CCII.P:CC - Cuspis Capital II Ltd. and 11197894 Canada Ltd. Enter Into Letter of Intent for Qualifying Transaction
(TheNewswire)
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Toronto, Ontario / TheNewswire / March 5, 2024 – Cuspis Capital IILtd. (TSXV:CCII.P) (“ Cuspis ” or the“ Corporation ”), a capital pool company as defined under TSX VentureExchange (“ TSXV ” or the “ Exchange ”) Policy 2.4 – Capital Pool Companies (“ Policy2.4 ”), is pleased to announce it has enteredinto a letter of intent dated March 4, 2024 (the “ LOI ”) with 11197894Canada Ltd. (“ ICGroup ”), a privatecompany incorporated under the laws of Canada , whereby Cuspis andIC Group will complete an arrangement, amalgamation, share exchange,or similar transaction to ultimately form the resulting issuer (the“ ResultingIssuer ”) that will continue on the business ofIC Group (the “ Transaction ”), subject to the terms andconditions outlined below. Cuspis intends that the Transaction willconstitute its Qualifying Transaction, as such term is defined in thepolicies of the Exchange. Following completion of the Transaction, theResulting Issuer intends to list as a Tier 1Technology Issuer on the Exchange.
Cuspis completed its initial public offering inDecember, 2020. The common shares of Cuspis (the “ Cuspis Shares ”) arelisted for trading on the TSXV under the stock symbol “CCII.P”.Cuspis has not commenced commercial operations and has no assets otherthan cash. Cuspis was incorporated under the laws of the Province ofOntario.
IC Group is a leading marketing services technologycompany with over 30 years’ experience delivering impactful digitalpromotions, loyalty, rebate, messaging, and specialty insurancesolutions for Fortune 500 brands in global jurisdictions. IC Group, headquartered in Winnipeg, Manitoba, is the product of a July 31,2023 amalgamation that consolidated entities that have effectivelybeen in active business since 1989.
Cuspis’ management believes that IC Group's trackrecord of profitability, combined with the growth prospects of itsrecent and pending acquisitions, make it an attractive company tobring to the public market. The company is led by a seasonedmanagement team focused on generating positive cash flows, andsynergistic acquisitions. We believe the combination of CuspisCapital II Ltd. and IC Group creates a solid platform for IC Group'scontinued success in digital marketing services, as well as the growthof its novel strategies and services that digitally engage consumersfor Fortune 500 brands in global markets. For its year ended December31, 2023, IC Group had total assets of $24.78 million and totalliabilities of $22.31 million, for shareholders equity of $2.47million. (Included in both assets and liabilities is approximately $8million of offsetting amounts that relate to prizing activities thatare held on behalf of/owed to others). IC Group had $12.36 millionrevenues in its fiscal 2023, and net income (loss) of $(0.41) million.IC Group recently acquired the assets of a tier-one mobile aggregatorin Canada as of November 1, 2023. The Transaction also involves theacquisition of two additional businesses in conjunction with theConcurrent Financing. The combined pro forma revenue of the businessesis approximately $17.82 million for 2023. All figures are unaudited.
The LOI was negotiated at arm’s length and iseffective as of March 4, 2024. None of the current directors orofficers of Cuspis hold any securities of IC Group, nor do any of themhold a director or management position with IC Group. The Transactiondoes not constitute a Non-Arm’s Length Qualifying Transaction, andthe approval of the shareholders of Cuspis will not be required. Inthe event that approval from the shareholders of IC Group is required,such approval will be sought as a condition to the closing of theTransaction.
The material terms and conditions outlined in the LOIare non-binding on the parties. The Transaction described in the LOIis, among other things, conditional on the execution of a definitiveagreement (the “ DefinitiveAgreement ”) to be negotiated between theparties. It is currently anticipated that, immediately prior to thecompletion of the Transaction, Cuspis will effect a shareconsolidation (the “ Consolidation ”) on a basis to bedetermined.
The LOI contemplates that as a condition of closing ofthe Transaction, the parties will complete a private placement ofequity securities for gross proceeds of a minimum of $3,000,000 (the“ Concurrent Financing ”).Pursuant to the Transaction, post-Consolidation Cuspis Shares, in anamount and in a ratio to be determined, will be issued in exchange foroutstanding common shares of IC Group (such ratio being the“ Exchange Ratio ”). The Exchange Ratio will be determined by negotiationbetween the parties once the proportionate ownership of the resultingissuer has been established, which will be a function of theConcurrent Financing. The value of Cuspis has been established at$2.90 million, or $0.232 per share.
The LOI contemplates that the Transaction will becompleted no later than April 30, 2024, or such other date as may bemutually agreed to in writing between Cuspis and IC Group. There canbe no assurance that a Definitive Agreement will be successfullynegotiated or entered into, or that the Concurrent Financing or theTransaction will be completed.
Upon completion of the Transaction, the parties intendfor the following individuals to comprise the board of directors andmanagement of the Resulting Issuer. Cuspismay, at their option, nominate an additional director acceptable to ICGroup, and Cuspis and IC Group may also jointly agree to nominate anadditional director.
Director, President & CEO:Duncan McCready
Oakville, Ontario
Duncan, with more than 30 years of brand-activation,and promotion-tech experience working with global brands, is aco-founder of IC Group and Insured Creativity, and provides overallleadership and strategic direction. Duncan led the MBO of IC Group in2015, prior successful exits in 1997 and 2006, and more recently ledthe acquisition by IC Group of 2 marketing service businesses. Outsideof IC Group, Duncan supports the development of new startups throughmentorship and board level participation. Duncan has been on ICGroup’s board since 2015.
Director: Marc Caron
Winnipeg, Manitoba
Marc is a senior executive (BSc. EE, P.Eng., MBA, CMC,ISACA-CRISC) with over 30 years’ of international business andM&A experience bridging the disciplines of operations, informationtechnology, data security and business leadership. Marc mentors newentrepreneurs and business startups in the community, playing activeboard and advisory roles to support growth. Marc has been on ICGroup’s board since 2015 and leads IC Group’s delivery,technology, and information security teams.
Director: Michael Svetkoff
Toronto, Ontario
Mike is a director and investor in IC Group and brings30 years of senior executive experience in corporate finance andprivate equity. Mike has been involved in 100+ transactions and $1B ofprivate equity. Mike has been on IC Group’s board since 2015.
IC Group’s management team currently consists ofDuncan McCready as President & Chief Executive Officer, MarcCaron, as Chief Operating Officer, John Penhale, of Oakville, Ontario,as Chief Financial Officer. John is a finance executive (CPA,CA)with over 30 years’ experience leading Finance, Treasury and RiskManagement functions for Private and Public companies. John was a pastsenior executive of CIBC’s multi-billion-dollar private equitybusiness, managing and adjudicating equity and mezzanine debt investments.
Principal Shareholders
5304709 Manitoba Ltd. owns 39% of the issued andoutstanding common shares of IC Group.
Echo Bay Strategic Yield Fund owns 17% of the issuedand outstanding common shares of IC Group.
No other shareholder of IC Group holds 10% or more ofits outstanding voting securities.
Conditions to the Transaction
Completion of the Transaction is subject to a number ofconditions, including but not limited to, acceptance by the TSXV,approval of certain matters by the holders of the Cuspis Shares andother customary conditions including:
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completion of the Concurrent Financing;
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entry into the Definitive Agreement on or before March31, 2024;
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receipt of all director, shareholder, third party andrequisite regulatory approvals (including IC Group shareholderapproval) relating to the negotiation and execution of a DefinitiveAgreement in respect of the Transaction and as may be contemplated bythe Definitive Agreement;
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preparation and filing of a disclosure document, asrequired by the TSXV, (the Disclosure Document ”) outlining thedefinitive terms of the Transaction and describing the business to beconducted by Cuspis following completion of the Transaction, inaccordance with the policies of the TSXV;
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receipt by the TSXV of a Sponsor Report (as defined inthe policies of the TSXV), if required, satisfactory to the TSXV;and
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completion of the Consolidation.
There can be no assurance that the Transaction will becompleted as proposed or at all.
Sponsorship
Cuspis intends to make an application for exemptionfrom the sponsorship requirements of the TSXV in connection with theTransaction, however there is no assurance that the TSXV will exemptCuspis from all or part of applicable sponsorship requirements.
Further Information
Cuspis will provide further details in respect of theTransaction and the Concurrent Financing by way of updating pressreleases as the Transaction advances, in accordance with the policiesof the TSXV.
All information contained in this press release withrespect to IC Group and Cuspis (but excluding the terms of theTransaction) was supplied by the parties respectively, for inclusionherein, without independent review by the other party, and each partyand its directors and officers have relied on the other party for anyinformation concerning the other party.
Completion of the Transaction is subject to a number ofconditions, including but not limited to, TSXV acceptance and ifapplicable pursuant to TSXV requirements, majority of the minorityshareholder approval. Where applicable, the Transaction cannot closeuntil the required shareholder approval is obtained. There can be noassurance that the transaction will be completed as proposed or atall.
Investors are cautioned that, except as disclosed inthe Disclosure Document to be prepared in connection with theTransaction, any information released or received with respect to theTransaction may not be accurate or complete and should not be reliedupon. Trading in the securities of a capital pool company should beconsidered highly speculative.
The TSXV has in no way passed upon the merits of theTransaction and has neither approved nor disapproved the contents ofthis press release.
Trading in the listed securities of the Corporationwill remain halted pursuant to Policy 2.4 Section 2.3(b).
For further information:
William Ollerhead
Cuspis Capital II Ltd.
Tel. (416) 214-0876
Forward-Looking Information
This press release contains “forward-lookinginformation” and “forward-looking statements” (collectively,“ forward-lookingstatements ”) within the meaning of applicableCanadian securities legislation. All statements, other than statementsof historical fact, are forward-looking statements and are based onexpectations, estimates and projections as at the date of this pressrelease. Any statement that involves discussions with respect topredictions, expectations, beliefs, plans, projections, objectives,assumptions, future events or performance (often but not always usingphrases such as “expects”, or “does not expect”, “isexpected” “anticipates” or “does not anticipate”,“plans”, “budget”, “scheduled”, “forecasts”.“estimates”, “believes” or intends” or variations of suchwords and phrases or stating that certain actions, events or results“may” or “could, “would”, “might” or “will” be takento occur or be achieved) are not statements of historical fact and maybe forward-looking statements. In this press release, forward-lookingstatements relate, among other things, to: the Transaction and certainterms and conditions thereof; the business of IC Group; the ConcurrentFinancing; the Consolidation of Cuspis Shares; the Exchange Ratio;TSXV sponsorship requirements and intended application for exemptiontherefrom; shareholder, director and regulatory approvals; and futurepress releases and disclosure. Forward-lookingstatements are necessarily based upon a number of estimates andassumptions that, while considered reasonable, are subject to knownand unknown risks, uncertainties, and other factors which may causethe actual results and future events to differ materially from thoseexpressed or implied by such forward-looking statements. Such factorsinclude, but are not limited to: general business, economic,competitive, political and social uncertainties; and the delay orfailure to receive shareholder, director or regulatory approvals.There can be no assurance that such statements will prove to beaccurate, as actual results and future events could differ materiallyfrom those anticipated in such statements. Accordingly, readers shouldnot place undue reliance on the forward-looking statements andinformation contained in this press release. Except as required bylaw, Cuspis assumes no obligation to update the forward-lookingstatements of beliefs, opinions, projections, or other factors, shouldthey change, except as required by law.
Neither TSX Venture Exchange nor itsRegulation Services Provider (as that term is defined in policies ofthe TSX Venture Exchange) accepts responsibility for the adequacy oraccuracy of this release.
This press release does not constitute an offer to sellor a solicitation of an offer to buy any of the securities in theUnited States. The securities have not been and will not be registeredunder the United States Securities Act of 1933, as amended (the“ U.S. SecuritiesAct ”) or any state securities laws and may notbe offered or sold within the United States unless registered underthe U.S. Securities Act and applicable state securities laws, unlessan exemption from such registration is available.
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