LW Capital Pool Inc. enters into letter of intent with Tweed Inc.

Jan 02, 2014, 17:42 ET from LW Capital Pool Inc.

OTTAWA, Jan. 2, 2014 /CNW/ - LW Capital Pool Inc. ("LW CPI") (TSXV: LWI.H) announced today that it has entered into a non-binding letter of intent with Tweed Inc. ("Tweed") which outlines the general terms and conditions of a proposed transaction pursuant to which LW CPI proposes to acquire all of the issued and outstanding securities of Tweed in exchange for securities of LW CPI (the "Transaction"). The LOI was negotiated at arm's length and is effective as of January 2, 2014.

LW CPI is a Capital Pool Company listed on the NEX board of the TSX Venture Exchange (the "TSXV").  LW CPI has not commenced commercial operations and has no assets other than cash. The Transaction, if completed, will constitute LW CPI's "Qualifying Transaction", as defined in TSXV policies.

Tweed is a Canadian company established to produce and supply medical marijuana pursuant to the Marihuana for Medical Purposes Regulations in Smiths Falls, Ontario.

The transaction terms outlined in the LOI are non-binding on the parties and the LOI is expected to be superseded by a definitive agreement (the "Definitive Agreement") to be signed between the parties. The Transaction is subject to regulatory approval, including the approval of the TSXV and standard closing conditions, including the approval of the Definitive Agreement by the directors of each of LW CPI and Tweed and completion of due diligence investigations to the satisfaction of each of LW CPI and Tweed, as well as the conditions described below. The legal structure for the Transaction will be determined after the parties have considered all applicable tax, securities law, and accounting efficiencies.

Trading in the common shares of LW CPI will be halted as a result of this announcement. It is unlikely that the common shares of LW CPI will resume trading until the Transaction is completed and approved by the TSXV.

The Proposed Transaction

As of the date hereof, LW CPI has 7,260,000 common shares outstanding and has issued options to acquire an aggregate of 723,000 common shares at an exercise price of $0.10 per common share.

It is expected that LW CPI will issue approximately 135,549,040 LW CPI common shares in exchange for all of the issued and outstanding shares of Tweed.  Based on the foregoing, it is currently expected that the current holders of LW CPI common shares will hold approximately 5.08% of the outstanding common shares of LW CPI post closing depending on the final ratio agreed to with Tweed, with shareholders of Tweed holding the balance.

LW CPI will also issue options to purchase common shares of LW CPI in exchange for outstanding options to purchase shares of Tweed.  The number of options to be issued and the terms of such options are to be determined and will be announced at a later date.

Conditions to Transaction

Completion of the Transaction is subject to a number of conditions, including but not limited to acceptance by the TSXV and, if applicable pursuant to TSXV requirements, majority of the minority shareholder approval. Where applicable, the Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Transaction will be completed as proposed or at all. Since the Transaction is not a non-arm's length transaction, at this point LW CPI does not anticipate having to obtain shareholder approval for the Transaction but this remains subject to TSXV confirmation.

Other conditions to completion of the Transaction include:

  • Negotiation and execution of a Definitive Agreement in respect of the Transaction.

  • Completion of a private placement in at least such minimum amount as may be required to meet TSXV minimum listing requirements, if any.

  • Preparation and filing of a filing statement outlining the definitive terms of the Transaction in accordance with the rules of the TSXV.

  • Receipt of all director, shareholder and requisite regulatory approvals relating to the Transaction, including, without limitation, TSXV approval.

Further Information

Further details about the proposed transaction and the combined entity will be provided in a comprehensive press release when the parties enter into a Definitive Agreement and in the filing statement to be prepared and filed in respect of the Transaction.

Investors are cautioned that, except as disclosed in the 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 TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

LW CPI will engage a sponsor in connection with the Transaction if required in accordance with the requirements of the TSXV.

Forward-Looking Information

This press release contains forward-looking information based on current expectations.  Statements about the closing of the Transaction, expected terms of the Transaction, the number of securities of LW CPI that may be issued in connection with the Transaction, the ownership ratio of LW CPI post closing, the requirement to hold shareholder approval and the parties' ability to satisfy closing conditions and receive necessary approvals are all forward-looking information.  These statements should not be read as guarantees of future performance or results. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those implied by such statements. Although such statements are based on management's reasonable assumptions, there can be no assurance that the Transaction will occur or that, if the Transaction does occur, it will be completed on the terms described above.  The terms described above are not binding unless and until a Definitive Agreement is signed.  LW CPI assumes no responsibility to update or revise forward-looking information to reflect new events or circumstances unless required by law.

Neither 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 release.

SOURCE LW Capital Pool Inc.