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OV2 Investment 1 Inc. Announces Qualifying Transaction With Freightera Logistics Inc.

/THIS PRESS RELEASE, REQUIRED BY APPLICABLE CANADIAN LAWS IS NOT FOR DISTRIBUTION TO U.S. NEWS SERVICES OR FOR DISSEMINATION IN THE UNITED STATES , AND DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF AN OFFER TO SELL ANY OF THE SECURITIES DESCRIBED HEREIN IN THE UNITED STATES , THESE SECURITIES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1993, AS AMENDED, OR ANY SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR U.S. PERSONS UNLESS REGISTERED OR EXEMPT THEREFROM./

TORONTO , July 30, 2019 /CNW/ - OV2 Investment 1 Inc. (the "Corporation") (TSXV: OVO.P), a capital pool company under Policy 2.4 (the "CPC Policy") of the TSX Venture Exchange ("Exchange"), is pleased to announce that it has entered into a non-binding Letter of Intent dated as of today's date with Freightera Logistics Inc. ("Freightera") for the purposes of completing a Qualifying Transaction ("QT") as defined in the CPC Policy. The QT is an arm's length transaction and will be completed by way of an amalgamation, share sale, asset sale or similar transaction whereby the Corporation and Freightera will complete a business combination and shareholders of Freightera immediately prior to the QT will acquire a controlling interest in the resulting issuer (the "Resulting Issuer"). The final structure of the QT is subject to the receipt of tax, corporate and securities law advice for both the Corporation and Freightera. Upon completion of the QT, the Resulting Issuer will carry on the business of Freightera.

Freightera is a private company formed under the laws of the Province of British Columbia , and based in Vancouver, BC . Freightera is a leading freight shipping marketplace offering instant freight quotes, online shipment bookings and lower emission transportation options in North America.  Freightera currently has 32,703,854 common shares (the "Freightera Shares") outstanding, 3,209,585 share purchase warrants exercisable into Freightera Shares at an average price of $0 .64 per share and $279,464 in outstanding convertible debt that is convertible into Freightera Shares at a price of $2.40 per share.

Terms of the QT

The QT is currently expected to proceed by way of a business combination transaction pursuant to which Freightera will become a wholly-owned subsidiary of the Corporation. In consideration of the Corporation's acquisition of Freightera, each Freightera Share that is issued and outstanding immediately prior to completion of the QT will be exchanged for 2.59909 common shares of the Corporation (the "Corporation Shares") based on an agreed fully-diluted valuation of Freightera of $34 million . The Corporation may seek to complete a consolidation of the Corporation Shares prior to completion of the QT, in which case the number of Corporation Shares to be issued in exchange for each Freightera Share (the "Exchange Ratio") would be adjusted accordingly.

In addition, all of Freightera's warrants, options and convertible debt will, to the extent outstanding upon completion of the QT, be converted into or exchanged for warrants, options and convertible debt that are exercisable or convertible into shares of the Resulting Issuer on the same terms, with necessary adjustments to give effect to the Exchange Ratio.

In conjunction with the QT, Freightera intends to complete a brokered private placement to secure a minimum of $3,500,000 gross proceeds from an equity financing (the "Financing"). The net proceeds of the Financing will be used to expand marketing to freight shippers and transport companies, add new automated services to the Freightera platform, repay all or a portion of outstanding indebtedness (including the Bridge Note), provide working capital, and for general and administrative expenses.

Completion of the QT is subject to a number of conditions, including but not limited to:

  • completion of satisfactory due diligence reviews by the Corporation and Freightera of the business and affairs of the other party;
  • execution of a binding definitive agreement between the Corporation and Freightera;
  • receipt of all applicable regulatory, shareholder and TSXV approvals;
  • completion of the issuance of the Freightera Restructuring Transaction (as defined below); and
  • completion of the Financing for gross proceeds of at least $3,500,000 .


Freightera Restructuring Transaction

Prior to or concurrent with the execution of a definitive agreement in respect of the QT, Freightera intends to complete a restructuring transaction with a company ("Holdco") controlled by Sheldon Pollack , a director and Chief Executive Officer of the Corporation, to secure access to funding via Holdco as contemplated below (the "Freightera Restructuring Transaction").

In connection with the Freightera Restructuring Transaction, Freightera will, through a series of steps, acquire Holdco. At the time of the transaction, Holdco's assets will include $2 million in cash and a $2 million promissory note payable to it on or prior to completion of the QT by another corporation controlled by Mr. Pollack (the "Holdco Note"). In exchange, Freightera will issue to Mr. Pollack, or a trust controlled by him, (i) a $2.5 million secured non-convertible promissory note (the "Bridge Note") and (ii) a $1.5 million secured convertible promissory note (the "Convertible Note").

The Bridge Note will be secured, bear interest at the rate of 12% per annum and will mature on the earlier of (i) nine months from the date of issuance and (ii) completion of the QT.

The Convertible Note will secured, bear interest at a rate of 2% per annum until completion of the QT (and 10% per annum thereafter) and will mature five years from the date of issuance. In addition, starting on the completion of the QT, the Convertible Note will be convertible at Mr. Pollack's option into common shares of Freightera at a price equal to, subject to the receipt of any required stock exchange approvals, the price at which Freightera's common shares are valued for the purposes of the QT less a 25% discount.

Freightera shall also be entitled to raise up to an additional $1,000,000 by issuing additional secured promissory notes, having terms that are substantially similar to the Bridge Note and which will rank pari passu with the Bridge Note, to other investors identified by Freightera.

Management and Board of Directors of Resulting Issuer

Upon completion of the QT, it is anticipated that all of the existing directors and officers of the Corporation will resign.  Eric Beckwitt , founder, Chair and CEO of Freightera will lead the new management team.  Further information with respect to the identity of each of the proposed directors and officers of the Resulting Issuer will be provided separately, once determined.

Trading Halt

Trading in the common shares of the Corporation has been has been halted and the shares are not expected to resume trading until the QT has been completed, or until the Exchange receives the requisite documentation to resume trading. If the QT is completed, the Corporation expects to be listed on the Exchange as a technology issuer.

Sponsorship

The Corporation intends to make an application for exemption from the sponsorship requirements of the TSXV in connection with the QT, however there is no assurance that the TSXV will exempt the Corporation from all or part of applicable sponsorship requirements.

Further Information

The Corporation will issue a subsequent press release in accordance with the policies of the TSXV providing further details in respect of the Qualifying Transaction, including information relating the transaction structure, the Freightera Restructuring Transaction and the Financing and summary financial information of Freightera.

Forward Looking Information

Statements in this press release regarding Freightera's business which are not historical facts, are "forward-looking statements" that involve risks and uncertainties, such as terms and completion of the proposed transaction. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties. Actual results in each case could differ materially from those currently anticipated in such statements.

Completion of the 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 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.

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 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."

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 OV2 Investment 1 Inc.


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