Solegear Bioplastic Technologies Inc.
TSX VENTURE : SGB

Solegear Bioplastic Technologies Inc.

November 10, 2016 16:41 ET

Solegear Completes First Tranche of Private Placement

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Nov. 10, 2016) -

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Solegear Bioplastic Technologies Inc. (the "Company" or "Solegear") (TSX VENTURE:SGB) announced today that it has issued $971,449 of units upon closing the first tranche (the "First Tranche") of its previously announced private placement (the "Private Placement"). This First Tranche includes 3,557,000 units at a price of $0.15 per unit for gross proceeds of $533,550, plus 2,825,155 units at a deemed price of $0.155 per unit having a total value of $437,899 upon the deemed exercise of certain special warrants previously issued by the Company, including an additional $32,500 in special warrants that were issued shortly before the closing. As a result, the Company has a total of 63,953,042 common shares issued and outstanding.

Each unit is comprised of one common share of the Company (each, a "Share") and one common share purchase warrant (each, a "Warrant", and together, a "Unit"). Each Warrant entitles its holder to acquire one additional Share of the Company at a price of $0.20 per Share within the 24-month period following the closing of the Private Placement. The net proceeds of the Private Placement will be used for working capital and ongoing commercial activities. Further information about the Private Placement was provided in the Company's September 22, 2016 press release.

Subject to TSX-V approval, the second tranche of the Private Placement is expected to close on or about November 29, 2016. The second tranche will provide for the issuance of up to $3,900,000 of Units.

Further to the Company's press release of November 2, 2016, the Company continues to make progress towards closing a separate $5,000,000 subscription agreement received from a private investor. An update on the shareholder approval process relating to that $5,000,000 investment will be provided in a subsequent press release.

"This Private Placement allows Solegear to fill orders of our proprietary products and further accelerate our commercialization efforts and drive adoption of bioplastics in the market," said Paul Antoniadis, CEO of Solegear. "We welcome our new investors who share our commitment to reducing the use of fossil fuels and removing hazardous chemicals from everyday products and packaging."

In connection with the closing of the First Tranche of the Private Placement, the Company paid Mackie Research Capital Corporation (the "Agent"), plus certain members of the selling group, an aggregate cash commission of $20,295.08, inclusive of HST. The Company also issued to the Agent and certain members of the Agent's selling group non-transferable options to acquire 169,779 Units from treasury at a price of $0.15 per Unit, exercisable at any time within the 24-month period following the closing date.

The closing of the First Tranche of the Private Placement is subject to approval by the TSX Venture Exchange (the "TSX-V"). The securities issued by the Company in connection with the Private Placement are subject to a four month "hold period" expiring on March 11, 2017 (the "Hold Period") as prescribed by the TSX-V and applicable securities laws.

Terms of the Warrants

The issued Warrants are subject to a Warrant Indenture made as of November 10, 2016 between the Company and the TSX Trust Company, which can be found on the Company's SEDAR profile at www.sedar.com. As previously announced, the expiry date of the Warrants will be subject to an acceleration right in favour of the Company that is exercisable if the common shares of the Company trade on the TSX-V at or above a volume-weight average trading price of $0.30 per share on any 20 consecutive or non-consecutive trading days, following the expiry of the Hold Period. If the acceleration right is exercised by the Company, the warrants will expire on the 30th day after the Company provides notice thereof.

Related Party Participation in the Private Placement

Paul Antoniadis, Chief Executive Officer and director of the Company, through Scenario Creation Ltd., subscribed for 500,000 Units having a subscription price of $75,000. Michael Thomson, director of the Company, subscribed for 200,000 Units having a subscription price of $30,000.

Following the closing of the Private Placement, and taking into account the effect of the exercise of the Special Warrants for common shares, Paul Antoniadis will beneficially own or control 2,908,119 Shares, representing approximately 4.5% of the issued and outstanding Shares on an undiluted basis, Michael Thomson will beneficially own or control 964,285 Shares, representing approximately 1.5% of the issued and outstanding Shares on an undiluted basis.

As insiders of Solegear participated in this private Placement, it is deemed to be a "related party transaction" as defined under Multilateral Instrument 61-101-Protection of Minority Security Holders in Special Transactions ("MI 61-101").

Each common share of the Company provides the holder with the right to one vote per common share. The Warrants do not entitle the holders to any voting rights. Therefore, all Warrants subscribed for pursuant to this Private Placement provide the subscriber, including the related party, with no additional votes at present but the holders thereof will have one vote per common share when issued upon the exercise of the Warrants. The Private Placement was unanimously approved by the directors of the Company.

Other than the subscription agreement between the aforementioned insiders and the Company relating to the issuance of the Units pursuant to the Private Placement, the Company has not entered into any agreement with an interested party or a joint actor with an interested party in connection with the Private Placement. Neither the Company, nor to the knowledge of the Company after reasonable inquiry, a related party, has knowledge of any material information concerning the Company or its securities that has not been generally disclosed.

The Private Placement is exempt from the formal valuation and minority shareholder approval requirements of MI 61-101 (pursuant to subsections 5.5(c) and 5.7(1)(b)) as it was a distribution of securities for cash and neither the fair market value of the Shares distributed to, nor the consideration received from, interested parties exceeded $2,500,000. The material change report in connection with the Private Placement was not filed 21 days in advance of the closing of the Private Placement for the purposes of Section 5.2(2) of MI 61-101 on the basis that the subscriptions under the Private Placement were not available to the Company until shortly before the closing.

About Solegear Bioplastic Technologies Inc.

Solegear Bioplastic Technologies Inc. (TSX VENTURE:SGB) is an innovator in the field of next generation bioplastics made from annually renewable plant-based sources. Committed to the principles of Green Chemistry, Solegear is driven by its mission to create healthier, safer and stronger communities by fundamentally changing the way plastics are made.

Solegear's proprietary bioplastic formulations are designed to meet today's social and corporate requirements to lower carbon emissions, reduce waste and remove toxicity typically associated with traditional petroleum-based plastics. Together with its partners, Solegear custom engineers, produces and distributes its high-performance bioplastics as resin, sheets and finished goods with some of the highest percentages of renewable, plant-based materials currently available in the industry.

For more information: www.solegear.ca.

On behalf of the Company:

Paul Antoniadis, Chief Executive Officer and Director

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

This press release does not constitute an offer of securities for sale in the United States. The securities 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 absent U.S. registration or an applicable exemption from U.S. registration requirements.

Cautionary Statement Regarding Forward-Looking Information

Information in this news release that is not current or historical factual information may constitute forward-looking information within the meaning of securities laws. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

Such factors include, among others, the risk that: (i) the bioplastics market may not grow as anticipated by the Company, and (ii) the economic circumstances of the Company may change and result in the proceeds of the Private Placement being used other in the manner described above.

When relying on the Company's forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. The Company has assumed that the material factors referred to in the previous paragraph will not cause such forward-looking statements and information to differ materially from actual results or events. However, there can be no assurance that such assumptions will reflect the actual outcome of such items or factors.

Other than as required under securities laws, we do not undertake to update this information at any particular time.

Forward-looking information contained in this news release is based on our current estimates, expectations and projections, which we believe are reasonable as of the current date. The reader should not place undue importance on forward-looking information and should not rely upon this information as of any other date. All forward-looking information contained in this news release is expressly qualified in its entirety by this cautionary statement.

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