Crowsnest Acquisition Corp.
TSX VENTURE : CAW.P

October 07, 2014 16:12 ET

Crowsnest Acquisition Corp. Announces Closing of Subscription Receipt Financing by QE2 Acquisition Corp.

CALGARY, ALBERTA--(Marketwired - Oct. 7, 2014) -

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.

Crowsnest Acquisition Corp. (TSX VENTURE:CAW.P) (the "Corporation" or "Crowsnest"), a "capital pool company", as such term is defined in the policies of the TSX Venture Exchange ("Exchange"), is pleased to announce that in connection with the Corporation's "Qualifying Transaction" (as such term is defined in the policies of the Exchange) involving QE2 Acquisition Corp. ("QE2"), QE2 has closed the previously announced brokered private placement of 1,298 subscription receipts of QE2 ("Subscription Receipts") for gross proceeds of $1,298,000 (the "Private Placement") with Canaccord Genuity Corp. ("Canaccord"), as agent. Upon completion of the Qualifying Transaction, the combined entity (the "Resulting Issuer") will continue to carry on the business of QE2.

Each Subscription Receipt will be automatically exchanged immediately prior to the completion of the Qualifying Transaction (without any further action by the holder of such Subscription Receipt and for no further payment) for one 12% convertible unsecured subordinated debenture of QE2 ("QE2 Debentures") upon satisfaction of certain escrow release conditions (the "Escrow Release Conditions"). Each QE2 Debenture will be exchanged for one 12% convertible unsecured subordinated debenture of the Resulting Issuer ("Resulting Issuer Debentures") with a par value of $1,000 per each Resulting Issuer Debenture and a 2 year maturity period, convertible into common shares of the Resulting Issuer ("Resulting Issuer Shares") at a conversion price of $0.50 per Resulting Issuer Share (subject to adjustments). The Resulting Issuer will be able to force the conversion of the Resulting Issuer Debentures if the simple 20 day trading average of the Resulting Issuer Shares on the Exchange has exceeded $0.65 per Resulting Issuer Share. The proceeds of the Private Placement will be used for general working capital and the Resulting Issuer's future growth plans. The QE2 Debentures, Resulting Issuer Debentures and underlying shares will be subject to hold periods in accordance with applicable securities law.

Canaccord will receive a cash commission of 8% of the aggregate gross proceeds from Subscription Receipts on the closing of the Qualifying Transaction. QE2 will also issue broker warrants ("Broker Warrants") to Canaccord equal to 8% of the Subscription Receipts sold under the Private Placement upon closing of the Qualifying Transaction. Each Broker Warrant will be exercisable to acquire one Resulting Issuer Shares at a price of $0.50 per share for a period of 24 months from the closing of the Qualifying Transaction. The Broker Warrants will be subject to hold periods in accordance with applicable securities law. Canaccord will also be reimbursed for its reasonable legal and out-of-pocket expenses.

Trading Halt

The common shares of Crowsnest are currently halted from trading and are to remain halted from trading until completion of the Qualifying Transaction in accordance with the policies of the Exchange. Assuming the Exchange grants final acceptance of the Qualifying Transaction, it is anticipated that the common shares of Crowsnest will resume trading on the Exchange shortly after the Exchange issues its final approval of the Qualifying Transaction.

Additional Information

Completion of the Qualifying Transaction is subject to a number of conditions including, but not limited to, closing conditions customary to transactions of the nature of the Qualifying Transaction, approvals of all regulatory bodies having jurisdiction in connection with the Qualifying Transaction, final acceptance from the Exchange as the Qualifying Transaction of Crowsnest and, if required by the Exchange policies, majority of the minority shareholder approval. Where applicable, the Qualifying Transaction cannot close until the required shareholder approvals are obtained and there can be no assurance that the Qualifying Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in Crowsnest's Filing Statement dated August 29, 2014 prepared in connection with the Qualifying Transaction, any information released or received with respect to the Qualifying Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

Cautionary Statements

This news release contains "forward-looking information" within the meaning of applicable securities laws relating to the proposed Qualifying Transaction and associated transactions and the use of proceeds of the Private Placement. 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. The terms and conditions of the proposed Qualifying Transaction and the use of proceeds of the Private Placement may change based on the Corporation's due diligence (which is going to be limited as the Corporation intends largely to rely on the due diligence of other parties of the Qualifying Transaction to contain its costs, among other things) and the receipt of tax, corporate and securities law advice for both Crowsnest and QE2. Actual results and developments may differ materially from those that are currently contemplated by these statements depending on, among other things, the risks that the parties will not proceed with the Qualifying Transaction and associated transactions, that the ultimate terms of the Qualifying Transaction and associated transactions will differ from those that currently are contemplated, and that the Qualifying Transaction and associated transactions will not be successfully completed for any reason (including the failure to obtain the required approvals or clearances from regulatory authorities). The statements in this news 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, Canaccord, their securities, or their respective financial or operating results (as applicable).

Neither the TSX Venture Exchange, Inc. nor its Regulation Services Provider (as that term is defined in the polices of the TSX Venture Exchange) has in any way passed upon the merits of the Qualifying Transaction and associated transactions and neither of the foregoing entities has in any way approved or disapproved of the contents of this press release.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

The securities of Crowsnest and QE2 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.

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