CALGARY, ALBERTA / April 17, 2015 - QE2 Acquisition Corp. (TSXV:QE) (the “Corporation” or “QE2″) is pleased to announce that, further to its news release dated March 2, 2015, the Corporation has entered into a definitive share exchange agreement dated April 16, 2015 (the “Share Exchange Agreement”) with DistinctTech Inc. (“DistinctTech”), a corporation existing under the laws of the Province of Ontario, which outlines the general terms and conditions pursuant to which QE2 and DistinctTech would be willing to complete a transaction that will result in a reverse take-over of QE2 by the shareholders of DistinctTech (the “Transaction”). The Share Exchange Agreement was negotiated at arm’s length.
The Transaction is subject to requisite shareholder and regulatory approval, including the approval of the TSX Venture Exchange (the “TSXV”) and standard closing conditions, including the completion of due diligence investigations to the satisfaction of each of QE2 and DistinctTech, as well as the conditions described below.
QE2 is incorporated under the provisions of the Business Corporations Act (Alberta) with its registered and head office in Calgary Alberta. The primary objective of QE2 is the acquisition and growth of well-managed, profitable, asset-backed, Canadian-based businesses in the infrastructure and utility service sectors. QE2’s growth strategy is a mergers and acquisitions program which leverages the synergies that can be achieved by vertical and horizontal integration. QE2 is a “reporting issuer” in the provinces of British Columbia and Alberta.
Since the Transaction will constitute a reverse take-over of QE2, QE2 is required to obtain shareholder approval for the Transaction. QE2 intends to hold a special meeting of shareholders to approve the Transaction and certain matters ancillary to the Transaction, including a name change.
Trading in the common shares of QE2 is halted at present. It is unlikely that the common shares of QE2 will resume trading until the Transaction is completed and approved by the TSXV.
Conditions to Transaction
Prior to completion of the Transaction (and as conditions of closing):
- -QE2 and DistinctTech will obtain the requisite shareholder approvals for the Transaction and any ancillary matters contemplated in the Share Exchange Agreement.
- -All requisite regulatory approvals relating to the Transaction, including, without limitation, TSXV approval, will have been obtained.
- -QE2 shall have obtained the consents and waivers contemplated in the Share Exchange Agreement.
- -There shall not be in force any order or decree restraining or enjoining the consummation of the transactions contemplated by the Share Exchange Agreement.
- -None of the consents, orders, regulations or approvals contemplated in the Share Exchange Agreement shall contain terms or conditions or require undertakings or security deemed unsatisfactory or unacceptable by the parties to the Share Exchange Agreement.
The Proposed Transaction
Pre-Closing Capitalization of QE2
As of the date hereof, QE2 has 28,812,766 common shares (the “QE2 Shares”) issued and outstanding and securities exercisable or exchangeable for, or convertible into, or other rights to acquire, an aggregate of 7,246,792 QE2 Shares at exercise prices ranging from $0.20 per QE2 Share to $0.50 per QE2 Share.
Pre-Closing Capitalization of DistinctTech
As of the date hereof, DistinctTech has 151,000,000 common shares (the “DistinctTech Shares” issued and outstanding.
Terms of the Transaction
QE2 proposes to acquire all of the DistinctTech Shares in exchange for 151,000,00 QE2 Shares to be issued at a deemed price of $0.10 per QE2 Share for aggregate deemed consideration of $15,100,000, all pursuant to the Share Exchange Agreement. In addition to the acquisition of the DistinctTech Shares, all of the securities issuable pursuant to the DistinctTech Private Placement (as defined below) shall be exchanged on a one-for-one basis for QE2 securities.
DistinctTech is a design, engineering, construction, service and maintenance company working for the leading infrastructure and communications companies in Ontario. DistinctTech has worked on many projects across Canada, including in Western Canada, over the last seven years.
Information about the Control Person or Persons of DistinctTech and their Jurisdiction of Residence
The control persons of DistinctTech are Joe Lanni, residing in Etobicoke, Ontario and Alexander Agius, residing in Mississauga, Ontario.
Financial Information Concerning DistinctTech
The following is a summary of key audited financial information of DistinctTech for the fiscal years ended November 30, 2013, and November 30, 2014, prepared by management in accordance with IFRS standards.
||Financial Statements for year ended November 30, 2013 (audited)
||Financial Statements for year ended November 30, 2014 (audited)
|Net Comprehensive Income
DistinctTech Private Placement
Prior to the closing of the Transaction, DistinctTech intends to raise capital through a brokered private placement of up to 30,000,000 units (the “DistinctTech Units”) at a price of $0.10 per DistinctTech Unit for aggregate gross proceeds of up to $3,000,000 (the “DistinctTech Private Placement”). Each DistinctTech Unit shall be comprised of one (1) DistinctTech Share and one half of one (1/2) DistinctTech Warrant.
Each whole DistinctTech Warrant shall entitle the holder thereof to purchase one additional DistinctTech Share at an exercise price of $0.20 at any time up to 36 months from date of issuance. The DistinctTech Warrants will be subject to a forced conversion, at the option of the Resulting Issuer, if the Resulting Issuer Shares trade at or above $0.30 per share for a period of 20 non-consecutive trading days. The securities issuable pursuant to the DistinctTech Private Placement will be exchanged into QE2 Shares and QE2 Warrants as per the Exchange Ratio.
The DistinctTech Shares and DistinctTech Warrants will be subject to hold periods in accordance with the applicable securities laws.
The net proceeds of the DistinctTech Private Placement will be used for general operating purposes and future growth plan.
Additional information pertaining to the DistinctTech Private Placement including, information about the agent and its remuneration, will be provided at a later date as it becomes available.
QE2 Private Placement
Prior to the closing of the Transaction, QE2 intends to raise capital through a non-brokered private placement of a minimum of 500,000 and a maximum of 5,000,000 units of QE2 (“QE2 Units”) at a price of $0.10 per QE2 Unit for aggregate gross proceeds of a minimum of $50,000 and a maximum of $500,000 (the “QE2 Private Placement”). Each QE2 Unit shall be comprised of one (1) QE2 Share and one half of one (1/2) QE2 Warrant.
Each whole QE2 Warrant shall entitle the holder thereof to purchase one additional QE2 Share at an exercise price of $0.20 at any time up to 36 months from date of issuance. The QE2 Warrants will be subject to a forced conversion, at the option of QE2, if the QE2 Shares trade at or above $0.30 per share for a period of 20 non-consecutive trading days.
The proceeds of the QE2 Private Placement will be used for general operating purposes, working capital and paying the outstanding accounts payable. The QE2 Shares and QE2 Warrants will be subject to hold periods in accordance with applicable securities laws.
Insiders, Officers and Board of Directors of the Resulting Issuer
Upon completion of the Transaction, it is anticipated that the board of directors of the Resulting Issuer shall be comprised of: Alexander Agius, Joe Lanni, Michael Newman and two additional directors to be finalized prior to the close of the transaction which will be announced in a subsequent news release. It is anticipated that additional directors will be added to the board of directors of the Resulting Issuer. In addition, it is expected that the officers of the Resulting Issuer shall be Alexander Agius (Co-Chief Executive Officer), Joe Lanni (Co-Chief Executive Officer), Ian Hogg (Chief Operating Officer), Manny Bettencourt (Chief Financial Officer and Corporate Secretary) and Mihalis (Mike) Belantis (VP Business Development).
The following sets outs the names and backgrounds of all persons who are expected to be considered insiders of the Resulting Issuer.
Alexander Agius, Co-Chief Executive Officer and Director
Mr. Agius, is a seasoned infrastructure executive with over 25 years of industry experience. He began his career as a field tech fresh out of school. He rose to the level of VP Construction at Sentrex Communications a communications design company, where from 1988 to 2006 he oversaw Canadian operations and was involved in identifying and assessing US acquisitions. After leaving Sentrex he was responsible for creating, from 2006 to 2009, the telecom infrastructure group of Wesbell Group of Companies Inc., a professional services, logistics and investment recovery company. In 2009, Mr. Agius joined DistinctTech as co-Chief Executive Officer.
Joe Lanni, Co-Chief Executive Officer and Director
Mr. Lanni is an entrepreneur, having started his first business in his late teens and having founded and sold several businesses over the years. He has over twenty years of industry experience in general construction and utilities, and has served in several operational roles over the years. From 2006 until 2007, he was responsible for setting up the western Canadian operations of Wesbell Group of Companies Inc., a professional services, logistics and investment recovery company, and growing it to over 60 technicians in less than eighteen months. In 2007, Mr. Lanni was one of the original founders of DistinctTech and has helped guide it to its current level of success.
Michael Newman, Director
Michael Newman, 69, is the founder, and from 1997 to 2009 was the President & CEO of InterRent Real Estate Investment Trust (IIP.UN-TSX), a real estate investment trust that acquires and owns multi-residential properties. Prior to founding InterRent, Mr. Newman was for twenty five years an executive in the cable television and telecommunications industries in North America, having co-founded in 1972, CableTel Communications of Markham, Ontario, and served in a worldwide M&A capacity with Zenith Electronics of Chicago, Illinois from 1992 to 1997. He is the Managing Director of two family owned merchant banks, Boardwalk Capital Inc., and Adevam Investments Inc., and currently serves as the Chairman of the Board of Augustine Ventures Inc. (WAW-CNSX), and on the Boards of Directors of Quinsam Capital Inc., (QCA-CNSX), Leo Capital Corp. (LEQ.P-NEX), as well as being on the Advisory Boards of The Succession Fund, a private equity fund and AgriFood Capital Inc., a private equity advisor for food and agriculture in Canada. Mr. Newman is also a member of the Independent Review Committees (IRC) of Artemis US Capital Appreciation a TSXV listed Mutual Fund (AUF.UN-TSX), Citadel Income Fund (CTF.UN-TSX) and Energy Income Fund (ENI.UN-TSX). He is a partner in, and the CEO of KE Real Estate Holdings Inc., and 201004 Collier Holdings Inc., two private real estate companies. Over the past twenty years Mr. Newman has served on the Boards of Directors of numerous Toronto Stock Exchange and TSXV listed companies, often chairing a number of Board Committees.
Manny Bettencourt , Chief Financial Officer and Corporate Secretary
Mr. Bettencourt began his career at KPMG and is a graduate of the University of Toronto. Prior to becoming CFO for DistinctTech in 2014, Mr. Bettencourt was the CFO for First Global Data Ltd., from 2011 to 2014, a mobile, payments and remittance company, and had previously served from 2006 to 2012, as the COO and CTO of First Global Data Corp., the predecessor company. Mr. Bettencourt is a Chartered Accountant and has previously served as CFO and as a Senior Executive for a number of Canadian and US companies in the information, technology and telecommunications space. He served as CFO for Navaho Networks, an online payments company, was CFO at AT&T Solutions Canada, and was the Sr. Financial Officer of several other companies. In addition Mr. Bettencourt serves as a Director, and on the Audit Committee for First Global Data Ltd (TSXV) and has served as Chairman and a Director for several not for profit organizations.
Ian Hogg, Chief Operating Officer
Mr. Hogg began his business career in the early 1970’s in the securities industry and rose to run trading departments for two national firms in Canada and the United States. He moved to the Commercial Real Estate industry establishing the first branch office for the largest specialized broker in the country. In the late 1990’s he was asked to establish a public real estate company, TGS Properties Inc., based in western Canada and as president from 1998 to 2000, he grew it from $10 million in assets to over $150 million in 4 years. Mr. Hogg is currently the chairman and senior VP, investor relations for Imaginis Business Development.
Mihalis (Mike) Belantis, VP Business Development
Mr. Belantis has more than 15 years’ experience identifying opportunities, investing and consulting for companies in both the private and public sectors. Most recently, Mr. Belantis was a co-founder and Manager of Business Development for Otis Gold Corp., a company listed on the TSXV, from 2008 to 2010. Prior to that, he undertook corporate development work for Timmins Gold Corp., a company listed on the Toronto Stock Exchange, for three years. He has played a key role in developing the vision and implementing the initial foundation for many successful startups in some cases achieving market caps in excess of $300 million. As CEO of QE2, Mr. Belantis is involved in all aspects of QE2’s acquisitions, investments and new project initiatives.
Sponsorship of a reverse take-over is required by the TSXV unless exempt in accordance with TSXV policies. QE2 is currently reviewing the requirements for sponsorship and may apply for an exemption from the sponsorship requirements pursuant to the policies of the TSXV, however, there is no assurance that QE2 will ultimately obtain this exemption. QE2 intends to include any additional information regarding sponsorship in a subsequent press release.
All information contained in this news release with respect to QE2 and DistinctTech was supplied by the parties respectively, for inclusion herein, and each party and its directors and officers have relied on the other party for any information concerning the other party.
Completion of the transaction is subject to a number of conditions, including Exchange acceptance and disinterested Shareholder approval. The transaction cannot close until the required Shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the Management Information Circular to be prepared in connection with the transaction, any information released or received with respect to the RTO may not be accurate or complete and should not be relied upon. Trading in the securities of QE2 Acquisition Corp. should be considered highly speculative.
The TSX Venture Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.
Investors are cautioned that, except as disclosed in the management information circular to be prepared in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of the Corporation should be considered highly speculative.
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This news release contains “forward-looking information” within the meaning of applicable securities laws relating to the proposal to complete the Transaction and associated transactions, including statements regarding the terms and conditions of the Transaction, the Share Exchange Agreement, the QE2 and DistinctTech Private Placements, and the use of proceeds of the Private Placements. The information about DistinctTech contained in the press release has not been independently verified by the Corporation. Although the Corporation believes in light of the experience of its officers and directors, current conditions and expected future developments and other factors that have been considered appropriate that the expectations reflected in this forward-looking information are reasonable, undue reliance should not be placed on them because the Corporation can give no assurance that they will prove to be correct. 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 depending on, among other things, the risks that the parties will not proceed with the Transaction, the Share Exchange Agreement, the Private Placements and associated transactions, that the ultimate terms of the Transaction, the Share Exchange Agreement, the Private Placements, and associated transactions will differ from those that currently are contemplated, and that the Transaction, the Share Exchange Agreement, the Private Placements and associated transactions will not be successfully completed for any reason (including the failure to obtain the required approvals or clearances from regulatoryauthorities). The terms and conditions of the Transaction may change based on the Corporation’s due diligence and the receipt of tax, corporate and securities law advice for both QE2 and DistinctTech. The statements in this press release are made as of the date of this release. The Corporation undertakes no obligation to comment on analyses, expectations or statements made by third-parties in respect of the Corporation, QE2, their securities, or their respective financial or operating results (as applicable).
The securities of QE2 and DistinctTech have not been and will not be registered under the United States Securities Act of 1933, as amended and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirement. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.
Not for distribution to U.S. Newswire Services or for dissemination in the United States of America. Any failure to comply with this restriction may constitute a violation of U.S. Securities laws.