A Canadian SPAC and an interesting one at that. I bought some of the pre merger CGGZ.UN....
Canaccord Genuity II to merge with Taiga Motors
2021-02-17 08:11 ET - News Release
Mr. Michael Shuh reports
ELECTRIFYING POWERSPORTS: CANACCORD GENUITY GROWTH II CORP. ANNOUNCES QUALIFYING TRANSACTION WITH TAIGA MOTORS INC.
Canaccord Genuity Growth II Corp. and Taiga Motors Inc. are proposing a merger transaction between the corporation and Taiga. The merger will constitute the corporation's qualifying acquisition.
Well positioned for early leadership in the mass production of next-generation electric power sports vehicles and fully integrated modular powertrain technology;Growth plans include expanding in manufacturing and distribution capability to fulfill demand for high performance power sports vehicles with reduced environmental impact;Qualifying acquisition values Taiga at a premoney valuation of $300-million;Combined pro forma implied market capitalization of $537-million (1), including a $100-million oversubscribed and upsized private placement anchored by institutional investors including Northern Private Capital;Transaction and private placement expected to result in approximately $185-million in net cash proceeds available to pursue Taiga's fully financed growth strategy (2);Combined company to be led by Samuel Bruneau, chief executive officer and co-founder of Taiga Motors, and Taiga's current management team;Completion of the transaction is expected in April, 2021, subject to stock exchange approval and other customary closing conditions.
The corporation also announces a $100-million private placement to finance Taiga's growth strategy, working capital and general corporate purposes along with remaining funds from Canaccord Genuity's $102-million of escrowed funds.
"We are excited to present this qualifying acquisition to our shareholders and we believe that Taiga Motors provides a compelling opportunity to participate in a new segment of the electric vehicle market," said Michael Shuh, chairman and chief executive officer of Canaccord Genuity Growth II. "We are confident that the Taiga team is positioned to take early leadership in this segment and has demonstrated a clear path for growth. We look forward to supporting the Taiga team as they begin their journey as a public company."
Taiga Motors co-founder and CEO Sam Bruneau added: "Taiga's mission is to revolutionize the power sports industry with all-electric, off-road vehicles that outperform peers without sacrificing the environment. We are a product first company that believes a mass-market shift towards electrification in power sports can only be achieved by building electric vehicles offering superior performance at a competitive price when compared to class leading combustion alternatives. With the funds from this transaction, we plan to accelerate our existing production capabilities and execute on our preorders while moving full speed ahead with plans for a second, mass-production facility, which will significantly increase our capacity by 2025. As the only mass-production-ready electric power sport vehicle manufacturer, we will continue to push technological boundaries with an aim to offer class-leading vehicles in this segment and capitalize on the rise in consumer interest in electric vehicles and related technologies."
Northern Private Capital chief investment officer Andrew Lapham commented: "We look for innovative companies that have the potential to disrupt industries and believe that Taiga's years of work developing its fit-for-purpose-built electric drivetrain technology positions it to do just that to the power sports industry. We are thrilled to be investing alongside Sam and his management team as they build what we think will become the premier manufacturer of power sports EVs."
In connection with the closing, it is the corporation's intention to rename itself Taiga Corp./Corporation Taiga.
Following the closing of the merger, Taiga will be led by Mr. Bruneau and Taiga's current management team.
The corporation's currently issued and outstanding Class A restricted voting units, which comprise one Class A restricted voting share and one-half of a share purchase warrant, are listed on the Toronto Stock Exchange and the Neo Exchange Inc.
It is a condition of closing that the new Taiga common shares (as defined below) and the warrants be listed on the Toronto Stock Exchange (TSX). The corporation has reserved the symbols TAIG and TAIG.W for the common shares and warrants, respectively.
(1) Based on the private placement offering price of $3 per share.
(2) Assuming no redemption by the corporation's shareholders.
Taiga Motors investment highlights
Access to a $50-billion power sports market: Growing environmental concerns have expedited demand for the electrification of passenger vehicles and commercial equipment, with off-road vehicle electrification as the next logical step. Aggregate sales from the top five manufacturers of snowmobiles, personal watercraft, and side-by-side vehicles in 2019 and International Council of Marine Industry Associations data indicate a $50-billion (3) market opportunity for snowmobiles, personal watercrafts, other recreational marine applications and side-by-side vehicles, with $400-billion (4) of upside identified in adjacent applications such as other off-road vehicles, motorcycles, agriculture and commercial vehicles, construction and heavy machinery, and lightweight aviation.
Cutting-edge technology: Taiga offers a modular hardware and software platform that has been designed to simplify its production and assembly process and decrease development time for new electric vehicle models. The electric powertrain currently used in Taiga's snowmobiles and personal watercrafts is the fourth generation of Taiga's electric powertrain technology, developed through years of innovation, R&D (research and development), and interactive field testing.
Early entrant advantage in mass production of electric power sports vehicles: Taiga management believes it is the only electric-focused power sports vehicle manufacturer positioned to commence mass production and distribution of its offering in the near or medium term. Taiga management believes that Taiga holds a significant advantage over other potential all-electric power sports manufacturers based on an estimated minimum three-year research and development time frame to design, pilot, validate and move to mass production of electric power sports vehicles.
Compelling unit economics encourage consumer adoption: Taiga's snowmobiles and personal watercrafts offer a significantly lower total cost of ownership relative to traditional internal combustion alternatives. Data from applicants to Taiga's fleet program, as well as model estimates, indicate a potential average annual savings of over $2,000 per vehicle for snowmobile fleet operators (5). Taiga's proprietary telematics fleet management software provides ancillary opportunities to generate accretive, high margin, SaaS (software-as-a-service) revenues.
Transformational road map for achieving scale: Taiga currently operates in a 50,000-square-foot R&D assembly facility in Montreal, Que., which is estimated to ramp up production capacity to 2,000 vehicles per year by the second half of 2021. Taiga also has plans to build an approximately 340,000-square-foot mass-production assembly facility over the coming years. Taiga's planned mass-production facility is anticipated to operate at peak capacity of 60,000 vehicles and 20,000 power trains per annum by 2025 (6). Additional economies of scale may be driven by Quebec's multipronged $7-billion electrification strategy, which is engineered to mitigate supply chain risk and provide access to a highly skilled labour force of more than 120,000 people.
Dealer and customer demand: To date, over 760 local and international dealers have applied to carry Taiga's products, and more than 200 commercial fleet operators have submitted applications to Taiga's fleet program. To date, Taiga has received over 1,400 snowmobile and personal watercraft preorders.
(3) Based on top five manufacturers aggregate sales of snowmobiles, personal watercrafts and side-by-sides in 2019 and International Council of Marine Industry Associations data.
(4) Based on OEM (original equipment manufacturer) aggregate sales, Global Info Research report and International Council of Marine Industry Association's recreational boating statistics report for adjacent applications and powertrains.
(5) Savings based on averages from data collected by Taiga from fleet operators -- 3,500 kilometres travelled per snowmobile per year and $825 in maintenance costs per snowmobile per year. Costs variable dependent on gas and electricity prices per region.
(6) Notes: Manufacturing plans based on Taiga management financial and operational forecasts. This forecast assumes that no risk factors materialize.
Summary of the merger
The corporation, its sponsor CG Investments Inc. III and a subsidiary created to facilitate the acquisition, have entered into a merger agreement with Taiga dated Feb. 17, 2021. The merger agreement provides for the acquisition by the corporation of all the issued and outstanding shares of Taiga by way of a three-cornered amalgamation of Taiga with the merger sub.
In consideration for the acquisition of Taiga, common shares of the corporation (the new Taiga common shares) will be issued to the existing shareholders of Taiga. The merger values Taiga at $300-million on a premoney basis and implies a market capitalization of $537-million based on the private placement offering price of $3 per share. In connection with the merger, certain outstanding options to acquire Taiga shares will be exchanged for options to acquire new Taiga common shares and outstanding warrants to acquire Taiga shares will be exchanged for warrants to purchase new Taiga common shares. As a result of the merger, Taiga will become a wholly owned subsidiary of New Taiga.
As the merger constitutes the corporation's qualifying acquisition, holders of the Class A restricted voting units have the right (conditional on the closing) to redeem all or a portion of their Class A restricted voting units, provided that they deposit their Class A restricted voting units for redemption prior to the deadline for such announcements, which will be publicly disclosed by the corporation once determined.
In connection with the merger, the Class A restricted voting shares underlying the Class A restricted voting units not required to be redeemed will convert into new Taiga common shares on a one-for-one basis. The new Taiga common shares and the warrants will then separate, and the new Taiga common shares and the warrants will trade separately. It is a condition of closing that the new Taiga common shares and the warrants be listed on the TSX. The corporation has reserved the symbols TAIG and TAIG.W for the new Taiga common shares and warrants, respectively.
The merger is subject to the satisfaction of customary conditions, including TSX and NEO approvals. Completion of the merger is currently expected to occur in April, 2021.
Summary of the private placement
The private placement is of $100-million of non-voting common shares of CGGZ Finance Corp. (CGI), a wholly owned subsidiary of the corporation, at a price of $3 per common share. The closing of the private placement will occur contemporaneously with the closing, and, in connection with the closing, the CGI shares will be exchanged for new Taiga common shares on a one-for-one basis. The private placement is subject to customary conditions, including the closing of the merger.
Timing and additional information
Pursuant to applicable rules, the corporation will file with the Canadian securities regulatory authorities in each of the provinces and territories of Canada a non-offering prospectus containing disclosure regarding Taiga and the merger. The preliminary long form prospectus is expected to be filed with Canadian securities regulatory authorities in the coming days.
In connection with the proposed qualifying acquisition, the corporation will call special meetings of the shareholders and warrantholders of the corporation. At the meeting of the corporation's shareholders, shareholders will be asked to consider and approve (a) a consolidation of the issued and outstanding new Taiga common shares on a 1:5 basis, (b) a name change of the corporation to Taiga Corp./Corporation Taiga, and (c) the adoption of a new omnibus equity incentive plan. If required, the corporation's shareholders may also be asked to approve an extension of the date by which the corporation has to consummate a qualifying acquisition. At the meeting of holders of the warrants, such holders will be asked to consider and approve a consolidation of the issued and outstanding warrants. Approval of the matters considered at the meetings are not conditions to closing.
Goodmans LLP is acting as legal counsel to the corporation. Canaccord Genuity Corp. and National Bank Financial Inc. (NBF) are acting as lead agents on the private placement, and Stikeman Elliott LLP is acting as legal counsel to the lead agents. NBF is also acting as sole financial adviser to Taiga. Fasken Martineau DuMoulin LLP is acting as legal counsel to Taiga.
Further details are set out in an investor presentation and in the merger agreement, which will be filed shortly on SEDAR.
About Canaccord Genuity Growth II Corp.
The corporation is a special purpose acquisition corporation incorporated under the laws of the Province of British Columbia for the purpose of effecting an acquisition of one or more businesses or assets, by way of a merger, amalgamation, arrangement, share exchange, asset acquisition, share purchase, reorganization or any other similar business combination involving the corporation. The corporation received $100.05-million of proceeds from its initial public offering which was completed on April 5, 2019. The gross proceeds of the offering were placed in an escrow account with Odyssey Trust Company immediately following the initial public offering and will be released upon consummation of its qualifying acquisition in accordance with the terms and conditions of the escrow agreement.
About Taiga Motors Inc.
Taiga is a Canadian-based company, founded in 2015, that is reinventing the power sports landscape with breakthrough electric off-road vehicles. Through a clean-sheet engineering approach, Taiga has pushed the frontiers of electric technology to achieve extreme power-to-weight ratios and thermal specifications that outperform comparable high performance combustion power sports vehicles. The first models released include a lineup of electric snowmobiles and personal watercraft to deliver on a rapidly growing recreational and commercial customer demand who are seeking better ways to explore the great outdoors without compromise.
We seek Safe Harbor.
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