REGINA, SK, Dec. 14, 2020 /CNW/ - Input Capital Corp. (TSXV:
INP) (US: INPCF) ("Input" or the "Company") is
pleased to announce that it has today entered into a binding share
purchase agreement (the "Purchase Agreement") with SRG
Security Resource Group Inc. ("SRG") and all of the common
shareholders of SRG ("SRG Shareholders"), whereby Input has
agreed to acquire all of the issued and outstanding common shares
("SRG Shares") from the SRG Shareholders on the terms and
subject to the conditions set out in the Purchase Agreement (the
"Acquisition"). Upon completion of the Acquisition, which is
expected to close in or around February
2021, SRG will become a wholly-owned subsidiary of the
Company.
SRG is a privately-held, market-leading Canadian provider of
world-class Cyber Security and physical Protective Security
Services. Founded in 1996, most of SRG's employees are located in
Western Canada, but solutions and
services are provided to organizations across the country. SRG
clients include federal and provincial governments, Crown
corporations, and many high profile corporate and public sector
clients such as hospitals, airports, utility companies and police
forces. More information is available on SRG's website at
https://securityresourcegroup.com.
As previously announced, Input will continue to operate its
existing agriculture operations for the foreseeable future. The
average remaining term of Input's streaming contracts with its many
farm clients is 2-3 years. With canola prices nearing all-time
highs, Input believes that it has an excellent opportunity to
maximize the value of its assets as the Company repatriates capital
from the agriculture sector over the remaining life of these
contracts. This is expected to put Input in an excellent financial
position to back SRG's anticipated growth strategy in the security
sector.
Doug Emsley, Chairman & CEO
of Input, restated his earlier comments: "The SRG security platform
represents a unique opportunity for the Company to acquire a
24-year-old, profitable, high-performing business that is extremely
well-positioned for its next stage of growth. By marrying Input's
very strong balance sheet to SRG's growth opportunities, we see an
opportunity to create a thriving player in the cyber and physical
security services business. SRG's founders have been in the
security business since 1987. The entire SRG management team is
expected to remain with the company."
Acquisition Terms
Pursuant to the Purchase Agreement, Input will acquire all the
SRG Shares for a total purchase price of approximately C$19,900,000 (the "Purchase Price"), as
adjusted on a dollar-for-dollar basis for positive or negative net
working capital of SRG. Half of the Purchase Price will be
satisfied by the issuance of 8,883,930 common shares of Input
("Input Shares") at a deemed value of C$1.12 per Input Share for an approximate total
value of C$9,950,000. The remaining
50% of the Purchase Price will be paid in cash. Any closing net
working capital adjustments to the Purchase Price will be made only
in cash.
The Input Shares to be issued pursuant to the Acquisition
represent approximately 16.74% of the issued and outstanding Input
Shares as of November 30, 2020.
The new Input Shares to be issued to SRG Shareholders pursuant
to the Acquisition will be subject to a statutory hold period
expiring 4 months and 1 day from the date of issuance. In addition,
the SRG Shareholders have agreed to lock-up terms in favour of the
Company restricting their ability to transfer their Input Shares
until the date that is 6 months following the closing of the
Acquisition.
The Acquisition is subject to TSX Venture Exchange
("TSXV") approval and other typical conditions precedent
including:
a) SRG having no closing
debt, except current liabilities calculated within the net working
capital adjustment;
b) 100% of the SRG
Shareholders will have signed the Purchase Agreement or joinder
agreements agreeing to be bound by the Purchase Agreement;
c) compliance by the parties
to the Purchase Agreement with all covenants and agreements in such
agreement;
d) the representations and
warranties of the parties to the Purchase Agreement being true and
correct at closing;
e) receipt of all regulatory
approvals, including approval of the TSXV;
f) there being no material
adverse change with respect to SRG or Input; and
g) other customary
conditions precedent set forth in the Purchase Agreement.
The Purchase Agreement also contains customary representations,
warranties and covenants by the parties thereto.
Assuming all of the conditions in the Purchase Agreement are
satisfied or waived, including approval of the TSXV, the
Acquisition is expected to close in or around February 2021.
The full text of the Purchase Agreement may be found under
Input's issuer profile at www.sedar.com.
Independent Committee
Doug Emsley, Chairman of the
Board, President and Chief Executive Officer of Input and a holder
of 21.95% of the issued and outstanding Input Shares, is also the
chairman of the board and chief executive officer of SRG and an SRG
Shareholder holding approximately 19.3% of the outstanding SRG
Shares (on a fully diluted basis, assuming the exercise of all
outstanding SRG options). Mr. Emsley is a "related party" to Input
under Multilateral Instrument 61-101 Protection of Minority
Security Holders in Special Transactions ("MI 61-101")
and a "Non-Arm's Length Party" under applicable TSXV policies. As a
result, the Acquisition is a "related party transaction" under MI
61-101 insofar as it relates to Mr. Emsley but is exempt from the
formal valuation and minority approval requirements because the
fair market value of the consideration payable to Mr. Emsley under
the Purchase Agreement will not exceed 25% of Input's market
capitalization, as determined under MI 61-101.
Because Mr. Emsley is a related party, the Company formed a
special committee of independent directors (the "Independent
Committee") consisting of David
Brown, C.M., Q.C., David
Laidley, FCPA, FCA, and Dr. Lorne
Hepworth, to consider and oversee the Acquisition and make a
recommendation to the board of directors of Input whether the
proposed acquisition of the SRG Shares would be in the best
interests of the Company and its shareholders. In the case of the
proposed acquisition, the Independent Committee was charged with
evaluating the proposed transaction and possible alternatives. In
that connection, the Independent Committee retained Davies Ward
Phillips & Vineberg LLP as its independent legal advisor and
MNP LLP as its independent financial advisor.
Following its review of the proposed Acquisition, which included
financial analysis and advice by MNP to the Independent Committee,
the Independent Committee recommended to the board of directors of
Input that the board approve the Acquisition and authorize the
Company to enter into the Purchase Agreement to acquire the SRG
Shares on the terms and subject to the conditions therein. The
Input board has unanimously approved the Company proceeding with
the Acquisition and the entering into of the Purchase Agreement.
Mr. Emsley declared his interest and abstained from voting on the
proposed Acquisition.
Additional information about the Acquisition may be found in a
Material Change Report that has been filed under Input's issuer
profile at www.sedar.com.
ABOUT INPUT
Input is primarily an agriculture commodity streaming company
providing several flexible and competitive forms of financing which
help western Canadian farmers solve working capital, mortgage
finance and canola marketing challenges and improve the financial
position of their farms. As of May
2019, Input postponed capital deployment into new streaming
contracts while the Company explores new profitable business
opportunities to invest determined through Input's strategic
alternatives process. For more information, please visit
www.inputcapital.com.
Forward Looking Statements
This release includes forward-looking statements regarding
Input and its business. Such statements are based on the current
expectations and views of future events of Input's management. In
some cases the forward-looking statements can be identified by
words or phrases such as "may", "will", "expect", "plan",
"anticipate", "intend", "potential", "estimate", "believe" or the
negative of these terms, or other similar expressions intended to
identify forward-looking statements. The forward-looking events and
circumstances discussed in this release may not occur and could
differ materially as a result of known and unknown risk factors and
uncertainties affecting Input, including risks regarding the
agricultural industry, economic factors and the equity markets
generally, the Company's inability to consummate the acquisition of
SRG, the anticipated timing and completion of the Acquisition,
non-satisfaction of the conditions to the Acquisition (including
the approval of the TSX Venture Exchange), risks associated with
the anticipated benefits of the Acquisition to Input and its
shareholders, uncertainties concerning the Company's future plans
and intentions with respect to its business, risks and
uncertainties relating to Input's and SRG's businesses, and many
other factors beyond the control of Input (including the ongoing
COVID-19 pandemic). No forward-looking statement can be guaranteed.
Forward-looking statements and information by their nature are
based on assumptions and involve known and unknown risks,
uncertainties and other factors which may cause our actual results,
performance or achievements, or industry results, to be materially
different from any future results, performance or achievements
expressed or implied by such forward-looking statement or
information. Accordingly, readers should not place undue reliance
on any forward-looking statements or information. Except as
required by applicable securities laws, forward-looking statements
speak only as of the date on which they are made and Input
undertakes no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information,
future events, or otherwise.
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.
SOURCE Input Capital Corp.