Verdant Financial Partners I Inc.

December 31, 2015 10:35 ET

Verdant Financial Partners I Inc. Announces Proposed Qualifying Transaction With Axis Auto Finance

TORONTO, ONTARIO--(Marketwired - Dec. 31, 2015) -


Verdant Financial Partners I Inc. ("Verdant" or the "Company") (NEX:VFI.H), a capital pool company, is pleased to announce that it has entered into a non-binding letter of intent (the "LOI") dated December 30, 2015 with 8095981 Canada Inc. operating as Axis Auto Finance ("Axis") which outlines the general terms and conditions of a proposed transaction (the "Proposed Transaction") that will result in Verdant acquiring all of the issued and outstanding shares of Axis (the "Axis Shares") in exchange for shares of Verdant (each, a "Verdant Share"). In addition, each convertible, exchangeable, or exercisable security of Axis shall be exchanged for a convertible exchangeable, or exercisable security, as applicable, of Verdant on substantially the same economic terms and conditions as the original convertible, exchangeable or exercisable security of Axis. The Proposed Transaction is currently expected to be completed by way of a three cornered amalgamation or share exchange between Verdant and Axis or other similar transaction which will result in Axis becoming a wholly-owned subsidiary of Verdant.

The LOI is to be superseded by a definitive agreement (the "Definitive Agreement") between Verdant and Axis with such agreement to include representations, warranties, conditions and covenants typical for a transaction of this nature. The Proposed Transaction is subject to, among other things, receipt of the requisite shareholder approval of Axis, final approval of the TSX Venture Exchange (the "Exchange") and standard closing conditions, including the conditions described below. The parties have agreed that during the period from signing the LOI through to execution of the Definitive Agreement, each of Verdant and Axis will continue their respective operations in the ordinary course and will not solicit or accept alternative offers (subject to fiduciary duties).

The Proposed Transaction will constitute the Company's qualifying transaction (the "Qualifying Transaction") pursuant to Policy 2.4 - Capital Pool Companies (the "Policy") of the Exchange.

The Proposed Transaction is not a Non Arm's Length Qualifying Transaction pursuant to Section 2.1 of the Policy and, as such, the Company is not required to obtain shareholder approval for the Proposed Transaction. However, the Company intends to hold its annual general and special meeting of shareholders to approve certain matters ancillary to the Proposed Transaction, including a name change, change in the board of directors and a consolidation of the Verdant Shares on a 6 for 1 basis (the "Consolidation"), effective upon closing of the Proposed Transaction ("Closing"), as well as standard AGM business. The Company currently intends to call the special meeting as soon as practicable and expects the meeting to be held prior to February 29, 2016.

Upon completion of the Proposed Transaction, Verdant will continue on with the business of Axis with Axis as its wholly‐owned, operating subsidiary (the Company after the Proposed Transaction being referred to herein as the "Resulting Issuer").

The Proposed Transaction

It is currently anticipated that the Proposed Transaction will be effected by way of amalgamation or share exchange whereby Verdant will acquire all of the issued and outstanding Axis Shares such that, each shareholder of Axis (including those becoming shareholders as a result of the Axis Financing, as defined below) (each, an "Axis Shareholder") will receive Verdant Shares (on a post-Consolidation basis) issued at a deemed issue price of $0.60 (the "Issue Price") in exchange for the Axis Shares held by such holder. The board of directors of each of the companies has agreed to relative pre-money valuations of each of Verdant and Axis of $353,450 and approximately $23,000,000, respectively. The number of Verdant Shares (on a post-Consolidation basis) to be issued by Verdant to acquire Axis will be equal to the aggregate of approximately $23 million plus the amount of the Axis Financing (as defined herein) divided by the Issue Price.

It is currently anticipated that all of the current officers and all but one of the current directors of Verdant will resign from their respective positions with Verdant. It is currently anticipated that the insiders of the Resulting Issuer will include: Ilja Troitschanski, as a director, chief executive officer and president, and the following directors: Robert Howe, Josh Arbuckle, Fraser Clarke and David Mitchell.

As a result of the Proposed Transaction, Axis will become a wholly-owned subsidiary of Verdant and Verdant will continue on with the business of Axis. Upon Closing, it is anticipated that the name of the Resulting Issuer will be changed to "Axis Auto Finance Inc." or such other name as may be acceptable to Axis and the Exchange.

All Verdant Shares issued pursuant to the Proposed Transaction, except those certain Verdant Shares issued to U.S. persons who are affiliates (as defined in Rule 144(a)(1) under the United States Securities Act of 1933, as amended (the "U.S. Securities Act")) of Axis at the time the Proposed Transaction is submitted for vote or consent by the shareholders of Axis, will be freely tradable under applicable securities legislation but may be subject to Exchange imposed restrictions on resale.

Certain of the Verdant Shares to be issued to the Axis Shareholders pursuant to the Proposed Transaction, including up to 100% of the securities to be issued to "Principals" (as defined under applicable laws), may also be subject to escrow provisions imposed pursuant to the policies of the Exchange.

None of the securities to be issued pursuant to the Amalgamation have been or will be registered under the U.S. Securities Act, or any state securities laws, and any securities issued pursuant to the Amalgamation are anticipated to be issued in reliance upon available exemptions from such registration requirements pursuant to Section 3(a)(10) of the U.S. Securities Act and applicable exemptions under state securities laws. This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities.

Proposed Axis Financing

Axis is working with Dundee Capital Markets, a division of Dundee Securities Ltd., to complete a best efforts brokered private placement (the "Axis Financing") for approximately $5,000,000, through the sale of subscription receipts. Net proceeds of the Axis Financing will be used for the origination of new vehicle lease contracts in the ordinary course of business of the Resulting Issuer. The Axis Financing is expected to close on or before February 29, 2016.

Conditions to Proposed Transaction

Prior to completion of the Proposed Transaction (and as conditions of closing), among other things:

  • Axis shall complete the Axis Financing;
  • Verdant shall, with appropriate shareholder approval, complete the Consolidation;
  • Verdant shall, with appropriate shareholder approval, change its name to "Axis Auto Finance Inc.", or a name substantially similar to such name or another name as agreed to by Axis and Verdant and acceptable to the Exchange, each acting reasonably;
  • completion of satisfactory due diligence investigations by each of Axis and Verdant;
  • approval of the Proposed Transaction by the board of directors of each of Axis and Verdant;
  • approval of the Proposed Transaction by Axis shareholders, if required; and
  • receipt of all required consents, waiver and approvals from the Exchange, any securities regulatory authority and any other third party having jurisdiction, including approval from the Exchange for the Proposed Transaction as its Qualifying Transaction and the listing of the Resulting Issuer Shares on the Exchange.

Sponsorship of a qualifying transaction of a capital pool company is required by the Exchange unless exempt in accordance with Exchange policies. The parties will be seeking a waiver of any requirement for a Sponsor, but in the event a waiver is not available, will seek a sponsorship relationship for this transaction with an Exchange member firm, and will update the markets accordingly.

About Axis

Axis was incorporated under the federal laws of Canada on February 1, 2012. Ilja Troitschanski of Thornhill, Ontario, is the only person who holds a controlling interest of Axis.

Axis provides non-standard auto financing options targeting roughly 30% of Canadians that do not qualify for traditional bank financing. Through personalized service and a commitment to building strong, long-lasting relationships with their dealer partners, Axis is becoming one of Canada's fastest-growing auto-financing companies. Axis offers underwriting flexibility, fast adjudication, dealer perks and excellent service. Axis' auto financing program is available to both independent and franchise dealers and prides itself on personalized service in helping dealers close more deals faster.

Proposed Management of the Resulting Issuer

Subject to Exchange approval, on completion of the Proposed Transaction, it is currently anticipated that the board of directors of the Resulting Issuer will consist of six directors, five of whom shall be nominated by Axis and one of whom shall be nominated by Verdant. Ilja Troitschanski will serve as president and CEO of the Resulting Issuer. Biographies of the proposed directors and officers of the Resulting Issuer are set out below.

Ilja Troitschanski - Director, Chief Executive Officer and President

Mr. Troitschanski is the founder and Chief Executive Officer of Axis. From 2009 to 2012 he was the Chief Financial Officer and Director of Innovative Composites International Inc. From November of 2006 to September of 2009, Mr. Troitschanski was Chief Financial Officer and a Director of Kingsmill Capital Ventures Inc., and from April of 2008 to September of 2009 he was also Chief Financial Officer and a Director of Kingsmill Capital Ventures II Inc.; both companies were Capital Pool Companies ("CPCs") listed on the Exchange and merged prior to completing a Qualifying Transaction with Innovative Composites Inc. in September of 2009. Mr. Troitschanski was a director of Whiteknight Acquisitions Inc. and Whiteknight Acquisitions II Inc., each a CPC which completed their Qualifying Transactions. Mr. Troitschanski was Vice President of Business Development of Bio-Extraction Inc. from June 2005 until October 2007. He is also the president and founder of private financial advisory firm specializing in advising early stage public and private companies.

Fraser Clarke - Director

Mr. Clarke is an experienced entrepreneur who brings a wealth of strategic and fiscal management experience to the Board of Axis. Mr. Clarke was one of the founding investors and a Director of Element Financial Corporation (TSX: EFN) from 2010 to 2013. He is currently the President and CEO of Massage Addict Inc. since 2014. Previously Mr. Clarke was the President and CEO of Herbal Magic from 2009 to 2013. Mr. Clarke also held positions with CCC Investment Banking and Ernst & Young LLP. Mr. Clarke is a designated Chartered Accountant and Certified Financial Analyst and holds a Bachelor of Commerce Honors from Memorial University.

Josh Arbuckle - Director

Mr. Arbuckle is a partner of Chitiz Pathak LLP, a Toronto law firm serving clients in the securities and investment industries, including issuers and dealers on a full range of securities transactions. Mr. Arbuckle practices principally in the areas of corporate, securities, mergers, acquisitions and commercial law. Mr. Arbuckle is currently a director of Whiteknight Acquisitions III Inc., a CPC listed on the TSX Venture Exchange under the symbol WKA.P and was previously a director of the following CPCs: Way Ventures Inc., which completed a Qualifying Transaction with UGE International Ltd. (TSXV: UG) in July of 2014, and Whiteknight Acquisitions Inc., which completed a Qualifying Transaction with Smart Employee Benefits Inc. (TSXV: SEB) in June of 2012. Mr. Arbuckle is also corporate secretary to a number of private and public companies. Mr. Arbuckle was called to the Ontario Bar in 1999, having completed his LL.B. at the University of Western Ontario in 1997. Mr. Arbuckle is also called to the New York bar, having worked for the New York offices of Shearman & Sterling LLP from 1999 to 2005. Mr. Arbuckle obtained his BA from McGill University in 1993.

Robert Howe - Director

Mr. Howe is a seasoned international executive with over 25 years of senior level management experience shared between the financial services sector and corporate turnaround and growth consulting. He has spent most of his corporate career in asset finance commencing with National Leasing Group, and then a series of progressive roles both domestically and internationally with AT&T Capital Canada predominantly as Senior Vice President, Strategic Marketing. Canada's Newcourt Credit Group acquired AT&T Capital Corp and Mr. Howe was appointed as Managing Director of the Continental European business which supported 16 countries, 150 staff with owned and managed assets exceeding $1 billion. In 2006, Mr. Howe founded Aorta Capital, a Switzerland based early stage investor, capital raising and consulting boutique. Aorta actively invests in Technology and Specialty Finance entities. Through this vehicle, he has worked across 5 continents, building an extensive international investor network. Mr Howe is currently a founding investor and COO of Toronto based Contract Capital Inc.

David Mitchell - Director

Mr. Mitchell is the CEO and founder of Stillbridge Ventures Inc., a corporate consulting firm to small and emerging businesses. Mr. Mitchell has had a career in the finance industry of over 29 years. In 2011 Mr. Mitchell founded and has been CEO of the Whiteknight Acquisitions series of Capital Pool Companies and since June 2015 has been a director of TSXV listed Intrinsic4D Inc. (IFD). In November 2015, Mr. Mitchell became the CEO and Director of Verdant. Mr. Mitchell is also a founder and director of a private company in the sports apparel industry.

All information contained in this news release with respect to Verdant and Axis was supplied by the parties, respectively, for inclusion herein, and Verdant and its directors and officers have relied on Axis for any information concerning such party.

Completion of the Qualifying Transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange requirements, majority of the minority shareholder approval. Where applicable, the Qualifying Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Qualifying Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement 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 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 Exchange) accepts responsibility for the adequacy or accuracy of this press release.

This news release contains forward-looking statements relating to the timing and completion of the Proposed Transaction, the future operations of the Company, Axis, and the Resulting Issuer and other statements that are not historical facts. Forward-looking statements are often identified by terms such as "will", "may", "should", "anticipate", "expects" and similar expressions. All statements other than statements of historical fact, included in this release, including, without limitation, statements regarding the Proposed Transaction and the future plans and objectives of the Company, Axis, and the Resulting Issuer are forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from the Company's, Axis, and the Resulting Issuer expectations include the failure to satisfy the conditions to completion of the Proposed Transaction set forth above and other risks detailed from time to time in the filings made by the Company, Axis, and the Resulting Issuer with securities regulations.

The reader is cautioned that assumptions used in the preparation of any forward-looking information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Company, Axis, and the Resulting Issuer. As a result, the Company, Axis, and the Resulting Issuer cannot guarantee that the Proposed Transaction will be completed on the terms and within the time disclosed herein or at all. The reader is cautioned not to place undue reliance on any forward-looking information. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement. The forward-looking statements contained in this news release are made as of the date of this news release and the Company, Axis, and the Resulting Issuer will update or revise publicly any of the included forward-looking statements as expressly required by Canadian securities law.

Contact Information

  • Verdant Financial Partners I Inc.
    David Mitchell
    Chief Executive Officer and Director
    (416) 574-4818