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CALGARY,
AB, Nov. 8, 2024 /CNW/ - Auka Capital Corp.
("Auka") (TSXV: AUK.P) a capital pool company as defined
under Policy 2.4 – Capital Pool Companies ("CPC") of the TSX
Venture Exchange (the "Exchange"), is announcing that,
further to its previous press release dated July 16, 2024 (the "Previous Press
Release"), it has amended a number of the terms of the
definitive business combination agreement dated July 16, 2024, with Dr. Phone Fix Canada Limited
("DPF"), including the terms of the related brokered private
placement financing for subscription receipts of DPF (the
"Subscription Receipts"), in connection with Auka's proposed
qualifying transaction (the "Transaction").
The Transaction will be carried out pursuant to the terms of an
Amended and Restated Definitive Agreement (the "Amended and
Restated Definitive Agreement"), a copy of which has been filed
on Auka's SEDAR+ profile at www.sedarplus.ca. The below summary of
certain updated terms of the Transaction is qualified in its
entirety by reference to the full text of the Amended and Restated
Definitive Agreement.
Updates to the Terms of the Transaction
Auka's wholly-owned subsidiary, 2629911 Alberta Inc.
("Subco"), will on closing of the Transaction continue to
amalgamate with DPF (the "Amalgamation") and the amalgamated
entity ("Amalco") will continue as a wholly-owned
subsidiary of Auka, and Auka will be renamed to "Dr. Phone Fix
Corporation", or such other similar name as may be accepted by the
relevant regulatory authorities and approved by DPF and Auka (the
"Resulting Issuer").
In accordance with the terms of the Amended and Restated
Definitive Agreement each holder of shares of DPF ("DPF
Shares") will now exchange their DPF Shares for common shares
in the capital of the Resulting Issuer ("Resulting Issuer Common
Shares") on the basis of 11.4402330114547 fully paid and
non-assessable Resulting Issuer Common Shares for every one (1) DPF
Share held, at an updated deemed price of approximately
$1.37 per DPF Share. The deemed
value of each Resulting Issuer Common Share issued to holders of
DPF Shares under the Transaction is approximately $0.12 per share.
The Transaction itself is not subject to Auka's shareholder
approval. Auka intends to hold an annual and special meeting of its
shareholders to approve certain matters related to the Transaction
as are set out in the Previous Press Release.
In connection with the proposed Transaction, and pursuant to the
terms of the Amended and Restated Definitive Agreement, it is now
expected that approximately 120,522,963 Resulting Issuer Common
Shares will be issued to the holders of DPF Shares (not including
DPF Shares issuable upon the conversion of Subscription Receipts).
Based on the number of DPF Shares outstanding as of the date
hereof, and assuming the exchange of each Subscription Receipt into
underlying securities, it is now expected that there would be a
maximum of approximately 162,249,835 Resulting Issuer Common Shares
(not including the exercise of the Agent's Option (as defined
below)) outstanding upon completion of the Transaction, on a
non-diluted basis. On completion of the Transaction, the current
shareholders of Auka are expected to hold an aggregate of
approximately 12,500,000 Resulting Issuer Common Shares, which now
represents approximately 7.7% of the maximum number of Resulting
Issuer Common Shares (not including the exercise of the Agent's
Option), the current shareholders of DPF (including the holders of
Resulting Issuer Common Shares which are being issued to satisfy
approximately $5.5 million in DPF
debt) would now hold an aggregate of approximately 120,522,963
Resulting Issuer Common Shares, which now represents approximately
74.3% of the maximum number of Resulting Issuer Common Shares (not
including the exercise of the Agent's Option), and investors in the
Private Placement (as defined below) would now hold an aggregate of
approximately 29,226,872 Resulting Issuer Common Shares (not
including the exercise of the Agent's Option), now representing
approximately 18.0% of the maximum number of Resulting Issuer
Common Shares.
In connection with the Transaction and pursuant to the Amended
and Restated Definitive Agreement Auka will, subject to required
regulatory approvals, advance an aggregate of $250,000 to DPF by way of secured loan (the
"Bridge Loan") pursuant to a definitive loan agreement and
ancillary documentation. The Bridge Loan shall be secured against
all present and after-acquired property of DPF. The Bridge Loan
will bear interest at a rate of the prime rate in Canada plus two percent (2%) and (i) will
mature on the date that is the earlier of (i) six (6) months from
the date of the Bridge Loan agreement or remain as an
inter-company loan between DPF and Amalco on closing of the
Transaction
Updates to the Terms of the Private Placement of
Subscription Receipts of DPF
Prior to the completion of the Transaction, DPF is expected to
complete a brokered private placement of Subscription
Receipts (the "Private Placement"), with Canaccord
Genuity Corp. as lead agent (the "Agent") for aggregate
gross proceeds of up to $3,500,000,
subject to the Agent's Option. The Agent has an option,
exercisable in whole or in part prior to the closing of the Private
Placement, to increase the size of the Private Placement by up to
an aggregate of $525,000 (the
"Agent's Option"). Each Subscription Receipt will now be
issued at a price of $1.37 per
Subscription Receipt.
The Subscription Receipts will be created and issued pursuant to
the terms of a subscription receipt agreement (the "Subscription
Receipt Agreement") to be entered into among Odyssey Trust
Company, as subscription receipt agent, DPF, Auka and the
Agent.
Each Subscription Receipt will be automatically converted,
without payment of additional consideration or further action by
the holder thereof, into one unit comprised of one DPF Share and
one-half of one common share purchase warrant of DPF (each whole
warrant, a "DPF Warrant"), subject to adjustment in certain
events, immediately before the completion of the Transaction upon
the satisfaction or waiver of the Escrow Release Conditions (as to
be defined in the Subscription Receipt Agreement) which will now
take place on or before January 31,
2025. Each DPF Warrant will entitle the holder thereof to
acquire one DPF Share at a price of $2.28 per DPF Share.
In consideration for the Agent's services in connection with the
Private Placement, the Agent will be entitled to commissions and
fees as described in the Previous Press Release.
Updates to the Proposed Management and Board of Directors
of Resulting Issuer
Concurrent with the completion of the Transaction, Frank Y. Sur now will be appointed as Corporate
Secretary of the Resulting Issuer and Graham Barr will be appointed only as director
of the Resulting Issuer.
Frank Y. Sur – Director
and Corporate Secretary
Frank Sur, current Corporate
Secretary and a director of Auka, is a partner of Gowling WLG
(Canada) LLP, practicing in the
areas of mergers and acquisitions, capital markets, and corporate
commercial, with a focus in technology, energy and mining sectors.
Fluent in Korean, Frank has represented a number of Korean-based
companies - as well as numerous international companies based in
China and other parts of
Asia - in various transactions
over the years. He has sat on the boards of a number of public
companies, has advised on a large number of cross-border
transactions, and has represented many international companies on
financings, mergers and acquisitions, and strategic
partnerships.
Mr. Sur holds an LL.B. from the University
of Windsor, a Juris Doctor from the University of Detroit Mercy School Of Law and a
bachelor's degree in arts (honours) from Queen's University.
Information on the remainder of management and directors of the
Resulting Issuer can be found in the Previous Press Release.
ABOUT AUKA
Auka is a capital pool company that has not commenced commercial
operations and has no assets other than cash. Except as
specifically contemplated in the Exchange's CPC Policy, until the
completion of its qualifying transaction, Auka will not carry on
business, other than the identification and evaluation of
businesses or assets with a view to completing a proposed
qualifying transaction.
ANY SECURITIES REFERRED TO HEREIN WILL NOT BE REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933 (THE "1933 ACT") AND MAY NOT
BE OFFERED OR SOLD IN THE UNITED
STATES OR TO A U.S. PERSON IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE 1933 ACT.
NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR
DISSEMINATION IN THE UNITED
STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY
CONSTITUTE A VIOLATION OF U.S. SECURITIES LAW.
Neither the Exchange nor its Regulation Services Provider (as
that term is defined in policies of the Exchange) accepts
responsibility for the adequacy or accuracy of this release. The
Exchange has in no way passed upon the merits of the Transaction
and has neither approved nor disapproved the content of this press
release.
The information contained or referred to in this press
release relating to DPF has been furnished by DPF. Although Auka
has no knowledge that would indicate that any statement contained
herein concerning DPF is untrue or incomplete, neither Auka nor any
of its respective directors or officers assumes any responsibility
for the accuracy or completeness of such information.
Completion of the Transaction is subject to a number of
conditions, including but not limited to, Exchange acceptance,
receipt of requisite regulatory approvals, completion of the
Private Placement and if applicable pursuant to Exchange
requirements, majority of the minority shareholder approval. Where
applicable, the Transaction cannot close until the required
shareholder approvals, and any ancillary matters thereto, are
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.
This forward-looking information in respect of Auka and DPF
reflects DPF's or Auka's, as the case may be, current beliefs and
is based on information currently available to Auka and DPF,
respectively, and on assumptions Auka and DPF, as the case may be,
believes are reasonable. These assumptions include, but are not
limited to, management's assumptions about the Exchange approval
for the Transaction, closing of the Private Placement, closing of
the Amalgamation announced above and DPF's assumptions regarding
its business objectives.
Forward-Looking Information Cautionary Statement
This news release includes forward-looking information
("forward-looking information") within the meaning of
Canadian securities laws regarding Auka, Subco, Amalco, DPF, the
Resulting Issuer and their respective businesses, which may
include, but is not limited to, statements with respect to the
completion, and the terms and conditions, of the Transaction, the
satisfaction of conditions to closing, the proposed composition of
the board of directors of the Resulting Issuer, the Private
Placement and the amount of the proceeds therefrom, if any, the
terms and timing on which the Transaction and the Private Placement
are intended to be completed, the ability to obtain regulatory
approval, the name of the Resulting Issuer, and the appointment of
the certain auditors upon completion of the Transaction. Often, but
not always, forward-looking information can be identified by the
use of words such as "plans", "is expected", "expects",
"scheduled", "intends", "contemplates", "anticipates", "believes",
"proposes", "estimates" or variations of such words and phrases, or
state that certain actions, events or results "may", "could",
"would", "might" or "will" be taken, occur or be achieved. Such
statements are based on the current expectations and views of
future events of the management of each entity, and are based on
assumptions and subject to risks and uncertainties. Although the
management of each respective entity believes that the assumptions
underlying the forward-looking information as applicable to them or
their respective businesses or the Transaction are reasonable, such
forward-looking information is subject to known and unknown risks,
uncertainties and other factors that may cause the actual results,
level of activity, performance or achievements of Auka, DPF and the
Resulting Issuer to be materially different from those expressed or
implied by such forward-looking information and may prove to be
incorrect. The forward-looking information, events and
circumstances discussed in this release, including but not limited
to regulatory approval, completion of the Transaction (and the
proposed terms upon which the Transaction is proposed to be
completed) and the Private Placement, may not occur by certain
specified dates or at all and could differ materially as a result
of known and unknown risk factors and uncertainties affecting the
companies, including the risk that DPF and Auka may not obtain all
requisite approvals for the Transaction, including the approval of
the Exchange for the Transaction (which may be conditional upon
amendments to the terms of the Transaction), risks of the industry
in which DPF operates, failure to obtain regulatory or shareholder
approvals, general business, economic, competitive, political and
social uncertainties, any estimated amounts, timing of the Private
Placement, the equity markets generally and risks associated with
growth, general capital market conditions and market prices for
securities and the market conditions of the refurbished device and
device repair industry in general, competition, and changes in
legislation affecting Auka, DPF and the Resulting Issuer. Although
Auka and DPF have attempted to identify important factors that
could cause actual actions, events or results to differ materially
from those described in forward-looking information, there may be
other factors that cause actions, events or results to differ from
those anticipated, estimated or intended. Accordingly, readers
should not place undue reliance on any forward-looking information
contained herein. No statements comprising forward-looking
information can be guaranteed. Except as required by applicable
securities laws, forward-looking information contained herein speak
only as of the date on which they are made and Auka and DPF
undertake no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information,
future events, or otherwise.
Neither the Exchange nor its Regulation Services Provider
(as that term is defined in the policies of the Exchange) accepts
responsibility for the adequacy or accuracy of this news
release.
SOURCE Auka Capital Corp.