Loma Vista Capital Inc. Announces Going Public Transaction with BitGold Inc.
January 28, 2015
Loma Vista Capital Inc. has entered into a binding letter of intent for a business combination agreement with BitGold Inc., which will result in a reverse takeover.
BitGold is a development-stage Internet technology and money service business. BitGold's mission is to provide global access to gold for secure savings and transactions, making an extraordinary element useful and empowering again. BitGold is advancing the digital payments revolution by helping global clients acquire, store and, now, spend gold with unprecedented simplicity. Through the use of its proprietary software technology, the BitGold operating platform provides innovative solutions to the challenge of transacting globally with fully allocated, redeemable and securely vaulted gold.
Sprott Inc., a leading alternative asset manager, has commenced discussions with BitGold to assess the potential business opportunities and commercial feasibility of establishing a strategic relationship. Sprott and its affiliates have assets under management of over $7-billion and is one of the world's foremost gold and gold investment managers. Sprott believes that its clients and other gold investors will benefit from access to a secure, Internet-based platform that facilitates the use of gold as a payment option. In addition, Sprott has committed to invest in BitGold as described as follows.
PowerOne Capital Markets Ltd. acted as financial adviser with respect to the transactions described in this press release.
Pursuant to the business combination, Loma Vista will amalgamate with BitGold to form a corporation to continue under the name BitGold Inc. Following completion of the business combination, the amalgamated company (Amalco) will hold all of BitGold's assets and conduct the business of BitGold.
Pursuant to the business combination, approximately 16.5 shares of Loma Vista will be exchanged for one common share of Amalco, and one share of BitGold will be exchanged for one common share of Amalco. As at Jan. 28, 2015, there were 9,158,667 Loma Vista common shares issued and outstanding and 27,292,500 BitGold shares outstanding.
As a result of the business combination, including the private placement discussed as follows, the company expects to have approximately 34,514,723 issued and outstanding common shares on an undiluted basis. Approximately 1.6 per cent of those shares will be held by shareholders of Loma Vista and 79 per cent will be held by former shareholders of BitGold, with the remaining 19.4 per cent held by the private placement investors.
In conjunction with the business combination, BitGold expects to complete a brokered private placement through a syndicate of agents co-led by Dundee Securities Ltd. and Clarus Securities Inc., and including GMP Securities LP and Canaccord Genuity Corp., to raise gross proceeds of approximately $6-million through the issuance of subscription receipts at a price of 90 cents per subscription receipt. Upon satisfaction of the escrow release conditions, including all conditions precedent to the business combination being satisfied, each subscription receipt will automatically convert, without any further action on the part of the holder, into one BitGold unit immediately prior to completion of the business combination. Provided that, if the escrow release conditions are not satisfied on or before April 27, 2015, the subscription receipts will be cancelled, and all proceeds from the sale of subscription receipts will be returned to the subscribers.
Each unit will comprise one BitGold share and one-half of one warrant, with each whole warrant entitling the holder thereof to acquire one BitGold share at a price of $1.35 for a period of 18 months after issuance, subject to acceleration by BitGold if the volume-weighted average price of the BitGold shares on the principal stock exchange upon which they are listed exceeds $2 for a period of 20 consecutive days. Pursuant to the business combination, each BitGold unit will be exchanged for one unit of Loma Vista on a postconsolidation basis.
BitGold has obtained a lead order from Sprott and certain of its directors who intend to subscribe for a total of 2,222,222 subscription receipts for a total purchase price of $2-million. BitGold and Sprott are discussing potential strategic relationship as discussed above. In addition, Roy Sebag and his designees will subscribe for 1,111,111 subscription receipts for a total purchase price of $1-million.
Net proceeds of the financing will be used by the company to execute BitGold's marketing and customer acquisition strategy through a variety of on-line and offline channels, to further develop BitGold's software technology and intellectual property portfolio, and for general working capital purposes.
In connection with the financing, the agents will be entitled to a cash commission equal to 6 per cent of the total gross proceeds raised and broker warrants exercisable for units equal to 6 per cent of the number of subscription receipts issued. Pursuant to the business combination, each one broker warrant issued pursuant to the financing will be exchanged for one broker warrant of the company.
Following completion of the transaction, Loma Vista expects to change its name to BitGold Inc. The proposed management of the company upon completion of the business combination is as follows.
Roy Sebag, president, chief executive officer and director
Mr. Sebag, president, chief executive officer and director, is a co-founder of BitGold and has served as its chief executive officer since 2014. Mr. Sebag also serves as the founder and managing principal of Braavos Capital Ltd., an international private investment organization engaged in value-oriented investments across a variety of asset classes and industries. From 2004 through to 2010, Mr. Sebag was the founder and portfolio manager of Essentia Equity Ltd., an investment partnership that engaged in fundamental long and short equity investing in distressed, event-driven and natural-resource-related opportunities. He is also the founder, chairman and chief executive officer of Natural Resource Holdings Ltd., an investment company engaged in the acquisition, development and ownership of natural resource assets in North America. Mr. Sebag is also the president, chief executive officer and a director of Loma Vista.
Joshua Crumb, chief operating officer and director
Mr. Crumb, chief strategy officer and director, is a co-founder of BitGold and has served as a director since 2014. Mr. Crumb is an entrepreneur with a background in early stage global businesses. Mr. Crumb was previously the senior metals strategist at Goldman Sachs in the global economics, commodities and strategies research division in London. Mr. Crumb also held various positions within the Lundin group of companies, serving as director of corporate development at Lundin Mining Corp. and special project analyst for group chairman Lukas Lundin, and is currently a director of Zazu Metals Corp., Silver Bull Resources Inc. and Loma Vista. Mr. Crumb holds a master of science in mineral economics, a graduate certificate in international political economy and a bachelor of science in engineering from the Colorado School of Mines.
Dennis H. Peterson, director
Mr. Peterson, director, is a securities lawyer and the principal of Peterson & Company LLP, a Toronto-based securities law boutique. Mr. Peterson was called to the bar in Ontario in 1988. He has held senior positions with a variety of public companies, including Probe Mines Ltd. (director), Zazu Metals (director) and Canstar Resources Inc. (director). Mr. Peterson holds a bachelor of commerce from Queen's University and a bachelor of law from the University of Toronto.
James Eaton, director
Mr. Eaton, director, is the president of Weatons Holdings, a Canadian private holding company. Mr. Eaton has been active in the founding, growth and divestiture stages of the Weatons portfolio companies across a wide variety of industries. His responsibilities at Weatons include overseeing numerous private investments and a portfolio of listed securities. Mr. Eaton serves on the boards of JC Clark, Defyrus, Dream Hard Asset Alternatives Trust, Syncordia Technologies and Healthcare Solutions, and Ceviche. Mr. Eaton also serves on the boards of the Canadian Art Foundation and the True Patriot Love Foundation and is a trustee of the John David and Signy Eaton Foundation. Mr. Eaton holds a bachelor of arts from the University of Colorado at Boulder.
Alessandro Premoli, chief technology officer
Mr. Premoli, chief technology officer, is a security cryptographer and software engineer. Over the last decade, he has developed encrypted storage and messaging systems for highly sensitive, data-intensive organizations. Mr. Premoli has served as chief technology officer of Andxor SRL, a company specializing in image, data and application security, and as a developer at C&A SRL, a company specializing in cryptography. Mr. Premoli also served as an independent security consultant to OpenCoin Inc., the developer of the Ripple protocol. Mr. Premoli holds a master's degree in informatics from the University of Milano-Bicocca.
Jason Loewe, chief operating officer and corporate secretary
Mr. Loewe, chief operating officer and corporate secretary, has an extensive background in financial services and compliance. He has served as a corporate compliance branch manager at IPC Securities Corp. He previously served as compliance officer at Assante Wealth Management. Previously, Mr. Loewe worked as an investment adviser at Canadian Imperial Bank of Commerce. Mr. Loewe holds a bachelor of arts in economics from the University of Windsor.
The proposed business combination is expected to provide significant benefits for shareholders, including:
"Since my days as a professional investor, I have wondered why there's no easy way to own and spend gold in a legal, transparent and tax-compliant manner," said Mr. Sebag, chief executive officer. "Payment technology breakthroughs have created a historical opportunity to solve one of the main challenges preventing gold from being useful again in daily transactions. True gold ownership requires gold to be safely vaulted and stored, making it extremely difficult to spend, especially in microtransactions. BitGold solved this problem by developing a patent-pending technology and platform that is part gold exchange, part payments technology and part custodian, resulting in a powerful user experience that advances gold from a physical element to an instantly accessible unit of account and store of value for the Internet, an operating system for gold. We believe both Loma Vista Capital and BitGold Inc. shareholders will benefit as a result of this proposed transaction, providing increased liquidity and access capital for the resulting company and advancing a historic and powerful business idea. I would like to personally thank Dundee Capital Markets for immediately recognizing BitGold's potential and helping Josh and I execute on our vision."
The business combination is a related party transaction as set out in Multilateral Instrument 61-101, Protection of Minority Shareholders in Special Transactions, as Roy Sebag and Joshua Crumb, directors of Loma Vista, are also directors of BitGold; Roy Sebag, Joshua Crumb and Daniel Crandall, officers of Loma Vista, are also officers of BitGold; and Roy Sebag, a control person of Loma Vista, is also a control person of BitGold. Mr. Sebag and Mr. Crumb respectively own 17.25 million and 1.5 million BitGold shares, representing 73.4 per cent and 6.4 per cent of the issued and outstanding BitGold shares. Upon completion of the proposed financing and business combination, and the purchase of 1,111,111 subscription receipts, Mr. Sebag, Mr. Crumb and Mr. Crandall will respectively hold 18,511,773 (53.6 per cent), 1,642,837 (4.8 per cent) and nil (0 per cent) of the common shares of Loma Vista on a postconsolidated basis.
Because it is a related party transaction, the business combination must be approved by: (i) a majority of Loma Vista common shares voted at the meeting other than the shares owned or controlled by the interested parties and (ii) a majority of Loma Vista common shares voted at the meeting. The consolidation, which is a condition of the closing of the business combination, and the change of Loma Vista's name must be approved by two-thirds of the shares voted at the meeting.
Pursuant to the business combination agreement, certain directors, officers and 10-per-cent shareholders of Loma Vista have agreed to support the business combination and related transactions, and have each entered into lock-up agreements with Loma Vista to vote their common shares in favour of the resolutions to be passed at the Loma Vista shareholder meeting.
Further details of the business combination and the interests of the interested parties will be provided in the management information circular in respect of the coming annual and special meeting of Loma Vista's shareholders, to be mailed to the holders of Loma Vista common shares and posted on SEDAR under Loma Vista's profile at SEDAR.
Completion of the transaction is subject to a number of conditions, including receipt of applicable regulatory approvals and shareholder approvals, including the approval of the Canadian Securities Exchange and disinterested Loma Vista shareholders. Additionally, the business combination agreement is subject to the conditions that the consolidation be approved and implemented as well as completion of the financing.
BitGold's mission is to provide global access to gold for secure savings and transactions, making an extraordinary element useful and empowering again. BitGold is advancing the digital payments revolution by helping people around the world acquire, store and spend gold with unprecedented simplicity.
The BitGold platform provides innovative solutions to the challenge of transacting with fully allocated and securely vaulted physical gold. BitGold accounts are free and convenient to open by anyone, anywhere(i) in just minutes. BitGold provides users with a secure vault account to purchase gold using a variety of electronic payment methods or with currency through an ATM (automated teller machine) network. The platform also provides transaction capability, including: instant cross-border gold payments, merchant invoicing and processing for gold, debit card spending of gold at traditional points of sale, conversions to a customer's external digital wallet or bank, and physical gold redemptions.
BitGold is a Canadian corporation with offices in Toronto, Canada, and Milan, Italy. BitGold has partnered with established professionals in auditing, vault security and Web security as well as bullion dealing, and is committed to best-practice systems for compliance with all applicable laws and regulations regarding anti-money laundering and know your customer.
(i) The BitGold platform will not initially be available to U.S. residents and will be unavailable to residents of OFAC-sanctioned (Office of Foreign Assets Control) countries.
Completion of the transaction is subject to a number of conditions, including CSE acceptance and disinterested shareholder approval. 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 of Loma Vista to be prepared in connection with the transaction, any information released or received with respect to the transactions described herein may not be accurate or complete and should not be relied upon. Trading in the securities of Loma Vista should be considered highly speculative.
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