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MONTREAL, Dec. 15, 2020 /CNW/ - LXRandCo, Inc.
("LXR" or the "Company") (TSX: LXR) (TSX: LXR.WT), an
omni-channel retailer of branded vintage luxury handbags and
accessories, is pleased to provide an update on the brokered
private placement of units previously announced on December 7, 2020 (the "Private
Placement").
As previously announced, Cormark Securities Inc., on a "best
efforts" agency basis as agent and lead agent on behalf of a
syndicate of agents if necessary (the "Agent(s)"), will lead
the Private Placement, whereby the Company will issue up to
$5.0 million or 40,000,000 units,
with each unit consisting of one Class B share in the capital of
the Company (the "Share(s)") and a one-quarter of one Class
B Share purchase warrant (the "Warrant") (the
"Units"), in the capital of the Company at a price of
$0.125 per Unit (the "Unit
Price"). Each whole Warrant will entitle the holder to purchase
one additional Share at a price of $0.175 (the "Exercise Price") for a period
of 24 months following the closing of the Private Placement. The
Warrants are subject to an accelerated expiry if, following the
date that is four months and one day after the date of issuance of
the Units and prior to the expiry date of the Warrants, the daily
volume weighted average trading price of the Shares exceeds
$0.35 for ten consecutive trading
days. The Unit Price and the Exercise Price represent a 7.04%
discount and 30.14% premium, respectively, to the market price of
Class B Shares (based on the five-day VWAP of the Class B Shares
for the five trading days ended December 4,
2020). The Company has also granted the Agent(s) an option
to arrange the purchase of up to an additional 50% of Units (being
up to 20,000,000 Units) sold under the Private Placement at the
issue price (the "Agent(s)' Option").
In consideration of the services to be rendered by the Agent(s)
in connection with the Private Placement, the Company will the
Agent(s), a cash fee (the "Agency Fee") equal to 6.0% of the
gross proceeds realized by the Company in respect of the sale of
the Units, excluding the gross proceeds received from the sale of
the Units to Gibraltar &
Company, Inc. as well as Luigi
Fraquelli, Valerie Sorbie,
Camillo di Prata, Eric Graveline and Javier San Juan (collectively, the "Insider
Participants"). The Agency Fee payable on gross proceeds from
Gibraltar & Company, Inc. and
the Insider Participants will be 3.0%. In addition to the Agency
Fee, the Company will also issue to the Agent(s) broker warrants of
the Company (the "Broker Warrants"), which will expire 24
months from the Closing Date, to purchase that number of additional
Units equal to 6.0% of the number of Units sold in the Private
Placement except for Units sold to Gibraltar & Company, Inc. and/or the
Insider Participants, at the Unit Price (which, as stated above,
represents a 7.04% discount to the market price of Class B Shares
(based on the five-day VWAP of the Class B Shares for the five
trading days ended December 4,
2020)). Up to 3,600,000 Broker Warrants are issuable under
the Private Placement.
Shareholder Approval
The Private Placement requires the approval of the shareholders
of the Company at a duly called meeting of shareholders pursuant to
the TSX Company Manual since the TSX requires security holder
approval be obtained for private placements (i) for an aggregate
number of listed securities issuable greater than 25% of the number
of securities of the listed issuer which are outstanding, on a
non-diluted basis, prior to the date of closing of the private
placement if the price per security is less than the market price
as set out in Section 607(g)(i) of the TSX Company Manual, (ii)
that during any six month period are to insiders for listed
securities or options, rights or other entitlements to listed
securities greater than 10% of the number of securities of the
listed issuer which are outstanding, on a non-diluted basis, prior
to the date of closing of the first private placement to an insider
during the six month period set out in Section 607(g)(ii) of the
TSX Company Manual and (iii) where warrants to purchase listed
securities are issued to a placee at a warrant exercise price that
is less than the market price of the underlying security at either
the date of the binding agreement obligating the listed issuer to
issue the warrants or some future date provided for in the binding
agreement (as is the case in this Private Placement with respect to
the Broker Warrants, given the exercise price thereof represents a
discount to the market price of the Class B Shares, but not with
respect to the Warrants, given the exercise price thereof
represents a premium to the market price of the Class B Shares) as
set out in Section 607(i) of the TSX Company Manual.
With the permission of the TSX, the Company intends to obtain
shareholder approval for the completion of the Private Placement by
way of written consents in lieu of a meeting pursuant to Section
604(d) of the TSX Company Manual. The TSX has required that
Gibraltar & Company, Inc. and
its affiliates (collectively, "Gibraltar") and Luigi Fraquelli, Valerie
Sorbie, Camillo di Prata,
Eric Graveline and Javier San Juan (collectively, the "Insider
Participants") be excluded from any shareholder vote or consent
resolution in respect of the Private Placement. Accordingly,
Gibraltar's and the Insider
Participants' Shares (representing an aggregate of approximately
14,402,465 Shares, or approximately 43.93% of the aggregate issued
and outstanding Shares on a non-diluted basis as of the date
hereof) will be excluded from the aggregate total of the Company's
issued and outstanding Shares and the Company will seek to have
shareholders representing a majority of its remaining issued and
outstanding Shares vote in favour of completing the Private
Placement.
Gibraltar currently
beneficially owns, controls or directs, directly or indirectly,
approximately 10,838,786 Shares, or approximately 33.06% of the
aggregate issued and outstanding Shares on a non-diluted basis as
of the date hereof. Gibraltar is
expected to acquire up to approximately 8,000,000 Units under the
Private Placement, representing approximately 13.33% of the
60,000,000 Units issuable pursuant to the Private Placement. Upon
closing of the Private Placement, Gibraltar is expected to beneficially own,
control or direct, directly or indirectly, approximately 18,838,786
Shares and 2,000,000 Warrants, representing approximately 20.30% of
the aggregate issued and outstanding Shares on a non-diluted basis
and approximately 21.99% of the aggregate issued and outstanding
Shares on a partially-diluted basis, assuming the Private Placement
is fully subscribed and assuming exercise of the Agent(s)' Option
in full.
Eric Graveline, a director of the
Company, currently beneficially owns, controls or directs, directly
or indirectly, approximately 2,657,393 Shares, or approximately
8.11% of the aggregate issued and outstanding Shares on a
non-diluted basis as of the date hereof. Eric Graveline is expected to acquire up to
approximately 1,600,000 Units under the Private Placement,
representing approximately 2.67% of the 60,000,000 Units issuable
pursuant to the Private Placement. Upon closing of the Private
Placement, Eric Graveline is
expected to beneficially own, control or direct, directly or
indirectly, approximately 4,257,393 Shares and 400,000 Warrants,
representing approximately 4.59% of the aggregate issued and
outstanding Shares on a non-diluted basis and approximately 5.00%
of the aggregate issued and outstanding Shares on a
partially-diluted basis, assuming the Private Placement is fully
subscribed and assuming exercise of the Agent(s)' Option in
full.
Camillo di Prata, a director and
the interim chief executive officer of the Company and an insider
of Gibraltar, currently
beneficially owns, controls or directs, directly or indirectly,
approximately 453,143 Class B Shares, or approximately 1.38% of the
aggregate issued and outstanding Class B Shares on a non-diluted
basis as of the date hereof. Camillo di
Prata is expected to acquire up to approximately 6,600,000
Units under the Private Placement, representing approximately
11.00% of the 60,000,000 Units issuable pursuant to the Private
Placement. Upon closing of the Private Placement, Camillo di Prata is expected to beneficially
own, control or direct, directly or indirectly, approximately
7,053,143 Shares and 1,650,000 Warrants, representing approximately
7.60% of the aggregate issued and outstanding Shares on a
non-diluted basis and approximately 9.22% of the aggregate issued
and outstanding Shares on a partially-diluted basis, assuming the
Private Placement is fully subscribed and assuming exercise of the
Agent(s)' Option in full.
Valerie Sorbie, a director and the chair of the Company and
an insider of Gibraltar, currently
beneficially owns, controls or directs, directly or indirectly,
approximately 453,143 Shares. or approximately 1.38% of the
aggregate issued and outstanding Shares on a non-diluted basis as
of the date hereof. Valerie Sorbie
is expected to acquire up to approximately 2,160,000 Units under
the Private Placement, representing approximately 3.60% of the
60,000,000 Units issuable pursuant to the Private Placement. Upon
closing of the Private Placement, Valerie
Sorbie is expected to beneficially own, control or direct,
directly or indirectly, approximately 2,613,143 Shares and 540,000
Warrants, representing approximately 2.82% of the aggregate issued
and outstanding Shares on a non-diluted basis and approximately
3.39% of the aggregate issued and outstanding Shares on a
partially-diluted basis, assuming the Private Placement is fully
subscribed and assuming exercise of the Agent(s)' Option in
full.
Javier San Juan, a director of
the Company, does not currently own, control or direct, directly or
indirectly, any Shares as of the date hereof. Javier San Juan is expected to acquire up to
approximately 1,200,000 Units under the Private Placement,
representing approximately 2.00% of the 60,000,000 Units issuable
pursuant to the Private Placement. Upon closing of the Private
Placement, Javier San Juan is
expected to beneficially own, control or direct, directly or
indirectly, approximately 1,200,000 Shares and 300,000 Warrants,
representing approximately 1.29% of the aggregate issued and
outstanding Shares on a non-diluted basis and approximately 1.61%
of the aggregate issued and outstanding Shares on a
partially-diluted basis, assuming the Private Placement is fully
subscribed and assuming exercise of the Agent(s)' Option in
full.
Luigi Fraquelli, an insider of
Gibraltar, does not currently own,
control or direct, directly or indirectly, any Shares as of the
date hereof. Luigi Fraquelli is
expected to acquire up to approximately 200,000 Units under the
Private Placement, representing approximately 0.33% of the
60,000,000 Units issuable pursuant to the Private Placement. Upon
closing of the Private Placement, Luigi
Fraquelli is expected to beneficially own, control or
direct, directly or indirectly, approximately 200,000 Shares and
50,000 Warrants, representing approximately 0.22% of the aggregate
issued and outstanding Shares on a non-diluted basis and
approximately 0.27% of the aggregate issued and outstanding Shares
on a partially-diluted basis, assuming the Private Placement is
fully subscribed and assuming exercise of the Agent(s)' Option in
full.
The Company currently has 32,783,155 issued and outstanding
Shares as of the date hereof. Pursuant to the Private Placement,
the Company will issue up to 60,000,000 Units, comprised of
60,000,000 Shares and 15,000,000 Warrants (exercisable into
15,000,000 Shares) and up to 3,600,000 Broker Warrants (exercisable
into 3,600,000 Shares and 900,000 Warrants which are further
exercisable into 900,000 Shares), which represents approximately
183.0% of the aggregate issued and outstanding Shares on a
non-diluted basis and 242.5% of the aggregate issued and
outstanding shares, assuming exercise of the Warrants and Broker
Warrants, as of the date hereof. Following completion of the
Private Placement, the Company will have 92,783,155 issued and
outstanding Shares (on a non-diluted basis), assuming the Private
Placement is fully subscribed and assuming exercise of the
Agent(s)' Option in full.
Exemptions under MI 61-101
As Gibraltar and the Insider
Participants are insiders of the Company, the Private Placement
constitutes a related party transaction under Multilateral
Instrument 61-101 – Protection of Minority Security Holders in
Special Investments (MI 61-101). The Company is relying on the
exemption from the formal valuation requirement in Section 5.5(g)
of MI 61-101 and the exemption from the minority approval
requirement in Section 5.7(1)(e) of MI 61-101 based on the board of
directors of the Company, acting in good faith, having determined,
and at least two-thirds of the Company's independent directors,
acting in good faith, having determined, that the Company is in
serious financial difficulty with limited alternatives, that the
Private Placement is designed to improve the Company's financial
position, that the terms of the Private Placement are reasonable in
the Company's circumstances, that the immediacy of the Company's
need for financing through the Private Placement does not afford it
sufficient time to hold a shareholders' meeting and that the
Private Placement is fair to, and in the best interests of, the
shareholders of the Company. The Company anticipates it will file a
material change report less than 21 days before the closing of the
Private Placement. This shorter period is reasonable and necessary
in the circumstances as the Company wants to complete the Private
Placement as expeditiously as possible given the immediacy of the
Company's need for financing.
The Private Placement was considered and unanimously approved by
the board of directors of the Company. There was no materially
contrary view or abstention by any director approving the Private
Placement.
The only entity or person who is expected (to the knowledge of
the Company) to own or exercise control and direction over more
than 10% of the issued and outstanding Shares upon completion of
the Private Placement, is Gibraltar, which is currently expected to then
exercise control and direction over approximately 20.30% of the
outstanding Shares (on a non-diluted basis and assuming both that
the Private Placement is fully subscribed and the exercise of the
Agent(s)' Option in full). Information regarding the effect of the
Private Placement on the share holdings of Gibraltar and the Insider Participants is
provided above.
Purpose and Timeline of the Financing
The net proceeds of the Private Placement shall be used to fund
the execution of LXR's transformation to a digital-first
omni-channel model as announced on September
3, 2020. The proceeds of the offering shall be used by the
Company to accelerate the growth of its e-commerce initiatives,
which include expansion of the e-commerce team and increased
digital marketing spend, and for general working capital
purposes.
Closing of the Private Placement is subject to receipt of all
necessary corporate and regulatory approvals, including the
approval of the Toronto Stock Exchange and is anticipated to occur
on or about December 23,
2020.
The securities issued in connection with the Private Placement
will be subject to a statutory hold period of four months plus a
day from the date of issuance in accordance with applicable
securities legislation. The Warrants will not be listed on any
exchange.
About LXR
LXR is a socially responsible, digital-first omni-channel
retailer of branded vintage luxury handbags and other personal
accessories. It curates, sources and authenticates high-quality,
pre-owned products from iconic brands such as Hermès, Louis Vuitton, Gucci, Prada and Chanel and sells
them at attractive prices through its e-commerce website,
www.lxrco.com, as well as the online platforms of its partners and
online vintage-focused marketplaces across North America. The Company's omni-channel
model is also supported by retail 'shop-in-shop' experience centers
and by wholesale activities.
Caution Regarding Forward-Looking Statements
Certain statements in this press release are prospective in
nature and constitute forward-looking information and/or
forward-looking statements within the meaning of applicable
securities laws (collectively, "forward-looking
statements"). Forward-looking statements generally, but not
always, can be identified by the use of forward-looking terminology
such as "outlook", "objective", "may", "could", "would", "will",
"expect", "intend", "estimate", "forecasts", "project", "seek",
"anticipate", "believes", "should", "plans" or "continue", or
similar expressions suggesting future outcomes or events and the
negative of any of these terms. Forward-looking statements in this
news release include, but are not limited to, statements regarding
the Company's intended use of proceeds from the Private Placement,
the expected closing date of the Private Placement, the expected
benefits of the Private Placement on the Company's financial
situation and the successful achievement of the Company's strategic
plan or components thereof. Forward-looking statements reflect
management's current beliefs, expectations and assumptions and are
based on information currently available to management, which
includes assumptions about management's historical experience,
perception of trends and current business conditions, expected
future developments and other factors which management considers
appropriate. With respect to the forward-looking statements
included in this press release, management has made certain
assumptions with respect to, among other things, the Company's
ability to meet its future objectives and strategies, the Company's
ability to achieve its future projects and plans and that such
projects and plans will proceed as anticipated. As well as
assumptions concerning the satisfaction of all conditions of
closing to the Private Placement, including receipt of all
necessary regulatory and stock exchange approvals, and the
successful completion of the Private Placement within the
anticipated timeframe, general economic and market growth rates,
currency exchange and interest rates and competitive intensity.
Readers are cautioned not to place undue reliance on
forward-looking statements, as there can be no assurance that the
future circumstances, outcomes or results anticipated or implied by
such forward-looking statements will occur or that plans,
intentions or expectations upon which the forward-looking
statements are based will occur.
All forward-looking statements included in and incorporated into
this press release are qualified by these cautionary statements.
Unless otherwise indicated, the forward-looking statements
contained herein are made as of the date of this press release, and
except as required by applicable law, the Company does not
undertake any obligation to publicly update or revise any
forward-looking statement, whether as a result of new information,
future events or otherwise.
Readers are cautioned that the actual results achieved may vary
from the information provided herein and that such variations may
be material. Consequently, there are no representations by LXRandCo
that actual results achieved will be the same in whole or in part
as those set out in the forward-looking statements.
SOURCE LXRandCo, Inc.