Valiant Minerals (VTM.H-V) Nov 17, '14 has completed its previously announced non-brokered private placement in connection with its qualifying transaction with Convalo Health International Corp.
Convalo Health International
Convalo is a private company operating in the highly fragmented and fast-growing U.S. outpatient addiction rehabilitation market. It is estimated that more than 20 million Americans suffer from substance-abuse problems that require treatment. Recent regulations in the United States, including Obamacare and the Parity Act, have created a significant increase in demand in the U.S.
In particular, the recent passage of the Parity Act requires private health insurance companies to treat many mental health disorders on parity with physical disorders, making treatment available to millions for the first time because health insurance companies are now covering these services. The provision in Obamacare giving parents the option to cover children until age 26 expands the universe of those who can be treated.
Once the amalgamation is complete, Convalo plans to consolidate specific sectors of the addiction treatment market in major cities across the U.S.
The first acquisition of a centre located in Hollywood, Calif., is open and serving patients for the treatment of addictive and co-occurring disorders under the brand name BLVD Centers.
The BLVD philosophy emphasizes mindfulness, meditation, trauma work, giving back, creative self-expression and community, all to achieve a deeply soulful and sustainable recovery. In conjunction with the time-tested 12-step approach, BLVD also offers additional insurance-reimbursed groups for a variety of communities: gender specific, creatively oriented, meditation/mindfulness and LGBT affirmative.
BLVD's flagship location in the heart of Hollywood, Calif., right on Highland and Hollywood Boulevard, features outdoor lounging patios with fireplaces and retractable awnings, a cross-training gym next door, and a luxury spa across the street. The neighborhood has countless restaurants, movie theaters, salons, stores and cafes within walking distance.
Other potential acquisition targets in Los Angeles or other cities may cater to other specific market segments, or to the general outpatient market, depending upon demand and market opportunities.
Concurrent financing
In conjunction with the proposed merger with Convalo Health International, Valiant has completed the concurrent financing through the issuance of 58.14 million subscription receipts at five cents per subscription receipt (equivalent to 10 cents postamalgamation) for aggregate gross proceeds of $2,907,000. Each subscription receipt will be automatically exchangeable in certain circumstances, without additional payment, into units of Valiant on a one-for-one basis concurrently with the completion of the amalgamation. Each unit shall consist of one common share in the capital of Valiant, one-half of one transferable share purchase warrant, with each whole Valiant A warrant entitling the holder thereof to acquire one Valiant share at a price of 10 cents until the date that is the earlier of 30 months from the date of issuance and 90 days following the amalgamation, and one-half of one transferable share purchase warrant, with each whole Valiant B warrant entitling the holder thereof to acquire one Valiant share at a price of 10 cents until the date that is the earlier of 30 months from the date of issuance and 12 months following the amalgamation. If the amalgamation is not completed by Dec. 31, 2015, the subscription proceeds will be returned together with any interest earned thereon to the subscriber in full satisfaction of all rights of the subscriber under his, her or its subscription receipts. In connection with the concurrent financing, on closing of the amalgamation, agents/finders will be entitled to a cash commission of $198,940 and broker warrants exercisable for 3,978,800 Valiant shares at an exercise price of five cents per Valiant share, exercisable for a period of 24 months from the closing of the concurrent financing.
Pursuant to the amalgamation, each Valiant share, Valiant A warrant and Valiant B warrant issued pursuant to a subscription receipt, and each broker warrant issued pursuant to the concurrent financing, will be exchanged for similar securities of Convalo on a one-for-two basis, with the exercise price of the warrants increased by 100 per cent.
The amalgamation
Following completion of the amalgamation, the current shareholders of Valiant will hold approximately 5.56 per cent of the common shares of Convalo, the current shareholders of Convalo will hold approximately 50.19 per cent of the resulting issuer shares, current holders of the previously issued Convalo subscription receipts will hold approximately 16.83 per cent of the resulting issuer shares and subscribers in the concurrent financing will hold approximately 27.41 per cent of the resulting issuer shares.
Closing of the amalgamation remains subject to several conditions precedent, including the preparation and filing of an information circular, holding a meeting of Valiant shareholders and receiving shareholder approval for the amalgamation, holding a meeting of Convalo shareholders and receiving shareholder approval for certain matters related to the amalgamation, and obtaining TSX-V approval to the transaction.
The amalgamation is expected to constitute the qualifying transaction of Valiant as defined by the policies of the TSX-V. Upon the closing thereof, Convalo will be listed as a Tier 2 industrial issuer on the TSX-V. |
