Thoroughbred Capital Inc.
TSX VENTURE : TBC.P

November 06, 2013 17:46 ET

Thoroughbred Capital Inc. Announces Qualifying Transaction to Acquire Sunora Foods Ltd.

OTTAWA, ONTARIO--(Marketwired - Nov. 6, 2013) -

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

Thoroughbred Capital Inc. ("Thoroughbred" or the "Corporation") (TSX VENTURE:TBC.P), a Capital Pool Company ("CPC"), is pleased to provide further particulars regarding its previously announced proposed qualifying transaction with Sunora Foods Ltd. ("Sunora"), a private company based in Calgary, Alberta (the "Proposed Transaction"). Sunora carries on the business of trading high quality retail, food service and bulk food oils.

The parties intend to change the Corporation's name to Sunora Foods Inc. and file articles of continuance under the Business Corporations Act (Alberta) following completion of the Proposed Transaction.

The stock symbol "SNF" has been reserved with the TSX Venture Exchange (the "Exchange") for Thoroughbred as it will exist upon completion of the Proposed Transaction (the "Resulting Issuer").

Details of the Proposed Qualifying Transaction

On April 9, 2013, Thoroughbred entered into an arm's length Agreement in Principle with Sunora pursuant to which Thoroughbred intends to acquire all of the issued and outstanding shares of Sunora (the "Sunora Shares"). Pursuant to the Proposed Transaction, Thoroughbred intends to (i) acquire all of the issued and outstanding Sunora Shares by way of a securities exchange of 30,000,000 common shares of Thoroughbred (the "Thoroughbred Shares") at a deemed price of $0.167 per share or $5,010,000 in the aggregate and (ii) complete a financing by way of a brokered private placement (the "Brokered Private Placement") and a non-brokered private placement (the "Non-Brokered Private Placement") for total aggregate proceeds of not less than $600,000 and not more than $1,100,000 (the "Financing"). The Proposed Transaction is expected to constitute Thoroughbred's Qualifying Transaction as defined in Policy 2.4 of the Exchange Corporate Finance Manual (the "CPC Policy") and is subject to compliance with all necessary regulatory approvals and certain other terms and conditions.

Pursuant to a securities exchange agreement currently under negotiation, Thoroughbred will purchase all of the issued and outstanding Sunora Shares held by the sole shareholder of Sunora (the "Sunora Shareholder") all on the exchange basis described above. Based on the 10,000 Sunora Shares currently issued and outstanding, the Sunora Shareholder will receive 3,000 Thoroughbred Shares for each 1 Sunora Share. Steve Bank, the President and sole director of Sunora, residing in Calgary, Alberta, holds 100% of the issued and outstanding Sunora Shares.

The parties intend that the offer and sale of Thoroughbred Shares in the Proposed Transaction shall be made in reliance on an exemption from the registration and prospectus requirements pursuant to section 2.12 of National Instrument 45-106 Prospectus and Registration Exemptions.

After completion of the Proposed Transaction and prior to the closing of the Financing, there will be 36,000,000 Thoroughbred Shares issued and outstanding, of which current shareholders of Thoroughbred will own 6,000,000 Thoroughbred Shares (16.67%) and the former Sunora shareholder will own 30,000,000 Thoroughbred Shares (83.33%). Accordingly, the Proposed Transaction will constitute a reverse asset acquisition of Thoroughbred for accounting purposes.

Together with the expected closing of the minimum Financing concurrently with the Proposed Transaction, the outstanding share capital of Thoroughbred is expected to consist of an aggregate of 40,000,000 Thoroughbred Shares issued and outstanding, of which current shareholders of Thoroughbred will own 6,000,000 (15%), the former Sunora shareholder will own 30,000,000 (75%) and shareholders pursuant to the minimum Financing will hold 4,000,000 Thoroughbred Shares (10%) and 4,000,000 Warrants (as defined below).

Together with the expected closing of the maximum Financing concurrently with the Proposed Transaction, the outstanding share capital of Thoroughbred is expected to consist of an aggregate of 43,333,333 Thoroughbred Shares issued and outstanding, of which current shareholders of Thoroughbred will own 6,000,000 (13.9%), the former Sunora shareholder will own 30,000,000 (69.2%) and shareholders pursuant to the maximum Financing will hold 7,333,333 Thoroughbred Shares (16.9%) and 7,333,333 Warrants (as defined below).

Following the Proposed Transaction, the Resulting Issuer will become a Tier 2 Issuer within the Industrial Industry Segment pursuant to Policy 2.1 Initial Listing Requirements of the Manual.

About Sunora (www.sunora.com)

Sunora Foods Ltd., a private company with its head office at 4616 Valiant Dr. NW, Suite 205, Calgary, Alberta, was incorporated under the laws of the Province of Alberta on June 25, 1990.

Sunora is a Calgary-based trader and supplier of canola, soybean, olive and other food oils. Currently, Sunora is a relatively small player participating in an international business populated by some of the largest companies in the world. It successfully occupies a niche position in the industry that has been achieved by building strong relationships with its suppliers and customers through a history of reliable and responsive service. While Sunora regularly cooperates with many of these companies, it also occasionally competes with companies that have far greater resources. Sunora has operated with a measure of success for over twenty years and has weathered both economic upturns and downturns by remaining true to its commitment to its industry, its customers and long-term business vision. Sunora operates by receiving orders from its customers in the food oil processing, retail and food services markets. Sunora contracts with seed crushers where food oil seeds are crushed to produce food oils including canola, soybean and corn oils. Sunora's sales operations are conducted through its experienced sales agents located across North America, South America, Africa, Asia, the Middle East, Eastern Russia, Australia and New Zealand. Sunora prides itself on its quality food oil products and intends to continue its global expansion as well as its position as a supplier of food oil to the health food industry.

Sunora prides itself on its quality branded and private label products. It intends to continue its global expansion and leverage its position as a significant North American supplier to the health food trade. Management expects that sales will increase from $15 million to approximately $19.5 million by 2015. Management believes this is achievable through continued expansion of Sunora's packaged and bulk exports overseas, by growing bulk oil trading generally and by extending its value chain by exploring strategic packaging, crushing and refining opportunities.

Financial Information on Sunora

The following figures are based on audited annual financial statements as at August 31, 2012, 2011 and 2010 and unaudited interim financial statements as at May 31, 2013:

Sales, gross margin and EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) for the 12 months ended August 31, 2012 were $16,784,515, $671,646 and $271,079 respectively and for the nine months ended May 31, 2013 were $11,714,902, $551,722, and $232,454 respectively.

At May 31, 2013, Sunora had total assets of $3,126,594, total current liabilities of $1,020,037, and a shareholders' equity of $2,106,557.

The pro forma consolidated balance sheet of Sunora and Thoroughbred, reflecting the acquisition as if it occurred at May 31, 2013 and assuming the Units allotted pursuant to the minimum Financing are fully subscribed, would result in cash on hand of approximately $1,927,739, current liabilities of no more than $1,052,596, and shareholders' equity of approximately $2,768,970.

Auditor's Qualification - Financial Statements of Sunora

The auditors of Sunora, Deloitte LLP, were appointed during the 2013 year to audit the financial statements of Sunora for the years ended August 31, 2012, 2011 and 2010. There were no qualifying statements made by the auditors in respect of the financial statements of Sunora.

Board of Directors and Management Team of the Resulting Issuer

It is contemplated that after the closing of the Qualifying Transaction the directors of the Resulting Issuer will consist of Steve Bank (Chairman of the Board), Eric Dahlberg, Ronnie Rash, James Lawson, Daniel Hilton and Michael Inskip. Senior management will consist of Steve Bank (Chief Executive Officer), Catherine Mark (Toews) (Chief Financial Officer) and Lorraine Mastersmith (Corporate Secretary). All of the directors and members of the senior management will be Insiders of the Resulting Issuer as defined in CPC Policy 1.1.

Steve Bank - Proposed Chairman of the Board and proposed Chief Executive Officer

Calgary, Alberta

Steve Bank is currently the President and sole director of Sunora and will be the Chief Executive Officer and Chairman of the Board of the Resulting Issuer. Sunora was founded by Mr. Bank in 1990. Mr. Bank has held a variety of senior positions in the food industry commencing in 1968 as Executive Vice President responsible for marketing in catalogue operations and finance followed by four years as Vice President of Marketing at a subsidiary of the Quaker Oats Corporation. Mr. Bank was also a partner in Britl Bread Bakeries and Director of U.S. Marketing for Vivant Beverage Company.

Catherine Mark (Toews) - Proposed Chief Financial Officer

Calgary, Alberta

Catherine Mark has over twenty years of experience in the financial services industry. Ms. Mark is a Certified General Accountant and is currently the President of Valiant Financial Services Inc. Ms. Mark was previously Vice President of Finance for Bronco Drilling Services Ltd. and an investment manager with Alberta Futurevest Corporation.

Eric C. Dahlberg - Proposed Director

Calgary, Alberta

Eric Dahlberg has over forty years experience in the petroleum industry as a geologist and teacher. Mr. Dahlberg is currently a Geologist and President of Saskatchewan Oil Ventures Ltd. and Consulting Geologist and President of ECD Geological Specialists, positions that he has held since 1977 and 1979 respectively. Mr. Dahlberg holds a Ph.D. from Penn State University in Geology, Geochemistry and Statistics in addition to a Masters of Science and a Bachelor of Arts. Mr. Dahlberg is also the author of numerous articles, five manuals, two books and over two dozen reports on various subjects related to the petroleum industry. He has developed and taught over four hundred short courses and presented to an excess of six thousand students. Of particular interest is Mr. Dahlberg's knowledge and networks gained during his teaching career of such diverse countries as China, Australia, Great Britain, Israel, Indonesia, Malaysia, Norway and Thailand to name a few.

Ronnie Rash - Proposed Director

Henderson, Nevada

Mr. Rush has been involved in the food service industry for over 42 years. In March 2008 Mr. Rush became an owner and full equity partner of Organic Foods International LLC where he continues to provide consulting services to Branded companies and secures new business for many vendors. He began his career in 1971 with the Maxwell House Division of General Foods operating in sales management and marketing services. Mr. Rush's ascendancy in the industry is highlighted by progressively senior positions including Vice President of Sales & Marketing, Chief Operating Officer and President of various companies. At each stage of his career, Ron increased the sales and market position of the companies he worked for. Ron Rush holds a Bachelor of Science degree and continues his education in areas of negotiation, plant management, consumer promotions, finance & accounting.

James E. Lawson - Proposed Director

Calgary, Alberta

Over his business and professional career of 42 years, James Lawson served as a chief financial officer or a director of a number of public and private companies. His areas of focus have included corporate finance, business advice in accounting, taxation and reporting issues. In the mid 1990s he was a founder and the first CFO of WestJet Airlines Ltd. listed on the TSX in 1999. He has served as a Chief Financial Officer and Director of Jubliee Resources Inc. and Canscot Resources Ltd., both companies listed on the Exchange until sold in 2003. In addition, he was a director of Tusk Energy Inc. until it became a trust in November 2004. He was a director of TUSK Energy Corporation serving as the Audit Committee Chairman on the TSX until sold in 2009. Several years ago he was the CEO and CFO of Canoel International Energy Ltd. until it completed its "Qualifying Transaction." He is a shareholder, director and CFO of Essentialtalk Network Incorporated and Ice Health Systems Inc. both private technology development companies specializing in software for the medical and dental fields.

Michael Inskip - Proposed Director

Ottawa, Ontario

Michael Inskip is currently a director and the President and CEO of Thoroughbred. He has served on the board of directors of LeoNovus Inc. since 2008. He has experience in leading global sales, all aspects of marketing, business development and business operations for both public and early stage private companies. For the period May, 2005 to May, 2008. Mr. Inskip was Director Sales, Marketing and Business Operations for Enablence Technologies Inc. a publicly traded entity on the Exchange. Between 2001 and 2005, Mr. Inskip held senior sales and marketing positions with privately held start-up technology companies. Mr. Inskip was also responsible for marketing for Iridian Spectral Technologies, which was later acquired by JDS Uniphase, during the period December 1998 to June 2001. Mr. Inskip has a Bachelor of Arts (Law) from Carleton University, an International Business Diploma from Algonquin College and an International Trade Diploma from the Forum for International Trade Training Program (FITT). Mr. Inskip has an Executive Certificate in Management and Leadership from the MIT Sloan School of Management, and he has completed the Executive Program in Venture Capital at UC Berkeley. Mr. Inskip has lived and worked in Beijing, China and Silicon Valley, USA and is currently an advisor to early stage companies.

Daniel Hilton - Proposed Director

Ottawa, Ontario

Daniel Hilton is currently a director and the CFO of Thoroughbred. He is a Chartered Accountant with a broad range of experience in strategic planning and leadership of finance and operations. He has served on the board of directors of LeoNovus Inc. since 2008. Hilton is currently Executive Director of the Conservative Party of Canada. He was previously the Director of Finance and Administration, Research and Development for World Heart Corporation and a co-founder and CFO of Kids Futures Ltd., a national loyalty program which in December of 2005 became a publicly traded entity on the Exchange. Mr. Hilton was formerly the Vice-President Finance and Technology and Senior Vice-President, Corporate Development & Administration of Enablence Technologies Inc., a publicly traded entity on the Exchange. Mr. Hilton earned his B.COMM from the University of Ottawa, and earned his professional designation with the firm Deloitte & Touche LLP. Mr. Hilton holds graduate business degrees with both Queen's University and Cornell University.

Lorraine Mastersmith - Proposed Corporate Secretary

Ottawa, Ontario

Lorraine Mastersmith is a Partner in the Business Law Group at Perley-Robertson, Hill & McDougall LLP. Her practice focuses on advising her clients with respect to expanding into international markets, accessing public markets and financing their ventures with banks, private lenders and all forms of equity investors. Prior to joining Perley-Robertson, Hill & McDougall LLP, Ms. Mastersmith was in-house general counsel to two significant multi-national Ottawa technology companies. She has advised and supported senior executives and directors of public and private companies on a wide range of legal matters in Canada and abroad.

Sponsorship and Proposed Private Placement

Sponsorship of a qualifying transaction of a CPC is required by the Exchange unless exempt in accordance with the Exchange's policies. Thoroughbred intends to apply for exemption from Sponsorship pursuant to section 3.4 (a) (ii) of CPC Policy 2.2 on the basis of the Brokered Private Placement of $600,000 in connection with the Proposed Transaction. However, no assurance can be given that Thoroughbred will obtain this exemption.

In conjunction with the Proposed Transaction, Thoroughbred intends to raise capital through the Financing for aggregate total proceeds of a minimum of $600,000 and a maximum of $1,100,000 by way of a Brokered Private Placement and a Non-Brokered Private Placement.

The Brokered Private Placement shall consist of the issuance of 4,000,000 units of Thoroughbred (the "Units") at a price of fifteen cents ($0.15) per Unit for aggregate gross proceeds of $600,000. Each Unit is comprised of one (1) Thoroughbred Share and one (1) warrant to purchase one (1) Thoroughbred Share (the "Warrant"). Each Warrant will entitle the holder to purchase one (1) Thoroughbred Share at a price of twenty-five cents ($0.25) per Thoroughbred Share for a period of twenty-four (24) months from the closing date of the Brokered Private Placement.

Thoroughbred has retained the services of Fin-XO Securities Inc. to act as the agent to assist it to complete the Brokered Private Placement on a commercially reasonable efforts basis (the "Agent"). The Agent will be paid a corporate finance fee of $20,000 plus applicable taxes in addition to a cash commission of seven and one half percent (7.5%) of gross proceeds of the Units sold by the Agent pursuant to the Brokered Private Placement (the "Agent's Commission") and will be granted an option to purchase Thoroughbred Shares in an amount equal to seven and one half percent (7.5%) of the Units sold by the Agent pursuant to the Brokered Private Placement (the "Agent's Option"). The Agent's Option will have a term of twenty-four (24) months and will be exercisable at $0.15 per Thoroughbred Share.

The Non-Brokered Private Placement shall consist of the issuance of a maximum of 3,333,333 Units of Thoroughbred at a price of fifteen cents ($0.15) per Unit for aggregate gross proceeds of not more than $500,000. Each Unit is comprised of one (1) Thoroughbred Share and one (1) Warrant. Each Warrant will entitle the holder to purchase one (1) Thoroughbred Share at a price of twenty-five cents ($0.25) per Thoroughbred Share for a period of twenty-four (24) months from the closing date of the Non-Brokered Private Placement.

Thoroughbred has retained the services of a finder (the "Finder") to facilitate the Non-Brokered Private Placement to investors in the People's Republic of China. The Finder will be granted an option to purchase Thoroughbred Shares in an amount equal to seven and one half percent (7.5%) of the Units issued in the Non-Brokered Private Placement to subscribers identified through the efforts of the Finder (the "Finder's Option"). The Finder's Option will have a term of twenty-four (24) months and will be exercisable at $0.15 per Thoroughbred Share.

No Agent's Commission, Agent's Option or Finder's Option will be payable by the Resulting Issuer on subscriptions in the Financing introduced directly by the officers and directors of Thoroughbred or Sunora.

Stock Options and other matters

The parties expect that no amendments will be made to Thoroughbred's existing stock option plan and that no options under this plan are intended to be issued as part of the Proposed Transaction.

The Proposed Transaction will constitute an arm's length Qualifying Transaction, as no party to the transaction is a "Control Person" (as defined in CPC Policy 1.1) of both Thoroughbred and Sunora. There is no requirement to obtain shareholder approval of the Qualifying Transaction from the shareholders of Thoroughbred, and no "Majority of the Minority" requirements are triggered under CPC Policy 5.9. A filing statement to be prepared and filed on SEDAR in conjunction with the Proposed Transaction will contain full particulars of the Proposed Transaction.

About Thoroughbred

Thoroughbred was incorporated under the Business Corporations Act (Ontario) on March 8, 2011 and its fiscal year end is December 31. Thoroughbred is classified as a CPC as defined in CPC Policy 2.4 and as such Thoroughbred has not commenced commercial operations and has no assets other than cash with which to identify and evaluate businesses or assets with a view to completing a Qualifying Transaction. As a result, Thoroughbred's current business is to identify and evaluate businesses and assets with a view to completing a Qualifying Transaction.

The common shares of Thoroughbred have traded on the Exchange (under the symbol "TBC.P") since September 1, 2011. Trading in the common shares of Thoroughbred was halted at the Corporation's request on December 30, 2011 pending the announcement of a proposed qualifying transaction with Innovative Labs LLC. On July 30, 2012 the Corporation announced that the parties had mutually agreed to terminate the letter of intent which was signed on December 30, 2011 and their respective obligations thereunder. Trading in the shares resumed at the Corporation's request on August 1, 2012. Trading in the shares was halted at the Corporation's request on April 10, 2013 pending the announcement of the Proposed Transaction.

In accordance with the CPC Policy, Thoroughbred was required to complete a Qualifying Transaction prior to September 3, 2013. On September 3, 2013 Thoroughbred received a notice from the Exchange confirming that its shares were suspended from trading and it is required to either complete a Qualifying Transaction or transfer its listing to the NEX board of the Exchange prior to December 3, 2013 to avoid the delisting of its shares from the Exchange. The Exchange has granted an extension until December 6, 2013 for Thoroughbred to hold a shareholders' meeting seeking the necessary approvals to transfer to the NEX. The shareholders' meeting is expected to be held on December 6, 2013. Should Thoroughbred fail to either complete the Proposed Transaction or satisfactorily hold its shareholders' meeting on December 6, 2013 and file all of the documentation required to transfer to the NEX by no later than December 10, 2013, the Exchange may proceed to delist the securities of Thoroughbred without further notice.

Further information about Thoroughbred can be found its prospectus dated June 28, 2011 and other filings of the Corporation with the Canadian securities regulators, which filings are available at www.sedar.com.

Completion of the Proposed Transaction is subject to a number of conditions, including but not limited to, completion of satisfactory due diligence, completion of the Financing, execution of a definitive agreement, receipt of all applicable consents to and approvals of the Proposed Transaction including approval of the Exchange, and if applicable pursuant to Exchange Requirements, majority of the minority shareholder approval. The Proposed Transaction cannot close until the required approvals and exemptions are obtained. Where applicable, the Proposed Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Proposed Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement of Thoroughbred to be prepared in connection with the Proposed 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 securities of a capital pool company should be considered highly speculative.

The Exchange has in no way passed upon the merits of the Proposed Transaction and has neither approved nor disapproved the contents of this press release.

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

Certain information in this press release may contain forward-looking statements. This information is based on current expectations that are subject to significant risks and uncertainties that are difficult to predict. Actual results might differ materially from results suggested in any forward-looking statements. These and all subsequent written and oral statements containing forward-looking information are based on the estimates and opinions of management on the dates they are made and expressly qualified in their entirety by this notice.

The Corporation assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those reflected in the forward looking-statements unless and until required by securities laws applicable to the Corporation. Readers are cautioned not to place undue reliance on any statements of forward-looking information that speak only as of the date of this release. Additional information identifying risks and uncertainties is contained in the Corporation's filings with the Canadian securities regulators, which filings are available at www.sedar.com.

This is not an offer for sale, or solicitation of an offer to buy, in the United States or to any U.S. Person (as defined in Regulation S under the U.S. Securities Act of 1933, as amended) of any equity shares or any other securities of the Corporation or Sunora.

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