TORONTO, April 28,
2023 /CNW/ - EMERGE Commerce Ltd. (TSXV: ECOM)
("EMERGE", or the "Company"), a diversified acquirer
and operator of niche e-commerce brands, announces that, further to
its news release dated April 3, 2023,
Emerge US Holdings LLC, a direct subsidiary of the Company, has
completed the sale of Battlbox LLC ("BattlBox") to
Battlbrands Holdings, Inc. (the "Buyer").
Pursuant to the sale of BattlBox (the "Transaction"),
EMERGE received cash consideration of US$6,008,666 on closing of the Transaction,
subject to certain distribution and debt adjustments, and the Buyer
assumed an aggregate of US$1,161,537
in outstanding liabilities.
EMERGE no longer has any deferred payment obligations owed to
former BattlBox Group shareholders in connection with its prior
acquisition of Battlbox.
No finder's fees were paid in connection with the
Transaction.
EMERGE plans to immediately utilize the majority of proceeds
from the transaction proceeds to pay down its senior credit
facility. Interest expense savings from debt repayment are expected
to be approximately C$1M
annually.
Ghassan Halazon, Founder and CEO of
EMERGE commented, "With the sale of BattlBox complete, we
plan to execute against our stated priorities of further debt
paydown to strengthen the balance sheet, driving organic growth,
extracting further operational efficiencies, and ultimately
improving EBITDA to cash flow conversion."
EMERGE originally acquired BattlBox Group in October 2021, which included both the BattlBox
and Carnivore Club brands. Carnivore Club is not included in the
transaction, and will remain an EMERGE brand, working closely with
truLOCAL, under the Meat / Grocery vertical.
Following the Transaction, EMERGE retains 7 brands across 4 main
verticals (Pets, Meat/ Grocery, Golf and Experiences) in
Canada and the U.S., namely
WholesalePet, truLOCAL, Carnivore Club, UnderPar, JustGolfStuff,
WagJag and BeRightBack. EMERGE's go-forward e-commerce
portfolio is expected to approach C$100M in Gross
Merchandise Sales(1) annually, and remain
profitable on an Adjusted EBITDA(1) basis.
BattlBox (excluding Carnivore Club) had sales of US$18.8M and a net loss of US$1.9M for the year ended December 31, 2022. As at December 31, 2022, BattlBox had total assets of
US$9.7M and liabilities of
US$2.2M.
Certain officers of BattlBox held a controlling interest in the
capital of the Buyer. Accordingly, the Transaction may be
considered a "related party transaction" under the provisions of
Multilateral Instrument 61- 101 – Protection of Minority
Security Holders in Special Transactions
("MI 61-101"). MI 61-101 requires the Company to
obtain a formal valuation and seek "minority approval" of the
Transaction by disinterested shareholders, unless exemptions are
available. The Company relied on the exemption from the requirement
to obtain a formal valuation under section 5.5(b) of MI 61-101
and the exemption from obtaining minority approval under section
5.7(e) of MI 61-101.
|
(1)
|
Non-GAAP Financial
Measure. Refer to section "Non-GAAP Financial Measures" below for
additional information.
|
|
|
About EMERGE
EMERGE is a diversified acquirer and
operator of profitable niche e-commerce brands across North America. Our marketplace and
subscription e-commerce properties provide our members with access
to pet products, meat/ grocery, golf and discounted experiences,
among other categories. EMERGE was named one
of Canada's Top Growing Companies by Globe and Mail in
2022 (and 2020), and one of the fastest growing companies
in Canada by the Startup 50 in 2020.
To learn more
visit https://www.emerge-commerce.com
Follow
EMERGE:
LinkedIn | Twitter | Instagram | Facebook
Cautionary notice
Neither TSX Venture Exchange nor
its Regulation Services Provider (as that term is defined in
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release.
Non-GAAP Measures
This press release makes
reference to certain non-GAAP measures. These non-GAAP measures are
not recognized measures under IFRS, do not have a standardized
meaning prescribed by IFRS and are therefore unlikely to be
comparable to similar measures presented by other companies.
Rather, these measures are provided as additional information to
complement those IFRS measures by providing a further understanding
of results of operations from management's perspective.
Accordingly, they should not be considered in isolation nor as a
substitute for analysis of the financial information of the Company
reported under IFRS. Gross Merchandise Sales ("GMS") and Adjusted
EBITDA should not be construed as alternatives to revenue or net
income/loss determined in accordance with IFRS. GMS and Adjusted
EBITDA do not have any standardized meaning under IFRS and
therefore may not be comparable to similar measures presented by
other issuers.
GMS as defined by management is the total dollar value of
customer purchases of goods and services, excluding applicable
taxes and net of discounts and refunds. Management believes GMS
provides a useful measure for the dollar volume of e-commerce
transactions made through our platforms and an indicator for our
business performance.
Adjusted EBITDA as defined by management means earnings
before interest and financing costs, income taxes, depreciation and
amortization, transaction costs, foreign exchange gains/losses,
discontinued operations, unrealized gains/losses on contingent
consideration and share-based compensation. Management believes
that Adjusted EBITDA is a useful measure because it provides
information about the operating and financial performance of EMERGE
and its ability to generate ongoing operating cash flow to fund
future working capital needs and fund future capital expenditures
or acquisitions.
Notice regarding forward-looking statements
This
press release may contain certain forward-looking information and
statements ("forward-looking information") within the meaning of
applicable Canadian securities legislation, that are not based on
historical fact, including, without limitation statements relating
to the expected results from the Transaction including the paydown
of outstanding debt, the results the Transaction may have on the
operations of the Company and its remaining assets, financial
figures that may be achieved by the Company and statements
containing the words "believes", "anticipates", "plans", "intends",
"will", "should", "expects", "continue", "estimate", "forecasts"
and other similar expressions. Readers are cautioned to not place
undue reliance on forward-looking information. Actual results and
developments may differ materially from those contemplated by these
statements. The Company undertakes no obligation to comment on
analyses, expectations or statements made by third-parties in
respect of the Company, its securities, or financial or operating
results (as applicable). Although the Company believes that the
expectations reflected in forward-looking information in this press
release are reasonable, such forward-looking information has been
based on expectations, factors and assumptions concerning future
events which may prove to be inaccurate and are subject to numerous
risks and uncertainties, certain of which are beyond the Company's
control, including risks related to the disposition of an operating
business by the Company, risks that the benefits derived from the
sale may not be as expected or that the Company may not see any
benefit from the sale, risks that each party to the agreement may
not satisfy its obligations or covenants, risks that the Company
may be subject to litigation as a result of the sale including
allegations of misrepresentation or breach of conditions or
covenants, as well as the risk factors discussed in the Company's
MD&A, and most recent Annual Information Form which are
available through SEDAR at www.sedar.com. The forward-looking
information contained in this press release are expressly qualified
by this cautionary statement and are made as of the date hereof.
The Company disclaims any intention and has no obligation or
responsibility, except as required by law, to update or revise any
forward-looking information, whether as a result of new
information, future events or otherwise.
On Behalf of the Board
Ghassan Halazon
Director, President, and CEO
SOURCE EMERGE Commerce Ltd.