Peak Reaches Agreement to Create $20M Funding Structure to Launch Financial Services Subsidiary "ASFC"

November 02, 2017 8:00 AM EDT | Source: Tenet Fintech Group Inc.

Montreal, Quebec--(Newsfile Corp. - November 2, 2017) - Peak Positioning Technologies Inc. (CSE: PKK) ("Peak" or the "Company") today announced that it has entered into a memorandum of understanding with Cubeler platform lender Jiu Dong Limited ("Jiu Dong") to create a financial services subsidiary to be named Asia Synergy Financial Capital ("ASFC").

ASFC would be established in the city of Wuxi and meet, among others, the minimum required registration capital of 100M RMB (about CAD$20M), as prescribed by the Wuxi Municipal Financial Affairs Office, in order to operate as a fully-licenced financial services company in all of China. ASFC's operations would focus primarily on providing financial services, such as loans and purchase order financing to registered platform users, on the Company's Cubeler and Gold River fintech platforms in China. The parties plan to enter into a formal agreement by December 31, 2017 to define the operational rules by which ASFC would be governed.

Under the terms of the agreement between the parties, Jiu Dong is prepared to invest $9.8M directly into ASFC for a 49% equity stake, while Peak would invest $10.2M for a 51% stake in the financial services company. $10M of the $10.2M investment to be made by Peak would come primarily from existing Peak shareholders and from Jiu Dong. The Company plans to issue a debenture with the following terms to raise the capital required for the investment:

  • An 8% annual interest rate
  • 24-month maturity date
  • 20 warrants* to purchase shares of the Company at a price of $0.05 per share for a 24-month period to be attached to each dollar of debenture

*The warrants in question would not be new warrants issued from treasury, but rather warrants already in circulation.

As part of its agreement with the Company, Jiu Dong is prepared to subscribe to $3M or more of the debenture and would receive at least 60M warrants. The Company plans to approach existing shareholders, including insiders of the Company, to have them subscribe to the remaining $7M or less of debenture for which they would be allocated a total of up to 140M warrants. The Company is aiming to close the debenture financing no later than December 15, 2017. The following summarizes the potential origin of the funds to be invested in ASFC as per the Company's plans:

  • Investment to be made by Peak directly into ASFC
    • From debenture subscription by existing shareholders: $7.0M
    • From debenture subscription by Jiu Dong: $3.0M
    • From working capital: $0.2M
                  Total invested by Peak into ASFC: $10.2M
  • Investment to be made by Jiu Dong directly into ASFC: $9.8M
  • Total investment to be made by Peak and Jiu Dong into ASFC: $20.0M

"Having ASFC would change everything for Peak", commented Johnson Joseph, President and CEO of Peak. "Once we close the financing and launch ASFC, transactions on our Cubeler and Gold River platforms would have the potential to deliver the revenues and profits we've all been waiting for. The shareholders we've approached so far about the debenture and warrants package financing welcomed the opportunity to help get us to the finish line. They're wagering that the warrants would be 'in the money' based on fundamentals since we should have filed several quarters' worth of strong financial results during that timeframe. Ideally, all the warrants attached to the debenture would be exercised thus eventually nullifying the debenture," concluded Mr. Joseph.

Jiu Dong (www.chinajiudong.com) is one of China's fastest growing alternative lenders with branches in Shanghai, Wuxi and Changzhou, and plans to expand to Suzhou, Hangzhou and Nanjing in 2018. In addition to potentially providing most of the funds required to create ASFC, Jiu Dong brings valuable experience in the Chinese lending industry and a substantial base of well-established repeat-business clients to the partnership. "As one of the early subscribers of Peak's service offerings, we have had a front-row seat to everything that the Company has been building and the potential impact of those services on the Chinese commercial lending industry", commented Mr. Kelong Cheng, Chairman and CEO of Jiu Dong. "We have had discussions with Peak about this potential partnership going back several months and we're really glad to have been able to solve the ownership structure to finally make it happen. We believe Peak's innovative approach to leveraging technology to make lending more efficient fits perfectly with our own vision. We look forward to this partnership, the creation of ASFC and having a positive impact on small business and consumer lending in the country", concluded Mr. Cheng.

About the Cubeler Platform:

Cubeler is a commercial lending platform that matches any business looking for credit with a variety of lenders. Cubeler periodically reads financial data coming from the registered businesses' accounting software, analyses several data points and calculates a series of financial ratios to determine how well the business is performing. Those data points and ratios are then compared to Cubeler's registered lenders' lending criterial and the resulting matches are shown to the lenders and the businesses, much like the way a dating website would show its members their compatible matches.

About the Gold River Platform:

Gold River is a product procurement platform for raw materials that go into the making of plastic products and for certain metals such as copper and aluminum. In addition to allowing them to place orders for metals and raw materials, Gold River allows the platform's registered users to have a portion of a purchase order or an entire purchase order placed on the platform financed.

About Peak Positioning Technologies Inc.:

Peak Positioning Technologies Inc. is an IT portfolio management company whose mission is to assemble, finance and manage a portfolio of high-growth-potential companies and assets in some of the fastest growing tech sectors in China, including Fintech, e-commerce and cloud-computing. Peak provides its shareholders with exceptional growth potential by giving them access to the fastest growing sectors of the world's fastest growing economy. For more information: http://www.peakpositioning.com

Contact information:

Cathy Hume
CEO
CHF Capital Markets
Phone: 416-868-1079 ext.: 231
Email: cathy@chfir.com

Or

Johnson Joseph
President and CEO
Peak Positioning Technologies Inc.
Phone: 514-340-7775 ext.: 501
Email: investors@peakpositioning.com

Forward-Looking Statements / Information:

This news release may include certain forward-looking information, including statements relating to business and operating strategies, plans and prospects for revenue growth, using words including "anticipate", "believe", "could", "expect", "intend", "may", "plan", "potential", "project", "seek", "should", "will", "would" and similar expressions, which are intended to identify a number of these forward-looking statements. Forward-looking information reflects current views with respect to current events and is not a guarantee of future performance and is subject to risks, uncertainties and assumptions. The Company undertakes no obligation to publicly update or review any forward-looking information contained in this news release, except as may be required by applicable laws, rules and regulations. Readers are urged to consider these factors carefully in evaluating any forward-looking information.

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