(TheNewswire)
Edmonton, Alberta – TheNewswire - October 18 th , 2023 – Yorkton EquityGroup Inc. (TSXV:YEG) (“Yorkton” or the “Company”) announcesit has received conditional acceptance from the TSX Venture Exchange(the “Exchange”) and has closed on the initial tranche of theprivate placement, previously announced on October 12 th , 2023 (the “PrivatePlacement”), on October 17 th , 2023. The Company has issued 2,000 unsecuredconvertible debentures of the Company (the “ConvertibleDebentures”) at an issue price of $1,000 per Convertible Debenturefor aggregate gross proceeds of $2,000,000. Mr. Ben Lui, an insiderof the Company, participated in the initial closing of the PrivatePlacement for the full amount of 2,000 Convertible Debentures for$2,000,000.
Details of this PrivatePlacement :
Each Convertible Debenture has an issue price of $1,000 with aninterest rate of eight percent (8%) per annum, payable annually to theConvertible Debenture holders only in cash no later than thirty (30)days from the anniversary date of the closing date of the PrivatePlacement to the maturity date.
Each Convertible Debenture will mature on thedate that is five (5) years from the date of issuance of theConvertible Debenture (the “Term”). The principal amount of eachConvertible Debenture may, at the option of the Convertible Debentureholder, be convertible, in whole or in part during the Term, intocommon shares of the Company (“Common Shares”) at a conversionprice of $0.20 per Common Share (the “Conversion”), after whichsuch principal amount of the Convertible Debenture will beextinguished.
The Company, after a period of thirty-six (36) months following thedate of closing, will have the right, but not the obligation, toredeem the principal amount and any unpaid interest of the ConvertibleDebenture, in cash, without penalty, at any time prior to the date ofmaturity by providing a thirty (30) calendar day notice period (the“Redemption Notice”) to the Convertible Debenture holder by way ofa written notice or a press release duly disseminated. W ithin ten (10) business days after receipt of the RedemptionNotice, the Convertible Debenture holder, at its sole discretion, mayrequest for a Conversion (of the principal amount only exclusive ofany interest component which is payable in cash only) from the Companyby the issuance of Common Shares. All rights to Conversion lapsesten (10) business days after receipt of the Redemption Notice.
The Convertible Debentures and any Common Shares issuable uponconversion will be subject to a statutory hold period lasting fourmonths and one day following the closing date.
The Company intends to use the proceeds from the Private Placement forthe closing of the acquisition of “The Fuse”, a 125-unitcondominium grade multi-family residential complex that wasconstructed in 2015 and is comprised of two buildings situated onapproximately 2.67 acres of land located in the Summersideneighborhood with the municipal addresses of 2105 and 2109 68 StreetSW, Edmonton, Alberta, as previously announced on October 2 nd , 2023, and general workingcapital.
Pursuant to the Private Placement, Mr. Ben Lui acquired 2,000Convertible Debentures in the principal amount of $2,000,000. Thistransaction is considered a “related party transaction” pursuantto the policies of the TSX Venture Exchange and MultilateralInstrument 61-101, Protection of Minority Security Holders in SpecialTransactions (“MI 61-101”) as Mr. Ben Lui is the CEO, director andmajority shareholder of Yorkton. This transaction will be exemptfrom the formal valuation and minority shareholder approvalrequirements of MI 61-101. In particular, the Company has determinedthat the exemption set out in paragraph (b) in section 5.5 of MI61-101 is applicable since the Company is not listed on the TorontoStock Exchange, but only on the TSX Venture Exchange. In addition,regarding the minority shareholder approval exemption, the independentdirectors have determined that the exemption set out in paragraphs(1)(b) in section 5.7 of MI 61-101 is applicable in that thedistribution of the securities to Mr. Ben Lui has a fair market valueof not more than $2,500,000 and the Company is not listed on theToronto Stock Exchange, but only on the TSX Venture Exchange.
The Company did not file a material change report inrespect of the transaction 21 days in advance of the closing of thePrivate Placement because insider participation had not beenconfirmed. The shorter period was necessary in order to permit theCompany to close the Private Placement in a timeframe consistent withusual market practice for transactions of this nature.
Early Warning ReportRequirements :
Mr. Ben Lui, who currently owns or controls (directly or indirectly)82,511,845 (or 73.23%) of the issued and outstanding Common Shares ona non-diluted basis, acquired Convertible Debentures in the principalamount of $2,000,000 pursuant to the Private Placement, being all ofthe Convertible Debentures issued in this initial closing of thePrivate Placement and 36.28% of all currently issued and outstandingconvertible debentures of the Company. The Convertible Debentures heldby Mr. Ben Lui may be converted, at his option, into a maximum of10,183,333 Common Shares at a conversion price of between $0.20 and$0.30 per Common Share by delivering written notice to convert at anytime prior to the close of business on the last business dayimmediately preceding the maturity date.
Prior to the Private Placement, Mr. Ben Lui (directly or indirectly)owned 82,511,845 Common Shares, 275,000 stock options, and 55unsecured convertible debentures (as previously announced on April20 th , 2023) of theCompany. If all of Mr. Ben Lui’s stock options and unsecuredconvertible debentures were exercised, Mr. Ben Lui would have owned(directly or indirectly) 73.33% of the then issued and outstandingCommon Shares, on a partially diluted basis.
After the initial tranche closing of the Private Placement, Mr. BenLui (directly or indirectly) owns 82,511,845 Common Shares, 275,000stock options of the Company and 2,055 unsecured convertibledebentures. If all of Mr. Ben Lui’s stock options and unsecuredconvertible debentures were exercised, Mr. Ben Lui would own (directlyor indirectly) 75.50% of the issued and outstanding Common Shares, ona partially diluted basis.
The Convertible Debentures were acquired for investment purposes. Mr.Ben Lui has no current intention to enter into any of the transactionslisted in item 5 of Form F1 of National Instrument 62-103 but in thefuture, he may discuss such transactions with management and/or theboard of directors of the Company and he may further purchase, hold,convert, vote, trade, dispose or otherwise deal in the securities ofthe Company, in such manner as he deems advisable to benefit fromchanges in market prices of the Company’s securities, publiclydisclosed changes in the operations of the Company, its businessstrategy or prospects or from a material transaction of the Company,and he will also consider the availability of funds, evaluation ofalternative investments and other factors. An early warning reportwill be filed by Mr. Ben Lui in accordance with applicable securitieslaws and will be available under the Company’s SEDAR+ profile at www.sedarplus.ca .
About Yorkton
Yorkton Equity Group Inc. is a growth-oriented real estate investmentcompany committed to providing shareholders with growing assetsthrough accretive acquisitions, organic growth, and the activemanagement of multi-family rental properties with significant upsidepotential. Our current geographical focus is in Alberta and BritishColumbia with diversified and growing economies, and strong populationin-migration. Our business objectives are to achieve growing NetOperating Income (“NOI”) as well as the asset values in ourmulti-family rental property portfolio in strategic markets acrossWestern Canada.
The management team at Yorkton Equity Group Inc. has well over 30years of prior real estate experience in acquiring and managing rentalassets.
Further information about Yorkton is available on the Company’swebsite at www.yorktonequitygroup.com and the SEDAR+ website at www.sedarplus.ca.
Neither the TSX Venture Exchange norits Regulation Services Provider (as that term is defined in the policies of the TSX VentureExchange) accepts responsibility for the adequacy or accuracy of thisrelease.
For further information on Yorkton,please contact:
Ben Lui, CEO - Corporate Office: (780) 409-8228
Yorkton Equity Group Inc. – Shareholder Communications: (780)907-5263
Email: investors@yorktonequitygroup.com
Forward-looking information
This press release may include forward-lookinginformation within the meaning of Canadian securities legislationconcerning the business of Yorkton. Forward-looking information isbased on certain key expectations and assumptions made by themanagement of Yorkton. Although Yorkton believes that the expectationsand assumptions on which such forward-looking information is based arereasonable, undue reliance should not be placed on the forward-lookinginformation because Yorkton can give no assurance that they will proveto be correct. Forward-looking statements contained in this pressrelease are made as of the date of this press release. Yorktondisclaims any intent or obligation to update publicly anyforward-looking information, whether as a result of new information,future events or results or otherwise, other than as required byapplicable securities laws.
This press release does not constitute an offer to sellor a solicitation of an offer to buy any of the securities describedherein in the United States. The securities described herein have notbeen and will not be registered under the United States Securities Actof 1933, as amended, or any applicable securities laws or any state ofthe United States and may not be offered or sold in the United Statesor to the account or benefit of a person in the United States absentan exemption from the registration requirement.
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