Lime Hill Capital Corporation
TSX VENTURE : LHL.P

January 12, 2011 13:25 ET

Lime Hill Capital Corporation Announces Proposed Qualifying Transaction

CALGARY, ALBERTA--(Marketwire - Jan. 12, 2011) - Lime Hill Capital Corporation (TSX:LHL.P) ("Lime Hill" or the "Corporation") is pleased to announce details concerning its proposed qualifying transaction involving a business combination with Liquid Nutrition Group Inc. ("LNGI"). LNGI is a private company that has developed and is now franchising its hybrid health and nutrition retail stores.

Lime Hill has entered into a letter agreement with LNGI dated December 21, 2010 (the "Letter Agreement"), pursuant to which Lime Hill and LNGI intend to complete a business combination (the "Transaction") by way of an amalgamation to form a new company ("Amalco") called "Liquid Nutrition Group Inc.". Pursuant to the Transaction: (i) each eight (8) issued and outstanding common shares of Lime Hill (the "Lime Hill Common Shares") will be exchanged for one (1) common share of Amalco (the "Amalco Common Shares") and one-half of one share purchase warrant of Amalco exercisable at $1.50 per share for a period of five (5) years; and (ii) each of the issued and outstanding common shares of LNGI (the "LNGI Common Shares") will be exchanged for one (1) Amalco Common Share. In addition, all of the convertible securities of LNGI will be exchanged for the same number of replacement convertible securities of Amalco having identical terms. Further, each eight (8) outstanding stock options and agent's options of Lime Hill will be exchanged for one replacement option of Amalco with adjusted terms. The final structure of the Transaction is subject to receipt of definitive tax, corporate and securities law advice satisfactory to both Lime Hill and LNGI.

It is intended that the Transaction, when completed, will constitute the qualifying transaction of the Corporation pursuant to Policy 2.4 of the TSX Venture Exchange Inc. (the "TSX Venture") Corporate Finance Manual. The Transaction is subject to the policies of the TSX Venture relating to qualifying transactions, as well as shareholder approval of Lime Hill and LNGI. Upon completion of the Transaction, Amalco will be a company focused on the hybrid health and nutrition franchise market in North America.

About Liquid Nutrition Group Inc.

LNGI has developed a hybrid health and nutrition retail store franchise business combining a health food bar and a health supplement retailer (the "Liquid Nutrition Business"). LNGI has fine tuned the retail business with much research and development at multiple stores, operating in Montreal since 2005. LNGI's primary target market comprises educated, health-conscious and time-sensitive adults in urban centers, particularly 18 to 49 year-olds. The concept also appeals strongly to other market segments, including those individuals who are attempting to lose weight and to those who are looking for a meal-replacement solution, as well as baby boomers, children/students and condition-specific consumers such as diabetics. LNGI is launching a franchise system to allow it to grow across North America and international markets rapidly and without substantial corporate capital investment.

LNGI is considering both the development of a traditional start-up format franchise and the implementation of area development agreements throughout the United States and Canada and international license agreements. The system will operate under the condition in which its franchisees will agree to follow a prescribed system, while LNGI allows them to market services under the "Liquid Nutrition" brand name. In return, the franchisees will pay an initial franchise fee and ongoing royalties and fees, as well as the costs of getting into business. LNGI franchisees would also purchase products from LNGI or designated suppliers.

There are currently 7 stores all operating in the greater Montreal area. The original store opened in December 2004 and the most recent store opened in September 2008.

LNGI Corporate History and Structure

LNGI was incorporated under the Canada Business Corporations Act on December 2, 2010. The head and registered office of LNGI is located at 888 Sherbrooke West, Montréal, Québec, H3A 1G3.

LNGI owns all the shares of Liquid Nutrition Franchising Corporation ("LNFC") which carries on the Liquid Nutrition Business pursuant to a License Agreement between LNGI and LNFC.

LNGI has recently been organized to have 7,900,000 LNGI Common Shares issued and outstanding and 2,100,000 LNGI Common Shares allocated for future share subscriptions, and no stock options, warrants, anti-dilution or other rights to purchase LNGI Common Shares issued or outstanding, other than it may have up to $2,000,000 principal amount of convertible debentures (the "LNGI Debentures") outstanding and bearing interest a rate of 9% per annum. The LNGI Debentures will be convertible into units of LNGI (the "LNGI Debenture Units") on the basis of one LNGI Debenture Unit for each $0.90 principal amount of LNGI Debentures. Each LNGI Debenture Unit will consist of one LNGI Common Share and one-half of one share purchase warrant (the "LNGI Warrants") exercisable for five (5) years at a price of $1.50 per share. LNGI may also have agent's options outstanding to purchase 10% of the principal amount of LNGI Debentures that are sold (the "LNGI Debenture Agent's Options").

LNGI intends to complete a private placement financing of LNGI Debentures on or about January 31, 2011, and such LNGI Debentures will be converted into LNGI Debenture Units in connection with the closing of the Transaction. The LNGI Common Shares and LNGI Warrants comprising the LNGI Debenture Units will be exchanged for replacement securities of Amalco on the same terms and conditions described above.

The sole shareholder of LNGI is Oxbridge Bank and Trust SCC ("Oxbridge Bank") of Barbados. Oxbridge Bank is controlled by H. Greg Chamandy.

Financial Information of LNGI

The opening balance sheet of LNGI as at December 21, 2010 is comprised of the following assets which were acquired by LNGI at such date pursuant to a Subscription Agreement between Oxbridge Bank and LNGI whereby LNGI Common Shares were issued to Oxbridge Bank:

(a) all the issued and outstanding shares of LNFC;

(b) all the issued and outstanding shares of Liquid Nutrition LLC (a holding corporation whose only assets are quotas of Liquid Nutrition SRL);

(c) all the issued and outstanding quotas of Liquid Nutrition SRL (directly and indirectly through Liquid Nutrition LLC);

(d) all business and trade names, brand names, trade dress, logos, slogans and unregistered trade-marks used in carrying on the Liquid Nutrition Business, including all goodwill associated therewith, as well the following trade-mark applications for registration and resulting registrations both in Canada and the United States, including all goodwill associated therewith: LIQUID NUTRITION (Canada; no. 1,276,265) and LIQUID Design (United States; no. 77/349,722);

(e) all designs and copyrights used in carrying on the Liquid Nutrition Business, whether registered or not, and including, without limitation, the copyright registration in Canada for Q LOGO (no. 1,058,125) as well as all copyrights associated with advertising or marketing materials, recipes, menus, website content and other business-related documents;

(f) all trade secrets and confidential information used in carrying on the Liquid Nutrition Business, whether registered or not, including, without limitation, concept know-how, franchise system manuals, special methods of preparing food, special and confidential recipes, product specifications, secret formulas, information regarding ingredients and suppliers, food supply guidelines, special methods of merchandising food products and services, customer-service techniques, advertising materials and strategies, marketing plans and materials, clients lists, telephone numbers, operational procedures, site selection guidelines, suggested pricing guidelines, business plans, the use of distinctive design, decor and furnishings and information on suppliers of same, as well the applications for legal registration and resulting legal registrations of the foregoing;

(g) domain name and any website design and content used in carrying on the Liquid Nutrition Business, including, without limitation, the domain name <liquidnutrition.ca> and all related designs and content; and

(h) domain all proprietary computer software used in carrying on the Liquid Nutrition Business, if any, including their source code, object code and any updates or upgrades thereof, as well as all rights to any licensed software used in carrying on the Liquid Nutrition Business.

A further press release with additional financial information regarding LNGI, as well as regarding certain key business partners of LNGI, will be issued in the next two weeks.

Summary of the Proposed Qualifying Transaction

Pursuant to the arm's length Letter Agreement and subject to the terms and conditions thereof Lime Hill and LNGI have agreed to complete the Transaction.

Pursuant to the Letter Agreement, the parties have agreed to use their "commercially reasonable efforts" to cause LNGI to complete a private placement (the "Private Placement") of a minimum of 3,200,000 units of LNGI and up to 3,500,000 units of LNGI (each an "LNGI Unit") at a price of $1.00 per LNGI Unit (the "Offering Price") for minimum gross proceeds of $3,200,000 and maximum gross proceeds of $3,500,000. Each LNGI Unit shall consist of one LNGI Common Share and one-half of one share purchase warrant of LNGI (each a "LNGI Warrant"). Each whole LNGI Warrant shall entitle the holder to purchase one LNGI Common Share at a price of $1.50 per share for a period of five (5) years. 

LNGI has engaged Avenue Capital Markets CPVC Inc. to act as agent and financial advisors (the "Agent") on a "commercially reasonable efforts" basis for the Private Placement and in connection therewith intends to pay a cash commission of up to 10% of the gross proceeds of the Private Placement. The Agent will also be granted agent's options (the "Agent's Options") to purchase up to 10% of the number of LNGI Units sold under the Private Placement, with each Agent's Option entitling the holder to purchase one LNGI Unit at a price of $1.00 per unit for a period of 36 months from the closing of the Private Placement.

Summary of Proposed Directors and Officers

After completion of the Transaction, the Board of Directors of Amalco will consist of five (5) directors, all of whom are nominees of LNGI, namely Dana Ades-Landy, H. Greg Chamandy, Arlene Dickinson, Brandon Kou and Glenn Young, provided the TSX Venture does not object to such nominations and such persons are eligible to act as directors pursuant to the requirements of the Canada Business Corporations Act. After the closing of the Transaction, the officers of Amalco will be appointed by the Board of Directors of Amalco and will include Glenn Young as President and Chief Executive Officer, and a Vice-President, Finance and Chief Financial Officer to be determined, as well as Mathieu Gendron as Corporate Secretary.

Dana Ades-Landy - Ms. Ades-Landy, age 51, is a Senior Vice-President with Laurentian Bank of Canada, in charge of the mid market group and has been since August 2006. Effective September 2010 she also took over responsibility for Commercial Banking in Ontario. Previously she worked with National Bank of Canada, as Vice-President, Special Loans and was also the Vice-President, Credit Risk for the Corporate, Treasury, Real Estate and National Accounts portfolios of this same institution. In 2009 and in 2007 she was named one of Canada's Top 100 Most Powerful Women by the Women's Executive Network. In 2009 she received the award for "L'Engagement au Sein de L'Association" from the Financial Women's Association of Quebec ("AFFQ"). In November 2009 she was honoured by the WOMEN OF ACTION in affiliation with ICRF and the Pink Lady Foundations for cancer research for her commitment to women in society. Alongside her professional career, she is an active member of the board of the "Foundation de la mode de Montreal". She will co-chair the Concordia University $250 million capital campaign launched in September 2010, was actively involved in the capital campaign for the John Molson School of Business, and sits on the Advisory Board of the school. Ms. Ades-Landy is actively involved in the Financial Women's Associate; she is a member of the Board of Directors, Chair of the Committee to promote Women on Boards of Canadian Companies and a member of the Audit Committee.

H. Greg Chamandy – Mr. Chamandy, age 52, is the co-founder of Gildan Activewear Inc. (GIL: NYSE and GIL: TSX). He held the position of Chairman and Chief Executive Officer of Gildan from 1984 to 2004. During this period, the company grew from a simple textile manufacturer into a sophisticated vertically integrated apparel manufacturing giant. Over the course of his leadership at Gildan, the company grew from a start up to its $30 million initial public offering in 1998, and finally to a market capitalization of over $830 million in 2004. The resulting 31.8% average annual return to Gildan shareholders far outperformed the 2.8% average annual return achieved by the S&P/TSX Composite Index over that time. In 2004, after creating the proper structure to replace him, Mr. Chamandy retired from Gildan in order to have the time to pursue other business and personal interests. Subsequent to Gildan, in 2005 Chairman and co-owner of Europe's Best, North America's largest selling brand of frozen fruit, which was sold to JM Smucker (JMS: NYSE) in 2008. Mr. Chamandy is currently also the Chairman of Oxbridge Bank & Trust SCC, a Barbados private bank catering to high net worth individuals. Mr. Chamandy is also the Executive Chairman of Richmont Mines (RIC: TSE and RIC: NYSE Amex), a Quebec-based gold producer.

Arlene Dickinson - Ms. Dickinson, age 54, is currently the CEO of Venture Communications Ltd. ("Venture") and has been since 1998. Ms. Dickinson is one of Canada's most renowned independent marketing communications entrepreneurs. After joining Venture as a partner in 1988, she took over sole ownership in 1998. Ms. Dickinson's accomplishments have been recognized with several honours and awards, including PROFIT and Chatelaine magazine's TOP 100 Women Business Owners; the Pinnacle Award for Entrepreneurial Excellence; Canada's Most Powerful Women Top 100 Hall of Fame; Ad Rodeo's Lifetime Achievement Award; McGill University's Management Achievement Award and Global Television Woman of Vision. Venture was recognized as one of Canada's 50 Best Managed Companies for three consecutive years. She is also a panelist on the Gemini award-winning CBC hit series, the Dragon's Den. In addition to her roles as CEO of Venture and panelist on Dragon's Den, She lends her time, skills and leadership to benefit the industry and the community. Over the years she has served on various boards including Ad Rodeo (chair) and the National Board for Kids Help Phone (co-chair). She is currently a director of the Calgary Municipal Lands Corporation and Chaorix, and sits on the Advisory Committee of the Stratford Institute for Theoretical Physics. She is also the recipient of honorary degrees from Mount Saint Vincent University and the Northern Alberta Institute of Technology.

Mathieu Gendron - Mr. Gendron is a lawyer at Heenan Blaikie LLP, one of the leading law firms in Canada. His practice includes corporate reorganizations and financings, with a particular emphasis on tax impact and securities-related issues. He received a License in Civil Law (LL.L.) from the University of Ottawa in 1999, a Québec Lawyer designation from the Barreau du Québec in 2000, a Specialized Graduate Diploma in taxation (D.E.S.S.) from HEC Montreal in 2003 and a Master in Laws (taxation option) (LL.M.) from HEC Montreal in 2006. Mr. Gendron also recently completed the Canadian Securities Course from the Canadian Securities Institute. Previously, Mr. Gendron worked with another law firm specializing in business law. He also held the position of General Manager of an investment fund.

Brandon Kou - Mr.Kou, age 26, is currently the General Manager of Steve Nash Enterprises, a conglomerate with portfolio companies in media, sports, entertainment, health and wellness. He is responsible for managing and providing growth strategies for the existing portfolio companies. Mr. Kou also leads the origination and evaluation of new opportunities. In addition to his responsibilities at Steve Nash Enterprises, Mr. Kou is a co-founder and serves on the Board of Directors for APOKO, a digital marketing company focused on growing the online brands of athletes, celebrities and brands. Mr. Kou currently serves as Chairman of the Board for OneBode, an international holistic vitamin company. Prior to joining Steve Nash Enterprises, Mr, Kou provided investment banking services at Houlihan Lokey where he focused on Media, Sports and Entertainment. Mr. Kou is a graduate of the Marshall School of Business at the University of Southern California.

Glenn Young – Mr. Young, age 46, is a senior executive with extensive experience and reach in the sports and entertainment industry with focus on sports marketing and forging win-win partnerships both in the profit and non-profit sectors. Mr. Young has most recently been appointed the President of LNGI. Previously as Senior Vice-President, Sports, Entertainment and Media for International Management Group Canada, the country's leading sports and lifestyle marketing company, Mr. Young oversaw all media activity for all of the company's media assets and properties and over his ten years was directly involved in some of Canada's largest athlete and property commercial agreements. Before his tenure at IMG, Mr. Young broadened his sales and marketing skills in the broadcast industry at Western International Television as Vice-President, Sales and Marketing, overseeing one of the largest media markets in Canada. Currently, Mr. Young serves on the board of directors for the Sponsorship Marketing Council of Canada and advisory committee for the Ireland Fund of Canada.

Other Matters Concerning the Qualifying Transaction

Concurrent with the closing of the Transaction, the existing directors of Lime Hill will transfer within escrow an aggregate of 2,000,000 Lime Hill Common Shares at a price of $0.08 per share to the directors and officers of LNGI, or as they may direct, subject to the receipt of all necessary regulatory approval (the "Escrow Transfer").

The completion of the Transaction is subject to the approval of TSX Venture and all other necessary regulatory approval. The completion of the Transaction is also subject to additional conditions precedent, including completion of the Private Placement for minimum gross proceeds of $3.2 million, shareholder approval of Lime Hill and LNGI, satisfactory completion of due diligence reviews by the parties, board of directors approval of Lime Hill and LNGI, completion of the Escrow Transfer, and certain other usual conditions.

The Transaction will be an arm's length transaction as none of the directors, officers or insiders of Lime Hill own any interest in LNGI.

Lime Hill also announces it has reserved a price of $1.00 per Amalco Common Share for the grant of stock options to acquire up to 15% of the number of issued and outstanding Amalco Common Shares (the "Stock Options") in the event the Transaction and the Private Placement are completed. The grant of the Stock Options is subject to regulatory approval. The Stock Options will be granted to directors, officers, employees and consultants of Amalco, concurrent with the completion of the Transaction.

Lime Hill intends to engage a sponsor in connection with the Transaction.

Trading of the Lime Hill Common Shares will not resume until all documents required by the TSX Venture have been filed. Lime Hill will issue a further news release when TSX Venture has received the necessary documentation and trading of the Lime Hill Common Shares is to resume.

As indicated above, completion of the Transaction is subject to a number of conditions, including but not limited to, TSX Venture acceptance and 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 Information Circular or Filing Statement, as applicable, of the Corporation 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.

Except for historical information contained herein, this news release contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially. Neither LNGI nor Lime Hill will update these forward-looking statements to reflect events or circumstances after the date hereof. More detailed information about potential factors that could affect financial results is included in the documents filed from time to time with the Canadian securities regulatory authorities by Lime Hill.

The securities of Lime Hill being offered have not been, nor will be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons absent U.S. registration or an applicable exemption from U.S. registration requirements. This release does not constitute an offer for sale of securities in the United States.

Neither the TSX Venture nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture) has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

Contact Information

  • Lime Hill Capital Corporation
    Michael Rousseau
    President
    (403) 816-1947
    or
    LNGI
    Glenn Young
    President
    (416) 889-4920