Pezm Gold (PEZM.H-V) Enters Into Letter Of Intent To Acquire Ontario-based Innovative Hydrogen Solutions
Dec 22, '21 - NR
Pezm Gold Inc. has entered into a letter of intent dated effective Dec. 19, 2021, outlining the general terms and conditions with respect to the acquisition by the company of all the issued and outstanding share capital of Innovative Hydrogen Solutions Inc. (IHS). The company and IHS are at arm's length, and the acquisition will constitute a change of business of the company in accordance with the policies of the TSX Venture Exchange. Assuming completion of the acquisition, it is anticipated that the company will be listed on the exchange as a Tier 2 industrial issuer.
IHS is a widely held, Ontario-based, private company involved in the application of hydrogen-on-demand technology to energy-saving products in the industrial sector. Following completion of the acquisition, it is anticipated that continued development and expansion of IHS will be the primary focus of the company.
Terms of the acquisition
In consideration for completion of the acquisition, the company will assume the obligation for repayment of a series of shareholder loans made to IHS in the aggregate amount of $3,175,000. It is a condition to completion of the acquisition that IHS arrange for the restructuring of the shareholder loans such that they do not bear interest and are repayable as follows: (i) $800,000 upon completion of the acquisition; (ii) $800,000 upon the one-year anniversary of completion of the acquisition; (iii) $800,000 upon the two-year anniversary of completion of the acquisition; and (iv) $775,000 upon the three-year anniversary of completion of the acquisition. The final amount of the shareholder loans is subject to confirmation by the company. The actual amount of the shareholder loans may change once the financial statements of IHS have been audited.
Following the initial payment of $800,000, the company may elect to settle any future repayments of the shareholder loans through the issuance of common shares of the company at a price equivalent to the volume-weighted average closing price of the common shares of the company on the exchange in the five trading days prior to settlement.
In addition to the assumption of the shareholder loans, upon completion of the acquisition, the company will arrange for existing shareholders to transfer 12.75 million common shares for the benefit of the existing shareholders of IHS. The consideration shares will be subject to a voluntary pooling arrangement for a period of five years from the date of completion of the acquisition, from which they will be released annually in five equal tranches commencing on the one-year anniversary of completion of the acquisition. The release of the consideration shares may be accelerated at the discretion of the company, or in the event of a takeover or acquisition of the company, subject to compliance with the escrow requirements prescribed by the exchange and applicable securities laws.
In connection with completion of the acquisition, it is anticipated that the company will change its name to Innovative Hydrogen Solutions Corp. and will adopt the ticker symbol IHS.
Concurrent financing
As a condition to completing the acquisition, the parties intend to complete a non-brokered private placement financing to raise sufficient capital to execute on the intended business plan of IHS and to meet the initial listing requirements of the exchange. The final terms for the concurrent financing have not yet been determined, and the company will provide additional detail regarding the concurrent financing as soon as it becomes available.
Board of directors and management changes
On completion of the proposed acquisition, the company's board of directors and management team will be reconstituted to consist individuals to be mutually agree between the company and IHS. The final composition of the board of directors and management has not yet been determined, and the company will provide additional details regarding the intended nominees as soon as they become available.
Shareholder approval
Approval of the shareholders of the company will not be required in connection with the acquisition, in accordance with exchange Policy 5.2, as the acquisition is not a related party transaction and no other circumstances exist which may comprise the independence of the company or other interested parties. The Company is without active operations, is not subject to a cease trade order or trading suspension, and shareholder approval is not required for the acquisition under applicable corporate or securities laws.
Sponsorship
Sponsorship of the acquisition is required by exchange Policy 2.2, unless an exemption from the sponsorship requirement is available. The company will be seeking a waiver of any requirement for a sponsor in connection with the acquisition.
Further information
Closing of the acquisition is subject to a number of conditions including the satisfactory completion of due diligence, the negotiation and entering into of definitive agreements, the restructuring of the shareholder loans, the completion of the concurrent financing, receipt of all required shareholder, regulatory and third party consents, including exchange approval, and satisfaction of other customary closing conditions. The acquisition and concurrent financing cannot close until the required approvals are obtained. There can be no assurance that the acquisition and concurrent financing will be completed as proposed or at all. Except in connection with the concurrent financing, no finders' fees or commissions are payable in connection with completion of the acquisition, and no advances or loans to IHS are contemplated prior to completion of the acquisition.
Further information on the acquisition, including the financial statements of IHS, will be available and posted on SEDAR upon completion of a filing statement that will be prepared by the company.
Trading in the common shares of the company will remain halted pending further filings with the exchange.
On Behalf of the Board of Directors of
PEZM GOLD INC.
“Arness Cordick”
Chief Executive Officer |
