Solegear Bioplastics Inc.
TSX VENTURE : SGB

Solegear Bioplastics Inc.

September 30, 2015 09:10 ET

Solegear Completes Private Placement of Common Shares

Hillcore Group to Join Forces with Yaletown in Financing of Solegear's Commercial Growth Opportunities

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Sept. 30, 2015) -

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) is pleased to announce that Hillcore Group ("Hillcore") has led the first tranche (the "First Tranche") of a non-brokered private placement of common shares (the "Shares") of the Company (the "Private Placement"), which closed earlier today and involved the placement of 2,700,000 Shares at a price of C$0.20 per Share for gross proceeds of C$540,000. Concurrent with the Private Placement, Hillcore also acquired a block of shares directly from Yaletown Ventures II Limited Partnership and Yaletown Ventures II (USA) Limited Partnership (collectively, "Yaletown"). At the closing of these transactions, Hillcore held 4,000,000 Shares of Solegear. Yaletown and Members of the Board of Directors have also participated in the Private Placement.

The Company expects to close the remaining tranches of the Private Placement within 30 days. One or more of these tranches may be brokered. The Private Placement in aggregate is targeted to result in the issuance of up to 10,000,000 common shares at a price of $0.20 per share for aggregate gross proceeds of up to C$2,000,000. The proceeds raised from the Private Placement will be used for working capital requirements for commercial activities and other general corporate purposes. Some of the Company's recent commercial activities include a purchase order for plant-based office products and a joint venture with Ex-Tech.

"Solegear is pursuing market share gains in the emerging bioplastic space," said Paul Antoniadis, CEO of Solegear. "Along with Hillcore's investment and Yaletown's follow-on participation after Solegear's going public financing, all of the Directors of the Company have also been a part of this Private Placement, which further highlights our collective commitment. The addition of Hillcore further positions Solegear in achieving our targeted market share gains, while also providing our customers, including Fortune 500 companies, with further confidence that Solegear is the right bioplastic choice to help them achieve their sustainability objectives."

Jean-Marc Bougie, CEO, Hillcore Group, stated the following: "We are pleased to have been able to secure a position to profit from the explosive growth that bioplastics is expected to experience in the years to come. Solegear has an outstanding management team and unique business model to truly benefit from this burgeoning market."

"We are delighted to have a large investment firm like Hillcore, with its excellent performance record, join us in this next chapter of Solegear's progress. Solegear is ramping up commercial sales to a diverse set of globally recognized customers who are actively seeking more sustainable materials and practices. Solegear's technology meets the price and product performance criteria established by these customers, which is making it a compelling solution," said Salil Munjal, General Partner, Yaletown, and Chair of Solegear.

Yaletown subscribed for 1,250,000 Shares (representing approximately 2.8% of the issued and outstanding common shares of the Company) at a price of $0.20 per share as part of the First Tranche of the Private Placement. Members of the Board of Directors subscribed for an aggregate of 575,000 Shares. These issuances make the First Tranche of the Private Placement a "related party transaction" under Multilateral Instrument 61-101-Protection of Minority Security Holders in Special Transactions ("MI 61-101"), as discussed further below.

The Private Placement is subject to final approval from the TSX Venture Exchange (the "TSX-V"). All Shares issued pursuant to the First Tranche are subject to a four-month hold period expiring on February 1, 2016 in accordance with applicable Canadian securities laws.

Related Party Participation in the Private Placement

A control person and three insiders of Solegear participated in the First Tranche, thereby making the First Tranche a "related party transaction" as defined under MI 61-101. Yaletown, a control person of the Company, subscribed for 1,250,000 Shares; Michael Thomson, Secretary and director of the Company, subscribed (through Independent Capital Partners Inc.) for 250,000 Shares; Paul Antoniadis, Chief Executive Officer and director of the Company, subscribed (through Scenario Ventures (VCC) Inc.) for 250,000 Shares; and Jim Zadra, a director of the Company, subscribed for 75,000 Shares.

Following the closing of the First Tranche, Yaletown beneficially owns or controls 20,293,988 Shares, representing approximately 45% of the issued and outstanding Shares on an undiluted basis; Mr. Thomson beneficially owns or controls 514,285 Shares, representing approximately 1% of the issued and outstanding Shares on an undiluted basis; Mr. Antoniadis beneficially owns or controls 1,101,084 Shares, representing approximately 3% of the issued and outstanding Shares on an undiluted basis; and Mr. Zadra beneficially owns or controls 135,000 Shares, representing less than 1% of the issued and outstanding Shares on an undiluted basis.

Each common share of the Company provides the holder with the right to one vote per common share. Therefore, all Shares subscribed for pursuant to the Private Placement provide the subscriber, including those related parties described above, with one vote per Share. The Private Placement was unanimously approved by the directors of the Company. Other than the subscription agreements between the control person and the insiders listed above relating to the issuance of the Shares pursuant to the First Tranche of 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 First Tranche of 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 First Tranche was not filed 21 days in advance of the closing of the First Tranche for the purposes of Section 5.2(2) of MI 61-101 on the basis that the subscriptions under the First Tranche were not available to the Company until shortly before the closing.

Early Warning Report for Yaletown

Yaletown Ventures II (USA) Limited Partnership may be considered a "joint actor" of Yaletown Ventures II Limited Partnership ("YVP II"). Immediately prior to the acquisition of ownership of, and control over, 1,200,000 of the 1,250,000 Shares by YVP II, as described above (and subsequent to the sale of shares to Hillcore noted above), YVP II owned and controlled 17,947,965 common shares of the Company, representing approximately 43% of the issued and outstanding common shares. Upon completion of the acquisition of the 1,250,000 Shares, an aggregate of 20,293,988 common shares of the Company are now owned and controlled by YVP II and Yaletown Ventures II (USA) Limited Partnership, representing approximately 45% of the issued and outstanding shares of the Company.

YVP II has advised the Company that the Shares were acquired for investment purposes and that Yaletown may from time to time acquire additional securities of the Company, dispose of some or all of the existing securities it holds or may in the future hold, or may continue to hold its current position.

YVP II has advised the Company that it will file an early warning report, as required under National Instrument 62-103, containing additional information with respect to the foregoing matters that will be available under the Company's SEDAR profile at www.sedar.com.

For additional information, or for a copy of the early warning report, please contact:

Hans Knapp
General Partner
Yaletown Venture Partners
#510, 1122 Mainland Street
Vancouver, British Columbia V6B 5L1

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, Polysole® and Traverse®, 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

About The Hillcore Group

The Hillcore Group is a leading independent Canadian investment and advisory firm. Hillcore is an active purchaser and operator of various businesses across Canada, with a particular emphasis on leveraged and management assisted buyouts. Since 2005, the Hillcore Group, directly or indirectly through its investment funds, has closed transactions with an aggregate asset value in excess of $6.5 billion with $670 million closed in 2014 alone. Entities under the Hillcore Group's management have an asset value in excess of $3.2 billion as of December 31, 2014. The Hillcore Group has offices in Toronto, Vancouver, Calgary and Montreal, and together with its various groups and portfolio companies, employs approximately 2,500 individuals across Canada.

See more at: www.hillcoregroup.com

About Yaletown

Yaletown invests in emerging-growth technology companies. With offices in Vancouver, Calgary and Seattle, Yaletown is led by a team that brings together industry relationships and more than 130 years collective experience building and financing technology companies. Founded in 2002, Yaletown is backed by leading institutional investors and a network of successful technology entrepreneurs, executives, and angel investors. Find out more about Yaletown and its portfolio of companies at www.yaletown.com.

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 Private Placement may not be completed on the terms contemplated above or at all, (ii) the bioplastics market may not grow as forecasted, and (iii) the economic circumstances of Solegear 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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