Magnitude Mining (MML.P-V) has arranged a potential qualifying transaction. If shareholders were hoping for a mining deal from Ms. De Witt, daughter of long-time mining promoter David De Witt, then they would have been disappointed. The Magnitude shell plans to acquire PesoRama Inc., an aspiring "dollar store" chain operator in Mexico. PesoRama, which was formed here in Canada in October, 2017, says it will open its first store in or near Mexico City, though it says not when.
Ms. De Witt, 29, graduated from law school in London, England, in 2015. She has since returned to Vancouver and is the vice-president of corporate development at Pathway Capital Ltd., a metals and mining investment company founded by her father and another mining promoter, Marcel de Groot. Her father is neither a director nor an escrow shareholder of her shell, but Mr. de Groot is both.
Ms. De Witt listed Magnitude in June, 2018, with a $200,000 initial public offering at 10 cents. In connection with its QT, the Magnitude shell will roll back 1 for 2, leaving it with 3.1 million shares issued, then issue 25 million shares to its target PesoRama's shareholders. Considering the rollback, Magnitude's IPO investors will need 20 cents to break even. Other investors who may be interested in the PesoRama deal can get in at a higher price: The shell and its target are together selling an $8-million private placement at 75 cents.
On closing of the QT, all shell directors will resign, including Ms. De Witt. The resulting issuer's directors will include Charles Wachsberg, Rahim Bhaloo, Robb McNaughton and Ed Sivitilli. Mr. Wachsberg is the president and chief executive officer of Apollo Health and Beauty Care Inc., a Toronto company that manufactures private-label personal care products (such as shampoo, liquid soap and hand sanitizer). In January, 2017, the then-private Apollo was acquired by a shell, not a capital pool shell but a SPAC (special purpose acquisition corporation), specifically Tony Melman and Belinda Stronach's Acasta Enterprises Inc., which is one of the worst-performing SPACs so far.
Mr. Melman and Ms. Stronach listed Acasta in July, 2015, with a $402.5-million IPO at $10. In January, 2017, it acquired Apollo Health and two other companies, JemPak Corp. and Stellwagen Finance Co. Ltd. JemPak manufactures laundry detergent and dish soap, as well as chemical surfactants. Stellwagen is an aviation financing and asset management company. Before the acquisition by Acasta, all three acquisition targets were profitable, although Apollo and Stellwagen were heavily indebted. Following the acquisition, the combined company lost $413-million on revenue of $366.5-million in the full year 2017. This sounds like a marvellous example of "more is less." At the end of 2017, the company had $983.9-million worth of long-term debts. |
