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MONTREAL, Dec. 23, 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 announce the closing of the brokered
private placement of units previously announced on December 7, 2020 (the "Private
Placement"), whereby the Company raised gross proceeds of
$7.5 million through the sale of
60,000,000 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 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 entitles 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 the Shares (based on
the five-day VWAP of the Shares for the five trading days ended
December 4, 2020).
Cormark Securities Inc., acted as lead agent in the Private
Placement on behalf of a syndicate of agents (the "Agents").
In consideration of their services in connection with the Private
Placement, the Company paid the Agents, a cash fee (the "Agency
Fee") of 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 paid on the gross
proceeds from Gibraltar &
Company, Inc. and the Insider Participants was 3.0%. In addition to
the Agency Fee, the Company also issued to the Agents 2,414,400
broker warrants of the Company (the "Broker Warrants"),
which will expire 24 months from the Closing Date, to purchase
2,414,400 additional Units at the Unit Price. The number of Units
purchasable through the exercise of the Broker Warrants is equal to
6.0% of the number of Units sold in the Private Placement excluding
the Units sold to Gibraltar &
Company, Inc. and the Insider Participants.
Shareholder Approval
The Private Placement
required 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 a
private placement (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 was 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 Shares, but not with respect to the Warrants, given the
exercise price thereof represents a premium to the market price of
the Shares) as set out in Section 607(i) of the TSX Company
Manual.
With the permission of the TSX, the Company obtained shareholder
approval for the completion of the Private Placement by way of
written consents, representing a majority of the issued and
outstanding Shares of those shareholders permitted to vote by the
TSX, in lieu of a meeting pursuant to Section 604(d) of the TSX
Company Manual. The TSX required that Gibraltar & Company, Inc. and its
affiliates (collectively, "Gibraltar") and the Insider Participants
be excluded from the consent resolution in respect of the Private
Placement. Accordingly, the Shares held by Gibraltar and the Insider Participants
(representing an aggregate of approximately 14,402,215 Shares, or
approximately 43.93% of the aggregate issued and outstanding Shares
on a non-diluted basis as of the date hereof) were excluded from
the aggregate total of the Company's issued and outstanding Shares
for the purposes of obtaining majority consent via the consent
resolution.
Prior to the Private Placement, Gibraltar beneficially owned, controlled or
directed, directly or indirectly, approximately 10,838,786 Shares,
or approximately 33.06% of the aggregate issued and outstanding
Shares on a non-diluted basis. Gibraltar acquired 8,000,000 Units under the
Private Placement, representing approximately 13.33% of the
60,000,000 Units issued pursuant to the Private Placement.
Upon closing of the Private Placement, Gibraltar beneficially owns, controls or
directs, 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.
Prior to the Private Placement, Eric
Graveline, a director of the Company, beneficially owned,
controlled or directed, directly or indirectly, approximately
2,657,143 Shares, or approximately 8.11% of the aggregate
issued and outstanding Shares on a non-diluted basis. Eric Graveline acquired 1,600,000 Units under
the Private Placement, representing approximately 2.67% of the
60,000,000 Units issued pursuant to the Private Placement.
Upon closing of the Private Placement, Eric
Graveline beneficially owns, controls or directs, directly
or indirectly, approximately 4,257,143 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.
Prior to the Private Placement, Camillo
di Prata, a director and the interim chief executive officer
of the Company and an insider of Gibraltar, beneficially
owned, controlled or directed, directly or indirectly,
approximately 453,143 Shares, or approximately 1.38% of the
aggregate issued and outstanding Shares on a non-diluted
basis. Camillo di Prata acquired 6,600,000 Units under the
Private Placement, representing approximately 11.00% of the
60,000,000 Units issued pursuant to the Private Placement.
Upon closing of the Private Placement, Camillo di Prata beneficially owns, controls or
directs, 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.
Prior to the Private Placement, Valerie Sorbie, a director
and the chair of the Company and an insider of
Gibraltar, beneficially owned, controlled or directed,
directly or indirectly, approximately 453,143 Shares or
approximately 1.38% of the aggregate issued and outstanding Shares
on a non-diluted basis. Valerie
Sorbie acquired 2,160,000 Units under the Private Placement,
representing approximately 3.60% of the 60,000,000 Units
issued pursuant to the Private Placement. Upon closing of the
Private Placement, Valerie Sorbie
beneficially owns, controls or directs, 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 3.38% of the aggregate
issued and outstanding Shares on a partially-diluted basis.
Prior to the Private Placement, Javier
San Juan, a director of the Company, did not own, control or
direct, directly or indirectly, any Shares of the Company.
Javier San Juan acquired 1,200,000
Units under the Private Placement, representing approximately 2.00%
of the 60,000,000 Units issued pursuant to the Private
Placement. Upon closing of the Private Placement, Javier San Juan beneficially owns, controls or
directs, 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.
Prior to the Private Placement, Luigi
Fraquelli, an insider of Gibraltar, did not own, control or direct,
directly or indirectly, any Shares of the Company. Luigi Fraquelli acquired 200,000 Units under the
Private Placement, representing approximately 0.33% of the
60,000,000 Units issued pursuant to the Private Placement. Upon
closing of the Private Placement, Luigi
Fraquelli beneficially owns, controls or directs, 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.
Prior to the Private Placement, the Company had 32,783,155
issued and outstanding on a non-diluted basis. Pursuant to the
Private Placement, the Company has issued up to 78,018,000 new
Shares, comprised of 60,000,000 Shares, plus 15,000,000 Warrants
(exercisable into 15,000,000 Shares at $0.175/share) and 2,414,400 Broker Warrants
(exercisable into 2,414,400 Shares and 603,600 Warrants which are
further exercisable into 603,600 Shares at $0.175/share). This represents approximately 183%
of the aggregate issued and outstanding Shares on a non-diluted
basis and approximately 238% 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 has 92,783,155 issued and
outstanding Shares on a non-diluted basis.
Exemptions under MI 61-101
As Gibraltar and the Insider Participants are
insiders of the Company, the Private Placement constituted a
related party transaction under Multilateral Instrument 61-101 –
Protection of Minority Security Holders in Special
Investments (MI 61-101). The Company relied 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, which throughout 2020
has faced significant challenges brought on by the coronavirus
(COVID-19) pandemic, is in serious financial difficulty with
limited alternatives, that the Private Placement was designed to
improve the Company's financial position, that the terms of the
Private Placement were reasonable in the Company's circumstances,
that the immediacy of the Company's need for financing through the
Private Placement did not afford it sufficient time to hold a
shareholders' meeting and that the Private Placement was fair to,
and in the best interests of, the shareholders of the Company. The
Company will file a material change report in connection with the
Private Placement. The Company was unable to issue a material
change report more than 21 days before closing the Private
Placement as it was reasonable and necessary to do so in the
circumstances as the Company wanted 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 contrary view
or abstention by any director approving the Private Placement.
The only entity or person who (to the knowledge of the Company)
owns or exercises control and direction over more than 10% of the
issued and outstanding Shares upon completion of the Private
Placement, is Gibraltar, which
currently exercises control and direction over approximately 20.30%
of the outstanding Shares on a non-diluted basis. 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.
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.
The Company will announce its fourth quarter financial results
for the three-month and twelve-month periods ending December 31, 2020 at the end of March 2021. The Company is planning to provide
preliminary fourth quarter revenue results for the three-month and
twelve-month periods ending December 31,
2020 in January 2021.
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 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 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.