DGM Minerals Corp. Closes Subscription Receipt Financing
Company Also Provides Update on Proposed Acquisition of
Self-Storage Properties in Poland and the Czech Republic
VANCOUVER, BRITISH COLUMBIA--(Marketwired - Apr 7, 2014) - DGM
Minerals Corp. ("DGM" or the "Company") (TSX-VENTURE:DGM) today
announced that it has closed an equity offering (the "Equity
Offering") of 7,000,000 subscription receipts (the "Subscription
Receipts") for gross proceeds of $7,000,000. The Equity Offering
was conducted in connection with the Company's proposed acquisition
(the "Acquisition") of all of the issued and outstanding shares of
five companies (the "Target Companies") which, collectively, own
and operate five self-storage stores in Poland and the Czech
Republic (the "Assets"), as previously announced in DGM's news
release of January 10, 2014.
Subscription Receipt Equity
Offering
The Company engaged
Euro Pacific Canada Inc. (the "Agent") to act as agent to
distribute the Subscription Receipts pursuant to an agency
agreement between the Company and the Agent dated March 31, 2014.
The gross proceeds of the Equity Offering (the "Escrowed Funds")
have been deposited in escrow pursuant to the terms of a
subscription receipt indenture between the Company, the Agent and
Computershare Trust Company of Canada dated March 31, 2014. The
Escrowed Funds will be released from escrow upon satisfaction of
all conditions precedent to the Acquisition, receipt of all
requisite shareholder and regulatory approvals to the Equity
Offering and the Acquisition, and certain other conditions (the
"Escrow Release Conditions"). Shareholder approval of the
Acquisition and related matters was obtained from DGM shareholders
on March 27, 2014. Upon satisfaction of the Escrow Release
Conditions and in connection with the completion of the
Acquisition, each Subscription Receipt will convert into one
post-consolidation common share (each, a "Share") of DGM (which
will be renamed "Less Mess Storage Inc." upon completion of the
Acquisition) and one common share purchase warrant (a "Warrant").
Each Warrant may be exercised for an additional Share for two years
from the date of issuance at an exercise price of $1.40.
The Agent and the
members of the selling group received: (i) a cash commission equal
to up to 7% of the gross proceeds of the Equity Offering; and (ii)
an aggregate of 490,000 Agent's subscription receipts (each, an
"Agent's Subscription Receipt"), being 7% of the number of
Subscription Receipts issued under the Equity Offering. Upon
satisfaction of the Escrow Release Conditions, each Agent's
Subscription Receipt will convert into an Agent's compensation
option (an "Agent's Compensation Option"). Each Agent's
Compensation Option will be exercisable for one Share and one
Warrant at an exercise price of $1.00 for a period of two years
from the date of issuance. The Agent also received a $25,000 work
fee.
In the event that
the Escrow Release Conditions are not satisfied on or before April
30, 2014, the gross proceeds from the Equity Financing will be
returned to the holders of the Subscription Receipts and the
Subscription Receipts will be automatically cancelled.
The Equity Offering
closed in two tranches: $6,484,000 under the first tranche and
$516,000 under the second tranche. All securities issued pursuant
to the first tranche of the Equity Offering are subject to four
month hold period expiring on August 1, 2014. All securities issued
pursuant to the second tranche of the Equity Offering are subject
to four month hold period expiring on August 5, 2014. The Equity
Offering remains subject to the receipt of all required regulatory
approvals, including, without limitation, the approval of the TSX
Venture Exchange.
Acquisition of the Target
Companies
DGM is pleased to
provide an update respecting the Acquisition. When consummated, the
Acquisition will make DGM the largest self-storage chain in Central
Europe, a region which management believes is poised for
substantial short and long term growth in the self-storage
sector.
DGM will purchase
all of the issued and outstanding shares of the Target Companies
and acquire the Assets under the definitive share sale and purchase
agreement dated January 9, 2014 (the "Share Purchase Agreement"),
for an aggregate purchase price of 14,000,000 Euros, 7,000,000
Euros of which is payable on closing, and 7,000,000 Euros of which
will be vendor-financed, as described in further detail in DGM's
January 10, 2014, news release.
The proposed
transaction will be a "change of business" transaction ("COB")
under the policies of the TSX Venture Exchange, and accordingly
requires the approval of DGM's shareholders. In conjunction with
the transaction, DGM will consolidate its current issued and
outstanding shares on a 12:1 basis (the "Consolidation", increased
from a previously-announced 10:1 consolidation ratio) and will
change its name to "Less Mess Storage Inc." DGM shareholders
approved the Acquisition, the COB, the Consolidation and the name
change at the Company's annual general and special meeting of
shareholders held on March 27, 2014 (the "Meeting"). The Shares to
be issued upon conversion of the Subscription Receipts issued under
the Equity Financing will be post-Consolidation Shares.
DGM acquired the
exclusive right to purchase the Target Companies and acquire the
Assets from Mr. Guy Pinsent pursuant to an asset purchase agreement
dated January 9, 2014 (the "Asset Purchase Agreement"). DGM will
also acquire other assets that Pinsent has obtained or developed
with respect to the Assets, including certain intellectual property
respecting the business to be conducted following the successful
completion of the transaction (i.e. the "Less Mess" brand and
intellectual property). The consideration payable by DGM under the
Asset Purchase Agreement has been reduced. While the parties
previously agreed that DGM would issue an aggregate of 2,300,000
post-Consolidation common shares, the Asset Purchase Agreement has
now been amended to provide that 2,000,000 post-Consolidation
common shares will be issued, as follows: Pinsent will receive
1,130,433 shares; Peter Smith (DGM's President and CEO) will
receive 521,739 shares; Michael Raven (DGM's Corporate Secretary)
will receive 173,914 shares; and two arm's length parties will
receive 86,957 shares each. Each of Mr. Smith and Mr. Raven are
receiving shares as compensation for services provided to Mr.
Pinsent during his pursuit of the acquisition of the Assets, prior
to DGM's involvement in the transaction.
DGM is partially
financing the Acquisition through the Equity Financing. To further
finance the Acquistion, DGM, through a Polish subsidiary, intends
to issue a bond (the "Bond") to Credit Value Sp. z o.o., a Polish
investment company based in Warsaw ("Credit Value"). The Bond will
be denominated in Polish Zloties (PLN) and be the equivalent of
$5,250,000. The Bond will pay a quarterly coupon based on an annual
interest rate of 5%, and the total cost of the Bond will be 18%
annualized, payable on redemption. There are no arrangement fees or
commissions payable in connection with the Bond; however, DGM will
also be obligated to pay the legal costs of Credit Value, to a
maximum of 15,000 Euros (approximately $22,500). The Bond will be
repayable on the date which is 24 months from the date of issuance,
and DGM may repay the Bond early without penalty at any time after
six months from the date of issuance.
DGM's President and
CEO, Peter Smith, is delighted to be moving ahead with the proposed
Acquisition: "We've spent a lot of time and resources assessing
this opportunity for DGM and we feel that it has outstanding
potential. Self-storage is an attractive sector to be in, and this
particular opportunity gives us five established self-storage
businesses, all purpose-built or renovated specifically for
self-storage, and all in central, inner-city locations where real
estate values are expected to grow. We also feel there is a
significant growth opportunity for self-storage in Central and
Eastern Europe, with the potential for us to grow many-fold in the
near future, provided that only a fraction of the market
penetration for self-storage already existing in places like the
USA, Canada, the United Kingdom and Germany (bordering Poland and
the Czech Republic) can be achieved. The rapid economic growth of
Poland and the Czech Republic over the past decade indicates that
many of the well-established 'drivers' for self-storage should now
exist in these regions. However, there still remains a lot of work
to be done before the transaction can be closed. Management will
continue to update the market as we progress."
Further details
regarding the Acquisition and related matters are provided in the
Company's Management Information Circular which has been mailed to
shareholders of DGM in connection with the Meeting. The Management
Information Circular is also accessible under DGM's SEDAR profile
at www.sedar.com.
Completion of
the Acquisition and related matters is subject to a number of
conditions, including TSX Venture Exchange acceptance. There can be
no assurance that the Acquisition and related matters will be
completed as proposed or at all.
Investors are
cautioned that, except as disclosed in the Management Information
Circular prepared in connection with the Acquisition, any
information released or received with respect to the COB may not be
accurate or complete and should not be relied upon. Trading in the
securities of DGM Minerals Corp. should be considered highly
speculative.
The TSX Venture
Exchange has in no way passed upon the merits of the proposed
transaction and has neither approved nor disapproved the contents
of this press release.
About the Company
DGM Minerals Corp.
is a Vancouver-based company and has its common shares listed on
the TSX Venture Exchange. For further information, please refer to
the Company's filings on SEDAR (www.sedar.com).
ON BEHALF OF THE
BOARD
Peter Smith,
President and CEO
This press release
contains "forward-looking information" that is based on the
Company's current expectations, estimates, forecasts and
projections. This forward-looking information includes, among other
things, the Company's business, plans, outlook and business
strategy. The words "may", "would", "could", "should", "will",
"likely", "expect," "anticipate," "intend", "estimate", "plan",
"forecast", "project" and "believe" or other similar words and
phrases are intended to identify forward-looking information.
Forward-looking
information is subject to known and unknown risks, uncertainties
and other factors that may cause the Company's actual results,
level of activity, performance or achievements to be materially
different from those expressed or implied by such forward-looking
information. Such factors include, but are not limited to:
uncertainties related to the ability of the Company to complete the
Acquisition and related matters; changes in economic conditions or
financial markets; changes in prices for the Company's products or
increases in costs; litigation; legislative, environmental and
other judicial, regulatory, political and competitive developments;
technological or operational difficulties; and labour relations
matters.
This list is not
exhaustive of the factors that may affect our forward-looking
information. These and other factors should be considered carefully
and readers should not place undue reliance on such forward-
looking information. Except as required by law, the Company
disclaims any intention or obligation to update or revise
forward-looking information, whether as a result of new
information, future events or otherwise.
NEITHER THE
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.
DGM Minerals Corp.778.999.7030
(TSXV:DGM)
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