SOURCE: Rainmaker Entertainment Inc.

Rainmaker Entertainment Inc.

September 14, 2015 16:56 ET

Rainmaker Entertainment Announces Signing of Share Purchase Agreement to Combine With Shaftesbury Films Inc. and Announces Proposed Offering of Units

VANCOUVER, BC--(Marketwired - September 14, 2015) -

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR RELEASE, PUBLICATION, DISTRIBUTION OR DISSEMINATION DIRECTLY, OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES

Rainmaker Entertainment Inc. (TSX VENTURE: RNK) ("Rainmaker" or the "Company") has executed a share purchase agreement (the "Purchase Agreement") with the shareholders of Shaftesbury Films Inc., a Canadian film and television production company ("Shaftesbury"), pursuant to which Rainmaker will acquire 100% of the issued and outstanding shares of Shaftesbury (the "Purchased Shares") for an aggregate purchase price of $20,500,000 (the "Proposed Transaction"). Upon closing of the Proposed Transaction, Rainmaker and Shaftesbury will become an integrated and diversified global entertainment company, with diverse revenue streams and content production capabilities.

The purchase price for the Purchased Shares will be paid by way of (i) $12,300,000 in cash, and (ii) the issuance of that number of common shares of Rainmaker ("Common Shares") equal to $8,200,000 at a deemed issue price of $0.30 per Common Share (the "CompanyConsideration Shares"), in each case less amounts paid in cash and Common Shares to certain option holders of Shaftesbury. If the issue price per Common Share in the Offering (as defined below) is less than $0.30, the issue price of the Company Consideration Shares will be adjusted to such lesser amount.

"By bringing together Rainmaker and Shaftesbury -- two leading content companies with proven track records delivering critically acclaimed entertainment to global consumers -- we are creating an exceptional opportunity to diversify revenue streams and production capabilities in order to build value for investors," said Craig Graham, Executive Chairman and CEO of Rainmaker.

"Our combined companies will be positioned to identify and make strategic acquisitions in the short term," said Christina Jennings, Chairman and CEO, Shaftesbury. "This transaction will provide Rainmaker and Shaftesbury with the necessary capital to expand the content and distribution sides of our integrated business, especially in the areas of digital media, branded entertainment and technology."

The Proposed Transaction will leverage Rainmaker and Shaftesbury's combined strengths in live action and animation content production to create a fully integrated global entertainment company with diversified revenue streams across production, distribution and licensing. Rainmaker will benefit from Shaftesbury's groundbreaking digital studio, Smokebomb Entertainment, to grow new revenue opportunities in the areas of digital media, branded entertainment and convergent technology. With a foothold in two of the largest markets in Canada -- Toronto and Vancouver, as well as Los Angeles -- the combined companies will be a significant kids content producer for the global market, producing live action and animated content for film, television, digital and mobile platforms. Rainmaker and Shaftesbury will continue to operate as independent business units while taking advantage of synergies between the two organizations.

The Proposed Transaction will be a "Fundamental Acquisition" under TSX Venture Exchange ("TSXV") policies. Although no Company shareholder approval of the Proposed Transaction is required, completion of the Proposed Transaction is subject to the Company fulfilling all of the requirements of the TSXV.

In connection with the closing of the Proposed Transaction, the board of directors of Rainmaker will be reconstituted and include: (i) Craig Graham (Rainmaker's current Chairman and CEO), (ii) Christina Jennings (Chairman and CEO of Shaftesbury), and (iii) certain other individuals mutually acceptable to, Rainmaker and Ms. Jennings. Appointment of any new directors is subject to approval by the TSXV. Rainmaker's existing board of directors will remain in place until such time as the Proposed Transaction is completed.

The Company anticipates that the Proposed Transaction will be completed in October, 2015. The Proposed Transaction is the result of arm's length negotiations among the parties.

Rainmaker intends to fund the cash portion of the purchase price with the proceeds of an offering of Units (as defined below) by way of short form prospectus offering. The Proposed Transaction is conditioned on the closing of the Offering (as defined below).

The Offering

In connection with the Proposed Transaction, Rainmaker also announces that it has filed a preliminary prospectus in the provinces of British Columbia, Alberta and Ontario in respect of a proposed offering (the "Offering") of a minimum of 78,571,429 units and a maximum of 85,714,285 units of the Company (the "Units") at an issue price of $0.35 (the "Offering Price") per Unit for minimum gross proceeds of $27,500,000 (the "Minimum Offering") and maximum gross proceeds of $30,000,000 (the "Maximum Offering"). The Offering remains subject to, and is conditional upon, the receipt of all necessary approvals, including regulatory approvals. The Offering is expected to close in late September, 2015. If the Minimum Offering is not achieved, the Offering will not close. The Proposed Transaction is conditioned on the closing of the Offering.

Attributes of the Units

Each Unit will consist of one Common Share (each a "Unit Share") and one-half warrant, with each whole warrant (a "Warrant") entitling the holder thereof to purchase one Common Share (each a "Warrant Share") at an exercise price of $0.40 per Warrant and each Warrant will be exercisable within 18 months following closing of the Offering.

The Units will be offered for sale on a "best efforts" basis without underwriter liability, pursuant to an agency agreement (the "Agency Agreement") between the Company and Maison Placements Canada Inc. (the "Agent").

The Company has granted the Agent an option (the "Over-Allotment Option"), exercisable in whole or in part in the sole discretion of the Agent, for a period of 30 days from the closing of the Offering, to purchase up to an additional 15% of the Units sold pursuant to the Offering, being a maximum of 12,857,142 Units, assuming the Maximum Offering (the "Additional Units"), at the Offering Price, to cover over-allotments, if any, and for market stabilization purposes.

The Company has agreed to pay the Agent a cash fee (the "Agent's Fee") equal to 6.0% of the aggregate gross proceeds of the Offering (including in respect of Units sold pursuant to the exercise of the Over-Allotment Option, if any), provided that the amount of the cash fee payable in connection with gross proceeds received from persons or entities on the president's list of the Company (the "President's List") is 3.0%. As additional compensation, the Company has also agreed to issue to the Agent that number of broker warrants (the "Broker Warrants") equal to 6.0% of the number of Units sold pursuant to the Offering (including in respect of Units sold pursuant to the exercise of the Over-Allotment Option, if any), provided that the number of Broker Warrants issuable in connection with Units sold to persons or entities on the President's List is equal to 3.0% of the number of Units sold to such persons or entities. Each Broker Warrant will entitle the holder thereof to acquire one common share of the Company (a "Broker Share") at a price of $0.35 within 18 months following closing of the Offering.

A preliminary prospectus containing important information relating to the Units and the Additional Units has been filed with the securities commissions or similar authorities in Ontario, British Columbia and Alberta. The preliminary prospectus is still subject to completion or amendment. Copies of the preliminary prospectus are available on SEDAR at http://www.sedar.com or from the Agent. This press release does not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale or any acceptance of an offer to buy these securities until a receipt for the final prospectus has been issued.

Use of Proceeds

The proceeds of the Offering will be used primarily to fund the Proposed Transaction and for working capital purposes. If the Proposed Transaction does not close, the proceeds of the Offering will be used for repayment of any of the Company's unconverted outstanding subordinated convertible debentures, other potential strategic acquisitions to be identified by the Company; and general corporate purposes.

U.S. Sales

This news release is not an offer of securities for sale in the United States. The Unit Shares, the Warrants, the Warrant Shares, the Broker Warrants and the Broker Shares will not be registered under the U.S. Securities Act of 1933, or the securities laws of any state, and may not be offered or sold in the United States or to, or for the account or benefit of, any U.S. person or person in the United States without registration unless an exemption from registration is available.

Trading Halt

In accordance with the TSXV policies, the Company's Common Shares are currently halted from trading and will remain so until the Company completes the Proposed Transaction, or the Purchase Agreement is terminated.

Forward-Looking Statements

Certain information set forth in this press release contains "forward-looking statements", and "forward-looking information" under applicable securities laws. These statements relate to future events or future performance and include, but are not limited to, (i) statements regarding the anticipated closing date of the Proposed Transaction, (ii) statements regarding the Company's intention to finance the cash portion of the purchase price with the proceeds of the Offering, and (iii) the proposed use of proceeds from the Offering. The words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect", and similar expressions are often used to identify forward-looking statements. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties, both general and specific. In evaluating these statements, readers should specifically consider risks which may cause actual results to differ materially from any forward-looking statement. These risks include, but are not limited to, risks relating to the possibility that the Proposed Transaction may not be completed. The forward-looking statements contained herein are based upon certain assumptions considered reasonable at the time they were prepared. Such assumptions include, but are not limited to, assumptions regarding: (i) general economic conditions, (ii) Rainmaker's future business prospects and opportunities, (iii) Rainmaker's ability to complete any or all of its proposed production work, and (iv) the completion of the Proposed Transaction. Should one or more of the risks or uncertainties identified herein materialize, or should the assumptions underlying the forward-looking statements prove to be incorrect, then actual results may vary materially from those described herein. In respect of Rainmaker's business generally, readers should also refer to Forward-looking Statements in the Management Discussion & Analysis for the second quarter of 2015. Readers are cautioned not to place undue reliance on forward-looking statements. Except as required by applicable securities laws, Rainmaker does not assume any obligation to update the forward-looking statements contained herein.

About Shaftesbury Films Inc.

Shaftesbury is a privately held content company based in Toronto and Los Angeles, with diversified operations spanning the production and distribution of screen-based entertainment for all genres and platforms. Led by CEO, Christina Jennings, with more than 25 years in business, Shaftesbury owns a significant library of 500+ hours of film, television, and digital content sold in Canada and 120 markets worldwide. One of Canada's Top 5 independent production companies with projects sold to leading broadcasters worldwide, Shaftesbury's slate includes David Shore's new series, Houdini & Doyle, for Sony Pictures Television, Shaw Media, ITV and Fox; thriller series Slasher for Super Channel and NBCUniversal's Chiller; nine seasons of Murdoch Mysteries for CBC, UKTV and ITV STUDIOS Global Entertainment; and the global hit Disney kids series Life with Derek. Shaftesbury's digital studio, Smokebomb Entertainment, produces convergent experiences for television and branded entertainment projects including the hit YouTube series Carmilla, funded by the U by Kotex® brand; and fashion-focused series MsLabelledfor Shaw Media and Schick® Quattro for Women. Shaftesbury operates through four divisions: Shaftesbury Production (film and television), Shaftesbury Sales (distribution), Shaftesbury U.S. (development) and Smokebomb Entertainment (digital/technology). Shaftesbury also owns a 50% interest in shift2, a brand agency focused on emerging branded entertainment revenue opportunities. For more information visit http://shaftesbury.ca.

About Rainmaker Entertainment

Based in Vancouver, British Columbia, Rainmaker Entertainment Inc. is a multifaceted animation studio and one of Canada's largest producers of CG animation. Rainmaker's first feature film, Escape From Planet Earth (distributed by The Weinstein Company), opened on 3,200 screens across North America. Originally established as Mainframe Entertainment, the Company produced the first ever CGI animation series, ReBoot, and over the course of its 15+ years of innovative history, Rainmaker has continued to break new ground in animation, telling engaging stories and creating compelling characters for all media. In addition to projects Rainmaker has produced with partners and clients including Mattel, The Weinstein Company, Hasbro, Lionsgate and Sony, Rainmaker also develops proprietary projects. Since announcing its return to television development and production in 2013 under the Mainframe Entertainment banner, two animated series are currently in the pipeline: in Fall 2013, the Company announced its plans to develop a new version of its iconic CG-animated ReBoot series; and in April 2014, the Company began production for HIT Entertainment of 104 10-minute episodes of the new CG-animated Bob the Builder series. For more information, visit www.rainmaker.com.

The information in this press release is provided for general information purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities of Rainmaker in any jurisdiction.

This press release should not be considered a comprehensive summary of the terms of the Proposed Transaction or Offering described above. Additional information may be required by the TSXV and may be disseminated at a future date following a satisfactory review by the TSXV.

Completion of the Proposed Transaction is subject to a number of conditions, including completion of the Offering and TSXV acceptance. There can be no assurance that the Proposed Transaction will be completed as proposed or at all.

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

Contact Information

  • For more information please contact:
    For Investor Relations:
    Bryant Pike
    CFO
    Rainmaker Entertainment Inc.
    investor@rainmaker.com
    604.714.2600