Match Capital Resources Corporation Providing Supplemental Disclosure to the Management Information Circular and Proxy Statement

October 12, 2018 1:07 PM EDT | Source: Tony G Co-Investment Holdings Ltd.

Toronto, Ontario--(Newsfile Corp. - October 12, 2018) - Match Capital Resources Corporation (TSXV: MHC.H) ("Match" or the "Company") announces that it is providing supplemental disclosure to the Company's Management Information Circular and Proxy Statement dated September 26, 2018 (the "Circular") in respect of the Annual and Special Meeting of the Shareholders of the Company (the "Meeting") to be held at 10:00 a.m. (Toronto Time) on October 26, 2018. This release should be read in conjunction with the Circular as a whole. Capitalized terms not otherwise defined herein have the meaning ascribed to such terms in the Circular.

Background to the Transaction

The Company entered into an agreement dated as of September 17, 2018 (the "Definitive Agreement") with Braingrid Corporation ("Briangrid") to acquire a 100% interest in Braingrid which will constitute a reverse takeover of Match by the shareholders of Braingrid (the "Transaction"). It is expected that the Transaction will be completed by way of a three-cornered amalgamation among Match, a wholly-owned subsidiary of Match and Braingrid.

In connection with the Transaction, Match will hold an annual and special meeting of shareholders on October 26, 2018 (the "Meeting") to among other things, approve a share consolidation on the basis of one (1) new common share of Match for every eight (8) existing common shares and approve a name change of the Company to "Braingrid Limited" or such other name as may be approved by the directors. On closing of the Transaction, Match will have 1,076,931 post consolidation common shares outstanding, will have no debt and no convertible securities outstanding. Braingrid intends to hold a special meeting of shareholders on October 23, 2018 to approve, among other things, the Transaction.

Proposed Debt Conversion

At the Meeting, shareholders will also be asked to approve the conversion of debt held by Mr. Daryl Hodges who is a currently a "related party" of the Company for the purposes of applicable securities legislation. Mr. Hodges currently holds approximately 19.9% of the common shares of the Company. Upon completion of the Transaction Mr. Hodges will beneficially own or have control and direction over 2% of the post-consolidated common shares of the Company.

Mr. Hodges is a "related party" of the Company as that term is defined in Multilateral Instrument 61-101 - Protection of Minority Securityholders in Special Transaction ("MI61-101") by virtue of him holding more than 10% of the outstanding common shares of the Company.

For the past four years Mr.  Hodges has been funding the Company by making loans to the Company to pay operating expenses, including legal and audit expenses. The proposed share for debt conversion was originally proposed as part of the Transaction by the principals of Braingrid as a condition of the Transaction. Braingrid required Mr. Hodges to convert his debt for shares for post-consolidated shares of the Company. The terms of the proposed conversion were negotiated by Mr. Hodges and the principals of Braingrid. The Board of Directors of Match was also involved in the negotiations with respect to the consolidation of the Company's shares and the conversion of Mr. Hodges' debt.

Board of Directors Deliberations

The Board of Match, in accordance with the provisions of MI 61-101, was charged with ensuring that the terms of the Transaction were negotiated in a manner which provided protection to minority shareholders. During the period leading up to the signing of the Definitive Agreement the Board as a whole undertook a comprehensive review of the proposed Transaction. The view of the Board of Directors, in their best business judgment, is that the Transaction is in the best interest of the Company because it builds full shareholder value by acquiring an operating business. The Board reviewed the business and history of Braingrid and relied upon its business judgement with respect to the pricing and the terms of the Transaction, including the proposed Hodges debt conversion, to conclude that the Transaction as proposed was fair to the minority shareholders of the Company,.

In making its determinations the Board also observed that a number of procedural safeguards were present to permit the Board to represent effectively the interest of the Company and the shareholders, other than Mr. Hodges, and the Company's other stakeholders including, among others:

  1. the valuation and negotiation process with respect to the Transaction was conducted by the Board alone, without the participation of Mr. Hodges except with respect to his debt conversion;

  2. the Transaction was approved by all of the directors of the Company in accordance with MI 61-101;

  3. a majority of the votes cast on the resolution by shareholders who vote at the Meeting, excluding for this purpose the votes attached to the common shares held by Mr. Hodges, is required for approval of the debt conversion resolution as provided by MI 61-101; and

  4. while the approval of the Transaction by a majority of the minority itself does not trigger dissent rights, the ancillary matters being considered by the shareholders provide that any registered shareholders who oppose the ancillary matters may, upon compliance with certain conditions, exercise dissent rights and, if ultimately successful receive the fair value of their common shares. Accordingly dissent rights are available in connection with the Transaction as set forth in the Circular.

Prior Valuations

There have been no prior valuations made of the shares of Match in the prior 24 months before the date of the Circular. Match has been an inactive company for the last five years.

Prior Conversion Offers

Match has been involved with two prior proposed reverse takeover transactions with arm's length parties that were not completed. One occurred in 2016 and the other occurred in 2017. Both of these transactions were conditional upon Match consolidating its shares and both required Mr. Hodges to convert his shares into post-consolidated shares of Match after the completion of the transaction. In both cases, on successful completion of either transaction, Mr. Hodges would have been left with a very small percentage shareholding in the Company. Similarly, upon completion of the Transaction Mr. Hodges will be a minor shareholder of the Company beneficially owning or having control and direction over approximately 2% of the post-consolidated common shares of the Company.

Votes Excluded

The votes attached to the shares held by Mr. Hodges, being a total of 1,714,473 common shares (representing in the aggregate approximately 19.9% of the issued and outstanding common shares) will be excluded in determining whether minority approval for the proposed related party transaction is obtained.

For further information please contact:

MATCH CAPITAL RESOURCES CORPORATION

Nadim Wakeam
Director
Telephone: (416) 593-2980

Completion of the Transaction is subject to a number of conditions, including TSX Venture Exchange acceptance, and if applicable, disinterested shareholder approval. The Transaction cannot close until the required shareholder approvals are obtained. There can be no assurance that the Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the disclosure documentation 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 Match should be considered highly speculative.

The TSX Venture Exchange has in no way passed upon the merits of the proposed Transaction and has neither approved or disapproved the contents of this press release.

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SOURCE: Match Capital Resources Corporation

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