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MONTREAL, May 23, 2024
/CNW/ - UpStart Investments Inc. (TSXV: UPT.P) (the
"Corporation" or "UpStart"), is pleased to announce
that it has entered into a binding letter of intent with
Megawattage, LLC ("Megawattage"), a limited liability
company existing under the laws of the State of Florida, dated May 21, 2024 (the "LOI"), pursuant to
which UpStart will acquire all of the issued and outstanding
securities and securities convertible into securities of
Megawattage (the "Megawattage Securities") (the
"Transaction"). It is intended that the Transaction will be
an arm's length "Qualifying Transaction" of UpStart, as such term
is defined in Policy 2.4 – Capital Pool Companies of the
Corporate Finance Manual ("Policy 2.4") of the TSX
Venture Exchange ("TSXV").
About Megawattage LLC
Megawattage, founded in 2006, is an industry leader servicing
emergency power needs within South
Florida. Their blue-chip clients include corporations,
government at the federal, state, and municipal levels, hospitals,
luxury condominiums, cold storage facilities, and many others
within the United States. The
Company's turnkey rental fleet is designed for mission-critical and
institutional clients with a large inventory of generators ranging
in power capacity from 20KW – 3000KW. Megawattage business units
are comprised of maintenance contracts, services, generator
rentals, and disaster relief. The Company extends services
throughout the continental U.S. and areas such as Guam, Hawaii,
Puerto Rico, and the U.S. Virgin Islands. For more information,
visit
www.megawattage.com.
Transaction Summary
The parties intend to complete the Transaction by way of a share
exchange, amalgamation, arrangement, or other similarly structured
transaction to be determined, having regard to relevant tax,
securities and other factors to form the resulting issuer from the
Transaction (the "Resulting Issuer"). Following completion
of the Transaction, the parties intend for the Resulting Issuer to
continue to list its common shares (after giving effect to the
Consolidation and Name Change, as defined below) on the TSXV. It is
intended that the Resulting Issuer will be listed on the TSXV as a
Tier 1 Industrial Issuer upon completion of the Transaction.
Pursuant to the Transaction, UpStart will acquire all
outstanding Megawattage Securities at a valuation of CDN$16,320,000 (prior to giving effect to the
Concurrent Financing and Bridge Financing, as defined below), and a
deemed valuation of UpStart (prior to giving effect to the
Concurrent Financing) of CDN $1,046,127. As of the date hereof, Megawattage
has one hundred (100) membership units outstanding (each, a
"Target Membership Unit"). Pursuant to the LOI, the
parties intend that each membership unit will be exchanged for
562,759.62 common shares of the Resulting Issuer (the "Exchange
Ratio"), the Exchange Ratio being subject to adjustment to
comply with Policy 2.1 – Initial Listing Requirements of the
Corporate Financial Manual of the TSXV.
UpStart Consolidation
Prior to closing of the Transaction ("Closing"), UpStart
intends to undertake a consolidation of the common shares of
UpStart (each, an "UpStart Share") on a 1.5:1 basis (the
"Consolidation"), resulting in one (1) UpStart Share
outstanding following the Consolidation for each one and one-half
(1 ½) UpStart Share outstanding prior to the Consolidation.
Additionally, prior to Closing, UpStart shall change its name to
such name as determined by Megawattage, in its sole discretion, in
compliance with applicable law and as may be acceptable to the TSXV
and a corresponding change shall be made to its trading symbol, as
applicable (the "Name Change").
UpStart and Megawattage intend to enter into a definitive
agreement (the "Definitive Agreement") evidencing the
Transaction which shall contain appropriate terms and conditions,
including such reasonable representations and warranties in
connection with the Transaction as are customary in comparable
circumstances as may be agreed to and in a form satisfactory to
both parties.
Finders' Fees
Subject to any requisite approval of the TSXV, upon Closing, an
aggregate of $848,500 will be paid to
arm's length finders, which shall be payable and satisfied by the
issuance of common shares of the Resulting Issuer at the price per
security equal to that of the Concurrent Financing (as defined
below).
Concurrent Financing
In connection with the Transaction, the parties intend for
UpStart to complete a non-brokered private placement offering (the
"Concurrent Financing") of UpStart Shares (each, an
"Offered Security") of not less than CDN$4,000,000, subject to the rules of the TSXV
applicable to the Transaction, at a price per Offered Security of
CDN$0.29 (after giving effect to the
Consolidation), or such other price as is mutually agreed upon by
UpStart and Megawattage, acting reasonably. It is expected that the
Concurrent Financing will be conducted as a subscription receipt
offering, or such other structure as the parties deem to be
necessary or advisable. UpStart intends to use the net proceeds of
the Concurrent Financing to fund geographic expansion and potential
acquisitions of the Resulting Issuer. A finder's fee may be paid to
arm's length finders in connection with the Concurrent
Financing.
Bridge Financing
Prior to the closing of the Concurrent Financing, if required
and subject to its discretion, UpStart intends to complete an
equity private placement bridge financing of a maximum of
CDN$250,000 (the "Bridge
Financing"). The price per UpStart Share sold pursuant to the
Bridge Financing shall be a minimum of CDN$0.2175 (after giving effect to the
Consolidation). Subject to the closing of the Concurrent Financing
and TSXV acceptance, up to fifty percent (50%) of the net proceeds
of the Bridge Financing may, at the option of Megawattage, be
advanced by UpStart to Megawattage as a secured loan, bearing an
interest rate of five percent (5%) per annum and immediately
repayable to UpStart upon termination of the LOI or the Definitive
Agreement, as applicable. UpStart intends to use the net proceeds
of the Bridge Financing to fund the Transaction. Megawattage
intends to use the proceeds of this advance to fund its expenses
relating to the Transaction.
Principals of the Resulting Issuer
The board of directors of the Resulting Issuer immediately
following Closing shall consist of not more than five (5) persons,
two (2) of whom shall be comprised of persons chosen by UpStart,
and three (3) of whom shall be determined at the sole discretion of
Megawattage. Details regarding the anticipated directors and
officers of the Resulting Issuer will be included in a subsequent
release.
General Information
Shareholder approval is not required with respect to the
Transaction under the rules of the TSXV. However, the structure of
the Transaction has not yet been finalized so shareholder approval
under corporate law may be required and a meeting of shareholders
of UpStart is expected to be held prior to the closing of the
Transaction to approve certain matters (including the Consolidation
and the Name Change). Trading in the UpStart Shares has been halted
and is not expected to resume until the Transaction is completed or
until the TSXV receives the requisite documentation to resume
trading.
Additional information concerning the Transaction, UpStart,
Megawattage and the Resulting Issuer, including financial
information respecting UpStart, further details regarding the
Concurrent Financing, the names and backgrounds of all persons who
will constitute insiders of the Resulting Issuer, and information
respecting sponsorship, if applicable, will be provided in a
subsequent news release and in UpStart's Filing Statement or
Information Circular, as applicable, to be filed in connection with
the Transaction and which will be available under UpStart's profile
on the System for Electronic Document Analysis and Retrieval
("SEDAR") at www.sedarplus.com.
UpStart intends to make an application for exemption from the
sponsorship requirements of Policy 2.4 in connection with the
Transaction; however, there is no assurance that the TSXV will
exempt UpStart from all or part of the applicable sponsorship
requirements.
About UpStart Investments
Inc.
UpStart is designated as a Capital Pool Company under Policy 2.4
of the TSXV. The Corporation has not commenced commercial
operations and has no assets other than cash. Until the completion
of a Qualifying Transaction, the Corporation will not carry on any
business other than the identification and evaluation of businesses
or assets with a view to completing a proposed Qualifying
Transaction. Any proposed Qualifying Transaction must be approved
by the TSXV and, in the case of a non-arm's length Qualifying
Transaction, must also receive majority approval of the minority
shareholders.
This news release does not constitute an offer to sell or a
solicitation of an offer to buy any securities in the United States. The securities have not
been and will not be registered under the United States Securities
Act of 1933, as amended (the "U.S. Securities Act"), or any state
securities laws, and may not be offered or sold within the United States or to U.S. Persons unless
registered under the U.S. Securities Act and applicable state
securities laws or an exemption from such registration is
available. "United States" and "U.S. Person" are as defined
in Regulation S under the U.S. Securities Act.
Completion of the Transaction is subject to a number of
conditions, including but not limited to, TSXV acceptance and if
applicable pursuant to TSXV requirements, majority of the minority
shareholder approval. Where applicable, 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 or filing statement to be prepared
in connection with the Transaction, any information released or
received with respect to the Transaction may not be accurate or
complete and should not be relied upon. Trading in the securities
of a capital pool company should be considered highly
speculative.
The information in this news release includes certain
information and statements about management's view of future
events, expectations, plans and prospects that constitute
forward-looking statements. These statements are based upon
assumptions that are subject to significant risks and
uncertainties. Because of these risks and uncertainties and as a
result of a variety of factors, the actual results, expectations,
achievements or performance may differ materially from those
anticipated and indicated by these forward-looking statements.
Forward-looking statements in this news release include, but are
not limited to, the completion of the Transaction and on the terms
described herein, the execution of the Definitive Agreement, the
completion of the proposed Concurrent Financing and the use of
proceeds therefrom, the completion of the proposed Bridge Financing
and the use of proceeds therefrom, the proposed directors and
officers of the Resulting Issuer, obtaining the appropriate
approvals required with respect to the Transaction, the completion
of the Consolidation, the completion of the Name Change,
shareholder and regulatory approvals, and future press releases and
disclosure. Any number of factors could cause actual results to
differ materially from these forward-looking statements as well as
future results. Although the Corporation believes that the
expectations reflected in forward-looking statements are
reasonable, it can give no assurances that the expectations of any
forward-looking statements will prove to be correct. Except as
required by law, the Corporation disclaims any intention and
assumes no obligation to update or revise any forward-looking
statements to reflect actual results, whether as a result of new
information, future events, changes in assumptions, changes in
factors affecting such forward-looking statements or
otherwise.
The TSX Venture Exchange Inc. has in no way passed upon the
merits of the proposed transaction and has neither approved nor
disapproved the contents of this press release. Neither the TSXV
nor its Regulation Services Provider (as that term is defined in
the policies of the TSXV) accepts responsibility for the adequacy
or accuracy of this release.
SOURCE UpStart Investments Inc.