3,999,500 shares (21.1%); and Roberto Aquilini – 3,999,500 shares (21.1%).
Directors, Officers and Insiders of the Resulting Issuer
The directors and officers of the Resulting Issuer are expected to be as follows:
Francesco Aquilini, Non-Executive Chairman and Director
Mr. Aquilini is a Canadian businessman, investor, and philanthropist. He has been the managing director of Vancouver-based Aquilini Investment Group LP, the parent company of several diverse subsidiaries since 1978. The company is best known for its ownership of the Vancouver Canucks and Rogers Arena. Mr. Aquilini obtained his BA from the Simon Fraser University in 1984 and his MBA from University of California, Los Angeles in 1994.
Adrian Montgomery, Chief Executive Officer and Director
Mr. Montgomery was the Chief Executive Officer of QM Environmental, an environmental and industrial services provider, from March 2015 to September 2017. He was President of Tuckamore Capital, a private equity firm, from January 2010 to February 2015. He has overseen a number of business development initiatives in the fields of sports and entertainment including landmark alliances with the National Football League, the International Olympic Committee, the FIFA World Cup, Live Nation Music, and CBS Paramount as GM of Rogers Media from May 2004 to December 2009. Mr. Montgomery is a lawyer and member of the New York State Bar. Mr. Montgomery obtained his BA from the University of Toronto in 1996 and his LLB/MBA from McGill University in 2000.
Steve Maida, President and Director
Mr. Maida is a Canadian businessman and the founder and owner of Luminosity Gaming. Mr. Maida is an avid gamer and has been involved in the eSports industry for over 15 years. Prior to founding Luminosity, Mr. Maida found success in the marketing industry, working as an independent consultant providing full marketing services to various professional service providers, including law firms and medical professionals, for many years. In 2015, Mr. Maida married his enthusiasm for gaming with his experience in marketing and founded and soon after elevated Luminosity to become the globally recognized eSports organization it is today. Mr. Maida attended post-secondary school for business marketing.
Alex Macdonald, Chief Financial Officer
Mr. Macdonald is an experienced public company CFO and financial professional. He is currently the CFO of the Target. He was the CFO of TSXV listed Peeks Social Ltd. (previously Keek Inc.) from 2014-2018, having also served on the board of directors in 2015. He is experienced in overseeing “go-public” transactions, managing growth stage companies, and Canadian expansions into the United States. Mr. Macdonald is a Chartered Professional Accountant and Chartered Accountant (CPA, CA) and a graduate of the University of Toronto. He also serves on the board of directors of the NATO Association of Canada, acting as Treasurer on the executive committee.
John Veltheer, Director
Dr. Veltheer is a seasoned public company director. He has completed numerous public listings and reverse merger transactions over a broad cross-section of industries since 1996 and is singularly focused on building and protecting stakeholder value in the startup and public company arenas. In the private space, Dr. Veltheer is currently chief strategist for Liquuid Home Ownership Inc., a full-stack startup reshaping home ownership and investment; chief executive officer, President and director of Atom Energy Inc. which is completing a reverse merger with 6th Wave Innovations Corp, a nanotechnology company focused on extraction and detection of target substances at the molecular level; and director of Innovation Metals Corp., a company focused on building separation solutions for the supply chain in green-energy metals. In the public space, Dr. Veltheer is chief financial officer and director of J55 Capital Corp. and a director of CSE-listed Atlas Blockchain Group Inc. Dr. Veltheer obtained his BSc (Hons) in Chemistry from Queen’s University in 1988 and his PhD in Inorganic Chemistry from the University of British Columbia in 1993.
Mike Beckerman, Director
Mr. Beckerman is a highly experienced C-level sale and marketing executive with over 20 years’ experience. From 1987 to 1996 Mr. Beckerman held senior sales and marketing positions at NIKE in Asia, Europe and the U.S., including serving as Director of Advertising for NIKE in Europe and Director of Retail for NIKE in the U.S. After leaving NIKE, Mr. Beckerman went on to become the VP Marketing for Canadian Airlines from 1996 to 1999; VP Marketing and International for MVP.com from 1999 to 2001; Chief Marketing Officer for BMO Financial Group from 2001 to 2006; President and then Chief Executive Officer for Ariad Communications from 2006 to 2015 and then CEO of both Ariad and US based Bluespire Marketing until 2016. Since 2016 Mr. Beckerman has run a marketing consulting practice with clients in Technology Travel, Sports and Automotive. Mr. Beckerman has been a director of Points International Ltd. (TSX: PTS) since 2016 and is also currently a director of Bluerush Inc. (TSX-V: BTV). Mr. Beckerman obtained his Bachelor of Arts from the University of British Columbia in 1986.
In addition to the foregoing, the following persons may ultimately hold more than 10% of the issued and outstanding common shares of the Resulting Issuer: Francesco Aquilini – approximately 9.0% (undiluted); Roberto Aquilini – approximately 9.0% (undiluted); Adrian Montgomery – approximately 9.0% (undiluted); and Steve Maida – approximately 21.1% (undiluted).
The parties acknowledge that such appointments of the directors and officers of the Resulting Issuer are subject to the approval of the TSXV.
Sponsorship
Sponsorship of a qualifying transaction of a capital pool company is required by the TSXV unless an exemption from the sponsorship requirement is available. The Company intends to apply for an exemption from the sponsorship requirement. There is no assurance that the Company will be able to obtain such an exemption.
Financial Information Regarding the Target
Financial statement information pertaining to the Target is not currently available. Such information shall be provided in a news release once it is available, and will be included in the management information circular that will be mailed to the shareholders of the Company in connection with the Transaction.
Trading Halt
The Company common shares are currently halted and the Company anticipates that they will remain halted until the documentation required by the TSXV for the proposed Transaction can be provided to the TSXV.
Completion of the Transaction is subject to a number of conditions, including but not limited to Exchange acceptance and if applicable pursuant to Exchange 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 TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.
ON BEHALF OF THE BOARD
“John Veltheer”
John Veltheer
Chief Financial Officer, Secretary and
Director
Disclaimer for Forward-Looking Information
Certain statements in this release are forward-looking statements, which reflect the expectations of management regarding the Company’s completion of the Transaction and related transactions. Forward-looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations or intentions regarding the future, including but not limited to the Company completing the Transaction, entering into a definitive agreement for the Transaction, the Target completing the acquisition of Luminosity, the Target completing the Target Financing, the proposed directors, officers and insiders of the Resulting Issuer and the conditions to be satisfied for completion of the Transaction. Such statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the statements, including risks related to factors beyond the control of the Company. The risks include the following: the parties may not enter into the definitive agreement; the requisite corporate approvals of the directors and shareholders of the parties may not be obtained; the TSXV may not approve the Transaction; sufficient funds may not be raised pursuant to the Target Financing; the Target may not complete the acquisition of Luminosity; and other risks that are customary to transactions of this nature. No assurance can be given that any of the events anticipated by the forward-looking statements will occur or, if they do occur, what benefits the Company will obtain from them.
This press release does not constitute an offer to sell or solicitation of an offer to buy 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 a U.S. Person unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.
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.
For further information, please contact:
John Veltheer
Telephone: 604-562-6915
Email: john@veltheer.com