Transactions unlock significant value from
existing assets
TORONTO, June 15,
2023 /CNW/ - Global Food and Ingredients Ltd.
(TSXV: PEAS) (OTCQX: PEASF) ("GFI" or the "Company"),
announced today that it has entered into a letter of intent to
raise approximately $11.7 million
through an investment in equity and debt by 35 Oak Holdings Ltd.
("35 Oak") in its pet food ingredients division (the "Pet
Food Transaction") as well as a commitment for a further
$500,000 investment in a concurrent
non-brokered private placement (the "Private Placement", and
together with the Pet Food Transaction, the "Transactions"),
for a total expected investment of approximately $12.2 million.
"We are very pleased to have entered into this letter of intent
with 35 Oak in relation to our pet food ingredients division,
unlocking significant value for our shareholders and generating
substantial capital to strengthen our balance sheet and prepare GFI
for the next phase of growth," said David
Hanna, President and CEO. "GFI will continue to manage
all aspects of the pet food business and will consolidate its
results as a controlled entity, while realizing on the value
created to date since building out the business unit over the past
two years," he added.
Pet Food
Transaction
Under the Pet Food Transaction, GFI will transfer all of the
assets and liabilities associated with its pet food ingredients
division to a newly formed and wholly owned subsidiary ("Pet
Food Co") and will sell a 49.9% equity stake in Pet Food Co to
35 Oak for approximately $3.2
million. In addition, as part of the Pet Food Transaction,
35 Oak will provide a revolving credit facility (the "Loan")
to Pet Food Co, of which approximately $8.5
million will be drawn at closing of the Pet Food
Transaction.
Under the terms of the Loan, Pet Food Co will receive a
revolving committed two-year credit facility of up to $10.0 million. The Loan will bear interest at an
expected rate of 10% per annum and will be secured by a first
position general security agreement over all of the assets of Pet
Food Co. As consideration for providing the Loan, it is anticipated
that the Company will issue 35 Oak non-transferrable warrants
(each, a "Warrant") to purchase an aggregate of 3,250,000
common shares of the Company (each, a "Common Share"), each
Warrant entitling 35 Oak to acquire one Common Share at an exercise
price of $0.27 per share for a period
of two years following the date of issuance. The Warrants will
include a forced exercise feature in the event that the closing
price of the Common Shares on the TSX Venture Exchange (the
"TSXV") reaches or exceeds $0.50 for 20 consecutive trading days. The terms
and issuance of the Warrants are subject to approval of the
TSXV.
In addition, the Company will enter into a management services
agreement with the Pet Food Co, which will result in a minimum
annual fee of $180,000 to GFI. GFI
will retain decision-making and management control of Pet Food Co
following the closing of the Pet Food Transaction.
Private Placement
Under the Private Placement, GFI intends to offer units
("Units") of the Company at a price of $0.205 per Unit on a non-brokered basis.
Each Unit will consist of one Common Share and one common share
purchase warrant of the Company (a "Unit Warrant").
Each Unit Warrant will entitle the holder to acquire one Common
Share at a price of $0.405 per share
for a period of two years from the closing date of the Private
Placement.
Under the letter of intent, 35 Oak has committed to purchase
$500,000 of Units, conditioned on
closing of the Pet Food Transaction.
The proceeds of the Transactions will be used for debt
repayment, including approximately $3.2
million to repay a shareholder loan (inclusive of accrued
interest) from 35 Oak in February
2023, working capital and to fund planned growth in GFI's
business.
The Transactions are anticipated to close in the second quarter
of the Company's current fiscal year ending March 31, 2024, subject to completion of
definitive agreements, satisfaction of customary closing
conditions, and receipt of regulatory approvals, including the
approval of the TSXV.
The Pet Food Transaction and 35 Oak's participation in the
Private Placement constitute "related party transactions" of GFI,
within the meaning of Multilateral Instrument 61-101 –
Protections of Minority Security Holders in Special
Transactions ("MI 61-101") as 35 Oak is a shareholder of
the Company. The Company determined that the Pet Food Transaction
and 35 Oak's participation in the Private Placement are exempt from
the formal valuation and minority approval requirements of MI
61-101 in reliance of the exemptions set forth in sections 5.5(e)
and 5.7(1)(c) of MI 61-101, respectively, as the Pet Food
Transaction and 35 Oak's participation in the Private Placement are
supported by a control person of the Company in the circumstances
described in section 5.5(e) of MI 61-101.
About GFI
GFI is a fast-growing Canadian plant-based food and ingredients
company, connecting the local farm to the global supply chain for
peas, beans, lentils, chickpeas and other high protein specialty
crops. GFI's vision is to become a vertically integrated
farm-to-fork plant-based company providing traceable, locally
sourced, healthy and sustainable food and ingredients. GFI is
organized into four primary business lines: Core Ingredients,
Value-Added Ingredients, Plant-Based Pet Food Ingredients and
Downstream Products. Headquartered in Toronto, GFI buys directly from its extensive
network of farmers, processes its products locally at its four
wholly-owned processing facilities in Western Canada and ships to 37 countries
across the world.
Disclaimer
Neither the TSXV nor its Regulation Service Provider (as defined
policies of the TSXV) accepts responsibility for the adequacy or
accuracy of this press release.
Forward-Looking
Information
This press release may contain certain forward-looking
information and statements ("forward-looking information")
within the meaning of applicable Canadian securities legislation,
that are not based on historical fact. Forward-looking statements
include without limitation statements containing the words
"believes", "anticipates", "plans", "intends", "will", "should",
"expects", "continue", "estimate", "forecasts" and other similar
expressions. Forward-looking information in this press release
includes without limitation statements relating to the Pet Food
Transaction, the Loan, the Private Placement and 35 Oak's
participation in the Private Placement, including the terms and
conditions, closing date and impacts thereof. Readers are cautioned
to not place undue reliance on forward-looking information. Actual
results and developments may differ materially from those
contemplated by these statements. GFI undertakes no obligation to
comment on analyses, expectations or statements made by
third-parties in respect of GFI, its securities, or financial or
operating results (as applicable). Although GFI believes that the
expectations reflected in forward-looking information in this press
release are reasonable, such forward-looking information has been
based on expectations, factors and assumptions concerning future
events which may prove to be inaccurate and are subject to numerous
risks and uncertainties, certain of which are beyond GFI's control,
including the risk factors discussed in GFI's annual information
form for the year ended March 31,
2022, which are incorporated herein by reference and are
available through SEDAR at www.sedar.com. The forward-looking
information contained in this press release is expressly qualified
by this cautionary statement and is given as of the date hereof.
GFI disclaims any intention and has no obligation or
responsibility, except as required by law, to update or revise any
forward-looking information, whether as a result of new
information, future events or otherwise.
SOURCE Global Food and Ingredients