Revelstoke Equity Inc. Announces Proposed Qualifying Transaction with Jet Power and Controls Ltd.

January 05, 2017 2:53 PM EST | Source: Zonetail Inc.

Toronto, Ontario--(Newsfile Corp. - January 5, 2017) - Revelstoke Equity Inc. (TSXV: REQ.P) ("REQ" or the "Company"), a capital pool company, wishes to announce that its previously announced letter of intent with Zonetail Inc. ("Zonetail") dated September 14, 2015 (the "Zonetail LOI") automatically terminated pursuant to its terms on November 30, 2015. Pursuant to the Zonetail LOI, Revelstoke and Zonetail were to complete a business combination intended to constitute Revelstoke's Qualifying Transaction, as such term is defined in Policy 2.4 of the Corporate Finance Manual of the TSX Venture Exchange.

The Company is pleased to announce that it has entered into a binding letter of intent (the "LOI") dated January 3, 2017 with Jet Power & Controls Ltd. ("Jet Power") which outlines the general terms and conditions of a proposed transaction (the "Proposed Transaction") that will result in REQ acquiring all of the issued and outstanding equity shares of Jet Power (the "Jet Power Shares") in exchange for common shares of REQ (each, a "REQ Share").

The LOI is to be superseded by a definitive agreement (the "Definitive Agreement") between REQ and Jet Power with such agreement to include representations, warranties, conditions and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 Jet Power and REQ, 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 REQ and Jet Power will continue their respective operations in the ordinary course and will not solicit or accept alternative offers (subject to fiduciary duties). Subject to satisfactory completion of due diligence, the parties expect to execute the Definitive Agreement on or before February 28, 2017 (or such other date as may be mutually agreed in writing between REQ and Jet Power).

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 a special meeting of shareholders to approve certain matters ancillary to the Proposed Transaction, including a name change, and change in the board of directors, effective upon closing of the Proposed Transaction ("Closing").

Upon completion of the Proposed Transaction, REQ will continue on with the business of Jet Power (the Company after completion of the Proposed Transaction is referred to herein as the "Resulting Issuer").

The Proposed Transaction

The Proposed Transaction will result in REQ acquiring all of the issued and outstanding Jet Power Shares such that each shareholder and warrantholder of Jet Power (including those becoming shareholders and/or warrant holders as a result of the Offering as defined below) (each, a "Jet Power Shareholder" or "Jet Power Warrantholder" as applicable) will receive one REQ Share issued at a deemed issue price of $0.30 for every Jet Power Share held by them (the "Issue Price") and/or one warrant of REQ (the "REQ Warrants") for every warrant of Jet Power (the "Jet Power Warrants") held by them, as applicable. The number of REQ Shares to be issued by REQ to acquire Jet Power will be 43,000,000 shares in addition to the number of REQ Shares and REQ Warrants to be issued in exchange for the Offered Shares and Warrants to be issued pursuant to the Offering (as defined below).

As a result of the Proposed Transaction, REQ will acquire all of the issued and outstanding securities of Jet Power and REQ will continue on with the business of Jet Power. Upon Closing, the name of the Resulting Issuer will be changed to "Jet Power & Controls Ltd." or such other name as may be acceptable to REQ, Jet Power and the Exchange.

All REQ Shares issued pursuant to the Proposed Transaction will be freely tradable under applicable securities legislation but may be subject to an Exchange imposed restriction on resale.

Certain of the REQ Shares to be issued to the Jet Power 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 Proposed Transaction have been or will be registered under the U.S. Securities Act, or any state securities laws, and any securities issued pursuant to the Proposed Transaction 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.

Brokered Equity Financing

Jet Power has entered into an engagement letter (the "Engagement Letter") with Mackie Research Capital Corporation ("MRCC") and Hampton Securities Limited ("Hampton" and together with MRCC, the "Agents") pursuant to which the Agents will act as co-agents and co-bookrunners on a best-efforts private placement of units of Jet Power (the "Units") for gross proceeds of a minimum of $1.5 million and a maximum of $6 million (the "Offering"). The Units will be offered at a purchase price of $0.30 per Unit, and each Unit will consist of one common share of Jet Power (the "Offered Shares") and ½ of one common share purchase warrant of Jet Power (the "Warrants"). Each whole Warrant shall entitle the holder thereof to purchase one additional common share of Jet Power at an exercise price of $0.50 per share for a period of 36 months from the date of issuance. The Warrants shall be subject to an accelerated expiration at the option of the Resulting Issuer should the Offered Shares trade at or above $0.75 per share for a period of 20 non-consecutive trading days. Upon the triggering of such accelerated expiration, the Warrants shall expire on the 20th business day following the date notice of the accelerated expiration is sent to shareholders.

The Agents shall have the option (the "Agent's Option") to increase the size of the Offering by up to 15% by providing written notice of the Agent's Option at any time up to 48 hours prior to closing of the Offering. The Offering will result in the issuance of a minimum of 5,000,000 Units and up to 20 million Units (23 million Units upon exercise in full of the Agent's Option) upon completion of the maximum Offering.

Jet Power shall pay to the Agents a cash commission equal to 6% of the gross proceeds raised in the Offering (including exercise of the Agent's Option, if applicable). Jet Power shall also issue nontransferable compensation options (the "Compensation Options") to the Agents in an amount equal to 8% the number of Units sold in the Offering (including upon exercise of the Agent's Option, if applicable) with each such Compensation Option being exercisable for one Unit of Jet Power at an exercise price of $0.30 per Unit, with such Units having the same terms and conditions as the Units sold in the Offering. The Agents shall also receive a work fee of $35,000 from Jet Power on closing of the Offering and payment of their reasonable out-of-pocket expenses, as well as legal fees.

Upon closing of the Proposed Transaction, all of the Offered Shares, Warrants, and Compensation Options issued in the Offering will be exchanged for REQ Shares, REQ Warrants and compensation options of REQ, on a one for one basis and all on substantially the same terms and conditions.

Conditions to Proposed Transaction

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

  • the Resulting Issuer shall meet the minimum listing requirements of a Tier 2 Exchange issuer pursuant to Policy 2.1 of the Exchange;

  • REQ will have taken all necessary steps to have its name changed from "Revelstoke Equity Inc." to "Jet Power & Control Systems Ltd." or such other name as the parties may determine and which is acceptable to the Exchange and applicable regulatory authorities;

  • Certain of the current directors and officers of REQ, to be determined, will have resigned and the incoming directors and officers of the Resulting Issuer shall have been appointed;

  • completion of the Offering;

  • 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 Jet Power

Jet Power was incorporated on February 7, 2011 and validly existing under the Business Corporations Act (Alberta). Jet Power is a provider of electrical power distribution control products and services to heavy power users such as pipelines, refiners, manufacturers, municipalities, and infrastructure providers across North America. Jet Power designs, manufactures, assembles, integrates, and tests a complete range of power control systems and accessories and also offers services ranging from basic panel wiring to complete manufacturing of medium voltage electrical sub stations. The Jet Power Shares are not publicly listed on any securities exchange.

The following shareholders of Jet Power are the vendors of the Jet Power Shares in the Proposed Transaction: Ian Hogg, Devon Sandford, and David Sandford, all of whom reside in Edmonton, Alberta.

Jet Power had total revenues from operations of $13,618,137 for the nine-month period ended July 31, 2016 and $26,888,410 for the year ended October 31, 2015. Jet Power had net earnings and comprehensive income of $782,586 for the nine-month period ended July 31, 2016 and $1,984,126 for the year ended October 31, 2015. For the nine month period ended July 31, 2016 Jet Power had total assets of $4,189,471 and total liabilities of $4,725,934. For the year ended October 31, 2015 Jet Power had total assets of $8,394,146 and total liabilities of $9,713,295. All of the foregoing figures are audited.

Proposed Management of the Resulting Issuer

Subject to Exchange approval, it is currently anticipated that all of the current officers and all of the current directors of REQ will resign from their respective positions with REQ. It is currently anticipated that Insiders (as such term is defined in the policies of the Exchange) of the Resulting Issuer will include each of Ian Hogg, Devon Sandford, and David Sandford.

Ian Hogg - Chief Executive Officer and Director

Ian has over 40 years of experience in senior management roles and managing public transactions. Ian's primary responsibilities at Jet Power are Financial Management including Corporate Finance, Investor Relations and Financial Institution Relationships, and the overall corporate direction. Pending the hiring of a permanent CFO, Ian is fulfilling all CFO duties as well. Ian has proven expertise in senior management roles and managing public transactions with specialties in construction and real estate. Ian was VP Business Development and Corporate Affairs of PetroWest Corp. from 2010-2014. In this role he secured of a total of $240 million for a refinancing of the company, and oversaw its market capitalization growth from $8 million to $200 million in under 5 years while maintaining over 35 institutional shareholders. From 1998 to 2001 Ian was President & COO of TGS Properties, where he established it as a public company and then grew its assets from $10 million to over $150 million in less than 4 years. Ian sits on a number of boards and advisory committees.

Devon Sandford - President, Chief Operating Officer and Director

Devon is a Red Seal Journeyman Electrician with nearly twenty years of experience in the electrical industry, fourteen of which were spent specializing in power distribution. Devon has experience in business development as well as technical skills in engineering, manufacturing and services. Devon was part of the development team for one of the nation's highest quality arc resistant electrical enclosures. Devon is responsible for the daily operations of the business at Jet Power, as well as sales and product development.

David Sandford - Vice President

David is a Red Seal Journeyman Electrician with nearly thirty-five years of experience in the electrical industry. Early in his career David owned and operated an industrial electrical company with over 30 employees and a client list that included major refineries. David then held various senior positions in management and sales for companies including Furnas, Siemens Electric and Cutler-Hammer.

Further details with respect to the incoming members of the management team and board of directors of the Resulting Issuer will be provided by way of a subsequent news release prior to Closing.

For further information about the Company please contact:

Craig Leon - President and Director
Phone: (416) 368-2773
E-mail: cleon@rangercap.ca

For further information about Jet Power please contact:

Ian D. Hogg
Chief Executive Officer
1(780) 485-1438 ext. 224
ian@jetpower.ca

All information contained in this news release with respect to REQ and Jet Power was supplied by the parties, respectively, for inclusion herein, and REQ and its directors and officers have relied on Jet Power 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 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, 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 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 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. As a result, the Company 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 will update or revise publicly any of the included forward-looking statements as expressly required by Canadian securities law.

NOT FOR DISSEMINATION IN THE U.S. OR THROUGH U.S. NEWSWIRES

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