Grasslands Entertainment Inc.
TSX VENTURE : GEE

Grasslands Entertainment Inc.

July 08, 2010 17:44 ET

Grasslands Entertainment Inc. Announces Amended Merger with Foundation Financial Holdings Corp. and Change of Business

TORONTO, ONTARIO--(Marketwire - July 8, 2010) - Grasslands Entertainment Inc. (TSX VENTURE:GEE) ("Grasslands" or the "Company") is pleased to announce that it has entered into an amended and restated letter of intent (the "Letter of Intent") dated June 21st, 2010 with Foundation Financial Holdings Corp. ("FFHC"), a private company incorporated under the laws of the Province of Ontario on October 20, 2006, pursuant to which Grasslands and FFHC have agreed to complete a business combination to form a new company ("Newco"). The business combination shall constitute a Reverse Takeover (the "RTO") of the Company as defined in the policies of the TSX Venture Exchange (the "TSX-V"). The Letter of Intent amends and restates the previously announced letter of intent dated February 4, 2010 among Grasslands, FFHC and certain affiliates of FFHC and provides for a restructuring of the previously announced reverse takeover.

In conjunction with the RTO, Grasslands will become an active merchant and investment banking business. FFHC currently holds subsidiaries with operations in merchant banking through Foundation Opportunities Inc., as well as investment banking though Foundation Markets Inc, an Exempt Market Dealer in Ontario, Canada, and Foundation Markets Corporation, a Broker-Dealer in New York.

FFHC is focused on working with small- and medium-sized companies with rapid growth potential. Through its merchant banking subsidiary, Foundation Opportunities Inc., and its Exempt Market Dealer, Foundation Markets Inc., FFHC specializes in assisting pre-public clients (examples of which are set out below) in accelerating their growth plan, access to private capital and executing going-public transactions. FFHC also works with public companies on financing, mergers and acquisitions transactions, and strategic advisory services. While FFHC primarily works with resource companies (mining, energy and alternative energy), it also is developing additional focuses on cleantech and media related companies.

FFHC has interests in and works with the following companies which are currently undertaking Qualifying Transactions with Capital Pool Companies:

  • Quia Resources Inc., a private company with gold exploration properties in Colombia;
  • Alpaca Resources Inc., a private company with gold exploration properties in Peru, and the United States;
  • Caldera Geothermal Inc., a private company focused on geothermal exploration and development in the Western United States

FFHC is currently developing other investment opportunities in the areas of Biofuels, Oil and Gas, Mining, Media and Technology.

FFHC also has interests in clients it has previously assisted in going public, including:

  • Petrolympic Inc., (TSX VENTURE:PCQ) a TSX-V listed company focusing on oil and gas exploration in Quebec;
  • Silver Shield Resources Corp. (TSX VENTURE:SSR), a TSX-V listed company focusing on advanced-stage silver properties in Northern Ontario and Mexico.

Summary of the Proposed Reverse Takeover

Under the terms of the Letter of Intent: (i) Grasslands shall consolidate (the "Share Consolidation") its Class A voting shares on a eight (8) old shares ("Pre-Consolidated Shares") for one (1) new share basis (a "Consolidated Share"), such Share Consolidation to become effective prior to completion of the RTO; and (ii) the holders of FFHC common shares (the "FFHC Common Shares") will receive twelve thousand and sixty-six (12,066) Consolidated Shares for each FFHC Common Share (the "Consideration Ratio"). The Company will issue a total of 17,857,680 Consolidated Shares to the holders of FFHC Common Shares upon closing of the RTO at an ascribed price of $0.28 per share.

The number of outstanding stock options, warrants, and broker options of Grasslands will be adjusted based on the same 8:1 ratio as the Pre-Consolidated Shares of Grasslands and, subject to the approval of the Exchange, the exercise price of the outstanding warrants of Grasslands will be amended to $0.28 per Consolidated Share on a post-Consolidation basis. Currently, Grasslands has 2,213,680 warrants outstanding (each warrant exercisable into one Pre-Consolidated Share at an exercise price of $0.10 until December 11, 2010) and 350,800 broker options (each broker option exercisable into one Pre-Consolidated Share at an exercise price of $0.10 until December 11, 2010).

On completion of the RTO, on both a basic and fully diluted basis, the shareholders of Grasslands and FFHC will own approximately 10.6% and 89.4% of Newco, respectively. There are currently 16,997,696 Pre-Consolidated Shares issued and outstanding and 1,480 FFHC Common Shares issued and outstanding.

Grasslands will also complete a financing of a minimum of $2 million worth of Grasslands securities (the "RTO Financing") in conjunction with the completion of the RTO. The units issued pursuant to the RTO Financing are expected to have an issue price of $0.28 per unit on a post-Share Consolidation basis and be comprised of one Consolidated Share and one-half of one Consolidated Share purchase warrant with exercise terms of the warrant to be determined in the context of the market.

No Non-Arm's Length Party (as that term is defined in the TSX-V Policies) of the Company has any direct or indirect beneficial interest in FFHC, and there is no relationship between any Non-Arm's Length Party of the Company and any Non-Arm's Length Party of FFHC.

The RTO is subject to certain regulatory approvals and is conditional upon the completion of satisfactory due diligence by both Grasslands and FFHC and the negotiation of a definitive agreement.

It is anticipated that on closing, assuming the RTO Financing is subscribed at the minimum, and there is no downward adjustment to the Consideration Ratio, Newco will have outstanding approximately 27,125,249 Consolidated Shares and approximately 9,375 options, 3,848,139 warrants and 615,279 broker options.

Upon completion of the RTO, it is anticipated that Mendel Ekstein and Gerald Goldberg, currently directors of Grasslands, shall remain directors of FFHC. FFHC shall appoint up to an additional five (5) directors. In addition, it is expected that upon completion of the RTO, the following persons will be appointed to positions as executive officers of Newco: Jeremy Goldman, Chief Executive Officer and Yannis Banks, President.

FFHC is owned by Jeremy Goldman (31.67%), Yannis Banks (31.67%), The Goomie Trust (31.67%) and Jack Azimi (5%), all of whom reside in the Province of Ontario.

It is anticipated that following completion of the RTO, the current principals shall be the only holder of more than 10% of the issued and outstanding Consolidated Shares (approximately 65.8%, assuming full subscription of the RTO Financing).

Completion of the transaction is subject to a number of conditions, including but not limited to, TSX-V 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.

The Company intends to issue at a later date a press release containing a summary of significant financial information regarding FFHC.

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 Grasslands should be considered highly speculative.

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

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