MillenMin Ventures Inc. Announces Update to the Proposed Reverse Takeover Transaction Involving a Private Placement and Acquisition of a 49% Interest in a Cuban Golf Resort Development
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TORONTO, July 7, 2017 /CNW/ - MillenMin Ventures Inc. (TSX-V: MVM) announces an update to its proposed private placement offering of common shares and subscription receipts with Bellomonte Investments Company Limited and other investors as part of a proposed reverse takeover, which also involves an acquisition of Bellomonte Limited, which controls a 49% interest in Bellomonte S.A., a Cuban joint stock company that plans to construct, develop and operate a golf resort in Cuba.This proposed private placement offering and related transactions were previously announced by MillenMin in its news release issued on January 27, 2017 and further disclosed in detail in its filing statement dated April 12, 2017.A copy of such news release and filing statement is available on SEDAR at www.sedar.com.Unless otherwise defined herein, capitalized terms used herein shall have the meanings assigned to such terms in MillenMin's news release dated January 27, 2017.
Since announcing the Control Placement, MillenMin has been informed that one of the Four Investors would not be able to complete in a timely manner.As such, MillenMin intends to proceed with the Control Placement with BICL and the remaining three investors (the "Other Investors").The Control Placement will be reduced by 4,483,000 Common Shares and by 74,627,000 Subscription Receipts and the allocation between Common Shares and Subscription Receipts to be subscribed for by each of BICL and the Other Investors will be adjusted, such that an aggregate of 26,000,000 Common Shares and 241,919,000 Subscription Receipts are expected to be issued under the Control Placement for gross proceeds of US$1,972,000 and US$18,347,997, respectively.The investor who will no longer be participating in the Control Placement, or another replacement investor, may ultimately determine to invest in MillenMin securities at a later time prior to the completion of the Vend-in Transaction, although there is no assurance that any such subsequent investment will be made.
MillenMin and the Other Investors have amended the Letter Agreement to set out this revised Control Placement and, to comply with regulatory requirements with respect to working capital, BICL has agreed to extend the term of its $125,000 loan to MillenMin and to provide a new $1,500,000 loan facility to MillenMin for purposes of designing the golf resort in furtherance of the Vend-in Transaction.Each of the foregoing loans shall be for a term ending upon the earlier of: (a) the date of the completion of the Vend-in Transaction; or (b) the date that is 18 months after the date of the completion of the Control Placement.
Revised Control Placement
The Control Placement now consists of: (1) a private placement of 26,000,000 Common Shares at a price of $0.10 per Common Share, which is expected to be paid in US dollars, for gross proceeds of US$1,972,000, and (2) a private placement of 241,919,000 Subscription Receipts at a price of $0.10 per Subscription Receipt, which is also expected to be paid in US dollars, for gross proceeds of US$18,347,997.Each Subscription Receipt will continue to be automatically exchanged for one Common Share on satisfaction of the Escrow Release Conditions.All of the subscription proceeds from the private placement of Subscription Receipts will be held in escrow until the Escrow Release Conditions are satisfied.If the Escrow Release Conditions are not satisfied by 5:00 pm (Toronto time) on December 31, 2017, the subscription proceeds will be used to repurchase the Subscription Receipts for cancellation at a repurchase price per Subscription Receipt that is equal to the purchase price.As previously disclosed, the prices for the Common Shares and the Subscription Receipts are expected to be paid in US dollars based on an agreed exchange rate of one Canadian dollar for US$0.758437618.
Immediately on completion of the Control Placement, BICL and the Other Investors will together hold approximately 61.8% of the issued and outstanding Common Shares, with BICL holding approximately 49.2% of the issued and outstanding Common Shares and the Other Investors holding 2.8%, 3.9% and 5.9% of the issued and outstanding Common Shares.Two of the Other Investors are related and, together, they will control approximately 9.8% of the issued and outstanding Common Shares.
With 49.2% of the issued and outstanding Common Shares, BPHL, through its wholly-owned subsidiary, BICL, will be a Control Person.MillenMin expects to obtain shareholder approval for the new Control Person by the written consent of shareholders holding more than 50% of the issued shares.MillenMin is not required and does not intend to file an amended filing statement.Currently, none of BICL and the Other Investors beneficially owns any Common Shares.
Pursuant to the amended Letter Agreement, MillenMin and BICL have amended the loan agreement dated January 27, 2017 to extend the repayment date such that the $125,000 loaned by BICL to MillenMin is to be repaid on the earlier of (a) the date of the closing of the Vend-in Transaction or (b) the date that is 18 months after the date of the closing of the Control Placement.In addition, BICL will make available to MillenMin a loan facility of up to $1,500,000 on a non-interest bearing basis for the purpose of designing the golf resort in connection with the Vend-in Transaction, to be repaid on the earlier of (a) the date of the closing of the Vend-in Transaction or (b) the date that is 18 months after the date of the closing of the Control Placement.
On satisfaction of the Escrow Release Conditions (which include the completion of the Vend-in Transaction) and not including the subsequent investments by other investors or the proposed brokered private placement prior to the completion of the Vend-in Transaction, the Subscription Receipts will be exchanged for Common Shares such that BICL and the Other Investors will hold, in aggregate, approximately 97.5% of the issued and outstanding Common Shares, with BICL holding approximately 72.8% of the issued and outstanding Common Shares and the Other Investors holding 4.1%, 8.2% and 12.4% of the issued and outstanding Common Shares.Two of the Other Investors are related and, together, they will control approximately 20.6% of the issued and outstanding Common Shares, but are expected to, in fact, control less than 20% on completion of the subsequent investments by other investors and the proposed brokered private placement prior to the completion of the Vend-in Transaction and on satisfaction of the conditions for TSX Venture Exchange acceptance, without which shareholder approval would be required for any news Control Persons.
Interests of Insiders
The shareholdings of each current insider, promoter and control person of the Issuer, before and after the Control Placement, are set out below:
|
Insider, Promoter or Control Person of Issuer |
Common Shares Owned |
Common Shares Owned | ||||||
|
Number |
Percentage |
Number |
Percentage | |||||
|
MillenAsia Resource Inc.(1) |
4,000,000 |
24.9% |
4,000,000 |
9.5% | ||||
|
Shunyi Yao(1) |
1,200,000 |
7.5% |
1,200,000 |
2.9% | ||||
|
Yunkai Cai |
1,205,000 |
7.5% |
1,205,000 |
2.9% | ||||
|
Peiwei Ni |
400,000 |
2.5% |
400,000 |
1.0% | ||||
|
Fan Xu |
346,000 |
2.1% |
346,000 |
0.8% | ||||
|
John Paterson |
300,000 |
1.9% |
300,000 |
0.7% | ||||
|
Totals: |
7,451,000 |
46.3% |
7,451,000 |
17.7% | ||||
|
_______________ | |
|
Note: | |
|
(1) |
MillenAsia Resource Inc. is wholly-owned by Li Liu, who is the spouse of Shunyi Yao.MillenAsia Resource Inc. previously held warrants to purchase up to 1,500,000 Common Shares at an exercise price of $0.40 per Common Share, such warrants expired on May 24, 2017. |
Under the amended Letter Agreement, the completion of the Control Placement is conditional on all loans or indebtedness outstanding that have been made or incurred to any director, officer or shareholder, to any former director, officer or shareholder of MillenMin or to any Person not dealing at arm's length (as such term is construed under the Tax Act) with any of the foregoing will have been paid and satisfied, unless waived.All indebtedness and other obligations shown as owing by MillenMin to related parties in MillenMin's financial statements will have been paid and satisfied such that no amounts are owing to any director, officer or shareholder of MillenMin as at completion of the Control Placement, unless waived. As of February 28, 2017, the amount of all loans and indebtedness outstanding that have been made or incurred to any director, officer or shareholder, to any former director, officer or shareholder of the Issuer or to any Person not dealing at arm's length is approximately $103,150.
Pro Forma Consolidated Capitalization
The following table sets forth the pro forma share and loan capital of MillenMin, after giving effect to the Control Placement.
|
Designation of Security(1) |
Amount Authorized or |
Amount Outstanding After | ||
|
Common Shares |
An unlimited number of Common Shares |
42,100,000 Common Shares ($3,745,690)(2) | ||
|
Subscription Receipts(3) |
Up to 309,399,162 Subscription Receipts |
241,919,000 Subscription Receipts ($24,191,900)(2) |
|
_____________ | |
|
Notes: | |
|
(1) |
MillenMin had outstanding warrants held by a related party, MillenAsia Resource Inc., to purchase up to 1,500,000 Common Shares at an exercise price of $0.40 per Common Share that expired on May 24, 2017. |
|
(2) |
Under the Control Placement, the prices for the Common Shares and the Subscription Receipts are expected to be paid in US dollars based on an agreed exchange rate of one Canadian dollar for US$0.758437618.The 26,000,000 Common Shares to be issued at a price of $0.10 per share, is expected to be paid in US dollars, for gross proceeds of US$1,972,000, and the 241,919,000 Subscription Receipts at a price of $0.10 per subscription receipt, is also expected to be paid in US dollars, for gross proceeds of US$18,347,997. |
|
(3) |
Each Subscription Receipt will be exchanged for one Common Share on satisfaction of the Escrow Release Conditions.All of the subscription proceeds from the private placement of Subscription Receipts will be held in escrow until the Escrow Release Conditions are satisfied.If the Escrow Release Conditions are not satisfied by 5:00 pm (Toronto time) on December 31, 2017, the subscription proceeds will be used to repurchase the Subscription Receipts for cancellation at a repurchase price per Subscription Receipt that is equal to the purchase price. |
Fully-Diluted Share Capital
The following table sets forth the fully-diluted share capital of MillenMin after giving effect to the Control Placement:
|
Outstanding After Giving Effect | ||||
|
Designation of Security |
Amount |
Percentage | ||
|
Common Shares Issued(1) |
42,100,000 |
14.8% | ||
|
Common Shares reserved for issuance on exchange of Subscription Receipts |
241,919,000 |
85.2% | ||
|
Total Number of Common Shares (fully-diluted) |
284,019,000 |
100.0% | ||
|
_______________ | |
|
Note: | |
|
(1) |
Based on 26,000,000 Common Shares issued under the Control Placement and the 16,100,000 Common Shares currently issued. |
Available Funds and Principal Purposes
On completion of the Control Placement, MillenMin is expected to have funds available of approximately $2,527,362 based on a working capital deficiency as at May 31, 2017 of approximately $197,720 and gross proceeds from the private placement of Common Shares as part of the Control Placement of $2,600,000.The available funds do not include the gross proceeds of US$18,347,997 from the private placement of Subscription Receipts (to be held in escrow until satisfaction of the Escrow Release Conditions).
On completion of the Control Placement, MillenMin will use the funds available to further its business objectives.Specifically, MillenMin will use the funds available to it on the completion of the Control Placement over the next 12 months as follows:
|
Use of Proceeds |
Amount | |
|
Advisory fees and expenses for the Vend-in Transaction (including financial, legal and audit fees) |
$600,000 | |
|
Operating and administrative expenses of the Issuer's Canadian office(1) |
$1,200,000 | |
|
Establishment of Cuban representative office including related expenses(2) |
$600,000 | |
|
Total:(3)(4) |
$2,400,000 |
|
___________ | |
|
Notes: | |
|
(1) |
The operating and administrative expenses of the Canadian office are based on a cost of $100,000 per month. |
|
(2) |
The costs relating to the establishment of the Cuban representative office includes general expenses, as well as the expected travel and living costs for personnel in Cuba for twelve months. |
|
(3) |
Repayment of the $125,000 loan from BICL to MillenMin has been or will be extended to the earlier of (a) the date of the closing of the Vend-in Transaction or (b) the date that is 18 months after the date of the closing of the Control Placement. |
|
(4) |
BICL has made or will make available to MillenMin a loan facility of up to $1,500,000 on a non-interest bearing basis for payment of professional fees relating to the golf resort schematic design, repayment to be on the earlier of (a) the date of the closing of the Vend-in Transaction or (b) the date that is 18 months after the date of the closing of the Control Placement. |
There may be circumstances after the completion of the Control Placement that, for business reasons, a reallocation of funds may be necessary in order for MillenMin to achieve its business objectives.
Selected Pro Forma Financial Information
The following table sets out certain financial information for the Issuer as at February 28, 2017, as well as unaudited pro forma financial information for MillenMin, after giving effect to the Control Placement.
|
MillenMin(1) |
Adjustments |
Pro Forma(2) | |||
|
Cash |
$116,854 |
$2,462,000 |
$2,578,854 | ||
|
Total Assets |
$134,345 |
$2,462,000 |
$2,596,345 | ||
|
Total Liabilities |
$285,229 |
- |
$285,229 | ||
|
Shareholders' Equity |
$(150,884) |
$2,311,116 |
|
_____________ | |
|
Notes: | |
|
(1) |
Financial position of MillenMin is as of February 28, 2017. |
|
(2) |
Assumes net proceeds of $2,462,000 from the Control Placement after deduction of Control Placement expenses and other pro-forma adjustments. |
Update on Risk Factors
Risk factors relating to the Control Placement, relating to MillenMin before completion of the Vend-in Transaction, and relating to MillenMin after completion of the Vend-in Transaction, include, but are not limited to the risk factors set out in the filing statement dated as of April 12, 2017, a copy of which is available on SEDAR at www.sedar.com.In addition, there is a risk associated with the recently announced new United States government policy towards Cuba.
Risks associated with the new developments in the US government policy towards Cuba.
On June 16, 2017, the United States government announced changes to its policy towards Cuba that will reverse some of the changes previously made to loosen restrictions on American trade and travel with Cuba.The new American policy is expected to re-instate some restrictions, including prohibitions on transactions involving Cuba's military, intelligence and security services, and limit travel by Americans to Cuba.The policy changes are expected to be implemented by the United States Department of the Treasury's Office of Foreign Assets Control ("OFAC") under its Cuban Assets Control Regulations.These changes will not be effective until the regulations have been issued, which may take up to several months or longer.
The new American restrictions are expected to or will generally prohibit any transactions by persons subject to United States government jurisdiction involving certain entities that are controlled by, or act for, or on behalf of, the Cuban military.The United States Department of State will publish a list of Cuban military intelligence and security services entities.OFAC will then prohibit direct financial transactions by persons subject to United States government jurisdiction with entities on this list.
The new United States government policy towards Cuba also calls for a partial reversal of restrictions on travel to Cuba by persons subject to United States government jurisdiction, specifically for individual people-to-people travel.Individual people-to-people travel will no longer be authorized.Group travel for people-to-people exchanges and educational activities will remain permitted, but the group must maintain a full-time schedule of educational exchange activities and travelers must be accompanied by a representative of the organization that sponsors such exchanges.All travelers must keep accurate records to establish that their travel was for purposes permitted by the regulations.The people-to-people provision has been frequently used by Untied States travelers to visit Cuba.Going forward, in the absence of the individual people-to-people provision, there can be no assurance that the growth of visitor traffic from the United States to Cuba will continue in sufficient numbers.
If MillenMin, after the Vend-in Transaction, fails to address these incoming United States regulations and any subsequent changes, its business and results of operations may be negatively impacted.The new policy announcement and subsequent related regulations could also make it more difficult to attract and retain business partners, suppliers and contractors and may have an adverse effect on MillenMin's business, financial condition, and results of operations.The enhanced requirements, including detailed record keeping requirements, could decrease the flow of American tourists and have a material adverse effect on MillenMin's business, financial condition, and results of operations, after the Vend-in Transaction is completed.It is expected that MillenMin, after the Vend-in Transaction, will take reasonable precautions to protect its business, financial condition and operations from the impact of this new American policy towards Cuba.However, there can be no assurance that its efforts in this regard will be sufficient.
Trading Halt
Trading of the MillenMin shares has been halted on the TSX Venture Exchange and it is expected that the trading halt will continue until submissions to the TSX Venture Exchange for the Vend-in Transaction have been completed to the satisfaction of the TSX Venture Exchange or until it determines otherwise in its discretion.
Additional Information
Additional information about MillenMin is available to the public on SEDAR at www.sedar.com.
The information with respect to Bellomonte, BL, BICL and the BE Group in this news release has been provided by BICL.MillenMin does not represent that this information is accurate or complete.
Completion of the Transaction is subject to a number of conditions, including but not limited to, contractual conditions, Exchange acceptance and applicable disinterested shareholder approvals.The Transaction cannot close until the required shareholder approvals and applicable regulatory approvals are obtained and contractual conditions are met or waived.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 MillenMin Ventures Inc. should be considered highly speculative.
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 news release.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Forward-Looking Statements
This news release contains forward-looking statements and information that are based on the beliefs of management and reflect MillenMin's current expectations.When used in this news release, the words "estimate", "project", "belief", "anticipate", "intend", "expect", "plan", "predict", "may" or "should" and the negative of these words or such variations thereon or comparable terminology are intended to identify forward-looking statements and information.The forward-looking statements and information in this news release includes information relating to completion of the Control Placement, the Vend-in Transaction and the Transaction.The forward-looking information is based on certain assumptions, which could change materially in the future.Such statements and information reflect the current view of MillenMin with respect to risks and uncertainties that may cause actual results to differ materially from those contemplated in those forward-looking statements and information.By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause MillenMin's actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.Such factors include, among others, the risk that MillenMin is unable to complete the Control Placement, the Vend-in Transaction and the Transaction, as expected or at all, the risk that the necessary directors, shareholders and regulatory approvals are not obtained or the Transaction may be terminated prior to completion, the risks associated with property development and doing business in Cuba.When relying on MillenMin's forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events.MillenMin has assumed a certain progression, which may not be realized.It has also assumed that the material factors referred to above will not cause such forward-looking statements and information to differ materially from actual results or events.However, the list of these factors is not exhaustive and is subject to change and there can be no assurance that such assumptions will reflect the actual outcome of such items or factors.
THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS NEWS RELEASE REPRESENTS THE EXPECTATIONS OF MILLENMIN AS OF THE DATE OF THIS NEWS RELEASE AND, ACCORDINGLY, IS SUBJECT TO CHANGE AFTER SUCH DATE.READERS SHOULD NOT PLACE UNDUE IMPORTANCE ON FORWARD-LOOKING INFORMATION AND SHOULD NOT RELY UPON THIS INFORMATION AS OF ANY OTHER DATE.WHILE MILLENMIN MAY ELECT TO, IT DOES NOT UNDERTAKE TO UPDATE THIS INFORMATION AT ANY PARTICULAR TIME EXCEPT AS REQUIRED IN ACCORDANCE WITH APPLICABLE LAWS.
SOURCEMillenMin Ventures Inc.
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