Spartan Acquisition Corp. Announces Its Qualifying Transaction

Spartan Acquisition Corp. Announces Its Qualifying Transaction

by ahnationtalk on November 24, 202073 Views

KELOWNA, BC, Nov. 23, 2020  – Spartan Acquisition Corp. (TSXV: VDKA.P) (the “Company” or “Spartan”), a capital pool company (“CPC”), is pleased to announce it has entered into a binding non-arm’s length amalgamation agreement dated November 20, 2020 (the “Agreement”) with Forbidden Distillery Inc. (“Forbidden”). Forbidden is a private company engaged in the production and distribution of alcoholic spirits which includes such brands as REBEL Vodka, Forbidden Spirits Vodka, Adam’s Apple Brandy, and Eve’s Original Gin. Pursuant to the Agreement, Spartan and Forbidden have agreed to amalgamate (the “Amalgamation”) under the Business Corporations Act (British Columbia) (the “BCBCA”).

Spartan intends that the Amalgamation will constitute its Qualifying Transaction, as such term is defined in the policies of the TSX Venture Exchange (the “Exchange”). Upon completion of the Amalgamation, the Company expects that the Resulting Issuer (as defined herein) will be named “Forbidden Spirits Distilling Corp.” and will be listed as a Tier 2 Industrial issuer on the Exchange.

Summary of the Qualifying Transaction

The Agreement contemplates Spartan and Forbidden amalgamating pursuant to the BCBCA to continue as a new company, Forbidden Spirits Distilling Corp. (the “Resulting Issuer”). As a result of the Amalgamation, the current shareholders of Forbidden would own a majority of the issued and outstanding Resulting Issuer Shares (as defined herein).

Each common share in the capital of Spartan (the “Spartan Shares”) that is outstanding immediately prior to the Amalgamation (other than Spartan Shares held by shareholders (the “Spartan Shareholders”) who exercise their dissent rights) shall be converted into one (1) common share in the capital of the Resulting Issuer (the “Resulting Issuer Shares”), representing a deemed price of $0.30 per Resulting Issuer Share.

Each class “A” voting common share in the capital of Forbidden (the “Forbidden Voting Shares”) that is outstanding immediately prior to the Amalgamation (other than Forbidden Voting Shares held by shareholders (the “Forbidden Shareholders”) who exercise their dissent rights) shall be converted into twenty-four (24) Resulting Issuer Shares at a deemed price of $0.30 per Resulting Issuer Share. Each class “B” non-voting common share in the capital of Forbidden (the “Forbidden Non-Voting Shares”) that is outstanding immediately prior to the Amalgamation (other than the Forbidden Non-Voting Shares held by Forbidden Shareholders who exercise their dissent rights) shall be converted into four (4) Resulting Issuer Shares at a deemed price of $0.30 per Resulting Issuer Share. Each class “C” non-voting preferred share in the capital of Forbidden (the “Forbidden Preferred Shares”) that is outstanding immediately prior to the Amalgamation (other than the Forbidden Preferred Shares held by Forbidden Shareholders who exercise their dissent rights) shall be converted into four (4) Resulting Issuer Shares at a deemed price of $0.30 per Resulting Issuer Share.  Each class “D” non-voting common share in the capital of Forbidden (the “Concurrent Financing Shares” and together with the Forbidden Voting Shares, the Forbidden Non-Voting Shares and the Forbidden Preferred Shares, the “Forbidden Shares”) that is outstanding immediately prior to the Amalgamation shall be converted into one (1) Resulting Issuer Share at a deemed price of $0.30 per Resulting Issuer Share.

Upon completion of the Amalgamation, assuming there are no dissenting shareholders and assuming the Minimum Financing (as defined herein) is completed, former holders of Spartan Shares will hold an aggregate of 4,788,500 Resulting Issuer Shares representing approximately 8.39% of the outstanding Resulting Issuer Shares (7.97% assuming the Maximum Financing is fully subscribed) and the former holders of Forbidden Shares will hold an aggregate of 40,296,000 Resulting Issuer Shares representing approximately 70.59% of the outstanding Resulting Issuer Shares (67.07% assuming the Maximum Financing is fully subscribed).

In addition, each share purchase warrant and option of Spartan and Forbidden outstanding immediately prior to the effective date of the Amalgamation is expected to be converted into securities of the Resulting Issuer on the same ratio as the Spartan Shares and Forbidden Shares, respectively.

As a result of the Amalgamation Spartan will essentially acquire Forbidden through the issuance of 40,296,000 Resulting Issuer Shares at a deemed price of $0.30 per Resulting Issuer Share for aggregate deemed consideration of $12,088,800, exclusive of the Resulting Issuer Shares issuable to the Concurrent Financing.

The Resulting Issuer Shares to be issued pursuant to the Amalgamation will be issued pursuant to exemptions from the prospectus requirements of applicable securities legislation and certain of the Resulting Issuer Shares issued to insiders of Forbidden will be subject to escrow conditions, as required by the Exchange.

Spartan expects that the Amalgamation will result in the Resulting Issuer being a Tier 2 Industrial Issuer on the Exchange. Blair Wilson, an officer and director of Spartan, is the sole director and president of Forbidden. In addition, other directors and officers of Spartan also own securities of Forbidden. As a result, the Amalgamation is a Non-Arm’s Length Qualifying Transaction (as defined by the policies of the Exchange). The Amalgamation must be approved by not less than 662/3% of the votes cast at the meeting of Spartan Shareholders (the “Spartan Meeting”). In addition, the “Majority of the Minority” approval will be required from disinterested Spartan Shareholders. It is expected that the Spartan Meeting will be held in the first quarter of 2021 and a management information circular will be provided to Spartan Shareholders in due course.

The completion of the Amalgamation is subject to the satisfaction of various conditions as are standard for a transaction of this nature, including but not limited to (i) the completion of the Concurrent Financing (ii) the approval by the shareholders of Spartan to complete the Amalgamation; (iii) the approval by the shareholders of Forbidden to complete the Amalgamation; (iv) the absence of any material adverse change, material litigation, claims, investigations or other matters affecting Spartan and Forbidden; and (v) receipt of all requisite regulatory, stock exchange, court, or governmental authorizations and consents, including the Exchange. There can be no assurance that the Amalgamation will be completed on the terms proposed above or at all. Each of Spartan and Forbidden will bear their own costs in respect of the Proposed Transaction.

In accordance with Exchange Policy 2.4, Spartan has advanced a $25,000 non-refundable unsecured deposit to Forbidden in connection with the Amalgamation.

Concurrent Financing

It is a condition to the completion of the Amalgamation that Forbidden complete a concurrent financing (the “Concurrent Financing”) for aggregate gross proceeds of a minimum of $3,600,000 (the “Minimum Financing”) and up to maximum gross proceeds of $4,500,000 (the “Maximum Financing”). It is anticipated that this Concurrent Financing will be undertaken on a non-brokered private placement of subscription receipts of Forbidden (the “Subscription Receipts”) at a price of $0.30 per Subscription Receipt.  It is anticipated that each Subscription Receipt shall entitle the holder thereof to receive, without payment of any additional consideration and subject to adjustment, one unit of Forbidden (a “Unit”) in accordance with the terms of the subscription receipt agreement which will govern the Subscription Receipts (the “Subscription Receipt Agreement”), including the satisfaction or waiver of the escrow release conditions which will be described in the Subscription Receipt Agreement (the “Escrow Release Conditions”). Immediately prior to closing of the Proposed Transaction, the Units issued pursuant to the Subscription Receipts will be automatically exchanged for one Concurrent Financing Share and one-half of one Concurrent Financing Share purchase warrant of Forbidden (each whole warrant, a “Warrant”) and subsequently converted into securities of the Resulting Issuer pursuant to the Amalgamation.  Each Warrant will entitle the holder to acquire one (1) Resulting Issuer Share at a price of $0.50 for a period of two years following the date of issuance.  If, at any time following the issuance of the Warrants, the daily volume weighted average trading price of the Resulting Issuer Shares on the Exchange, or such other stock exchange on which the Resulting Issuer Shares are listed, is greater than $0.75 for the preceding 10 consecutive trading days, the Resulting Issuer may, upon providing written notice to the holders of Warrants, accelerate the expiry date of the Warrants to the date that is 30 days following the delivery of such written notice. The Warrants will be transferable in accordance with applicable securities laws, but will not be listed or quoted on any stock exchange or market.

The gross proceeds of the Concurrent Financing will be deposited in escrow at closing pending the satisfaction of the Escrow Release Conditions.  If (i) the Escrow Release Conditions are not satisfied on or before the escrow release deadline to be stipulated in the Subscription Receipt Agreement, or (ii) prior to such escrow release deadline, Spartan and/or Forbidden announces to the public that it does not intend to satisfy the Escrow Release Conditions, the escrowed funds shall be returned to the holders of the Subscription Receipts in accordance with the terms of the Subscription Receipt Agreement.

Spartan may engage eligible finders (each a “Finder”) to assist with the Concurrent Financing.  Subject to compliance with applicable securities laws, including the policies of the Exchange, it is expected that any such Finder will be paid a cash commission equal to 8% of the proceeds raised under the Concurrent Financing (the “Cash Fee”) and be issued such number of non-transferable common share purchase warrants (the “Finder’s Warrants”) as is equal to 8% of the Subscription Receipts sold under the Concurrent Financing.  Each Finder’s Warrant will entitle the holder to acquire a Resulting Issuer Share at an exercise price of $0.50 for a period of twenty-four months following the date of issuance.

Proceeds of the Concurrent Financing will be used to pay the costs associated with the Concurrent Financing and the Amalgamation, and for working capital and other corporate purposes.

The Resulting Issuer

Assuming the Minimum Financing is completed, it is estimated that there will be 57,084,500 Resulting Issuer Shares issued and outstanding immediately following closing of the Amalgamation and the Minimum Financing (68,826,800 on a fully-diluted basis), with the former Spartan Shareholders holding approximately 8.39% of such Resulting Issuer Shares (6.96% on a fully-diluted basis), former Forbidden Shareholders holding approximately 70.59% of such Resulting Issuer Shares (58.55% on a fully-diluted basis) and subscribers under the Concurrent Financing holding approximately 21.02% of such Resulting Issuer Shares (17.44% on a fully-diluted basis).

In the event the Maximum Financing is fully subscribed, it is estimated that there will be 60,084,500 Resulting Issuer Shares issued and outstanding immediately following closing of the Amalgamation and the Minimum Financing (73,326,800 on a fully-diluted basis), with the former Spartan Shareholders holding approximately 7.97% of such Resulting Issuer Shares (6.51% on a fully-diluted basis), former Forbidden Shareholders holding approximately 67.07% of such Resulting Issuer Shares (54.77% on a fully-diluted basis) and subscribers under the Concurrent Financing holding approximately 24.96% of such Resulting Issuer Shares (20.39% on a fully-diluted basis).

Upon completion of the Amalgamation, it is anticipated that the management of the Resulting Issuer will include the persons identified below:

Blair Wilson, Director, President and Chief Executive Officer – (Age 57)

Mr. Wilson has been the President and CEO of Canadian ecoEquity Corp., a private leasing company since June 1991.  Mr. Wilson is also the co-founder of Forbidden and has been the President of Forbidden since 2014.  Since April 12, 2019, Mr. Wilson has held the offices of President, CEO, CFO and serves on the board of directors of Genesis Acquisition Corp. (TSXV: REBL). Since November 18, 2019, Mr. Wilson has held the offices of President, CEO, CFO and serves on the board of directors of Spartan.  Between June 2004 and January 2006, Mr. Wilson was a Member of Parliament for West Vancouver – Sunshine Coast – Sea to Sky Country and between 1994 and 1996 was a director and the CFO of Pan Smak Pizza Inc., a company formerly listed on the Exchange. See “Other Reporting Issuer Experience”.

Mr. Wilson earned a Bachelor of Arts degree in political science from the University of Victoria and a Chartered Accountants designation from the Canadian Institute of Chartered Accountants. Mr. Wilson was a member of the Chartered Professional Accountants of British Columbia until his resignation in 2016.

Terese Gieselman, Chief Financial Officer and Director – (Age 58)

Ms. Gieselman has 34 years of international experience with junior mining and exploration companies listed on the TSX, TSXV, OTCBB, NASDAQ and AMEX, in the roles of CFO, Treasurer, Corporate Secretary and director. During her tenure in the resource sector, Ms. Gieselman has accumulated an extensive background in corporate and financial reporting and compliance for Canada and the United States, including particularly relevant experience in financings, treasury, international corporate structure and financial reporting in Mexico, Peru, Chile, Argentina and Zimbabwe. Ms. Gieselman is currently the CFO, Corporate Secretary of Golden Ridge Resources Ltd (TSXV: GLDN) and the CFO and a director of Julian Resources Inc. (TSXV: JLR), CFO/Secretary of Damara Gold Corp (TSXV: DMR), Director of Mind Cure Health Inc. (CSE: MCUR), President of Minco Corporate Management Inc. and CFO/Secretary of Choom Holdings Inc. (CSE: CHOO).

Kelly Wilson, Corporate Secretary – (Age 58)

Ms. Wilson is the co-founder of Forbidden.  Ms. Wilson has also been the President and a Director of Apple Orchard RV Ltd., a private recreational vehicle camping ground located in Kelowna, British Columbia since March 1989.  Ms. Wilson has held the office of Corporate Secretary of Genesis Acquisition Corp. (TSXV: REBL) since April 12, 2019 and Corporate Secretary of Spartan since November 18, 2019. See “Other Reporting Issuer Experience”.

Ms. Wilson earned a diploma in Accounting from Langara College in 1997.

Eugene Hodgson, Director – (Age 63)

Mr. Hodgson brings 30 years of private and public sector experience to his position. He began his public sector career in the Northwest Territories where he acted as Senior Policy Advisor on resource-based projects. In the early 1980’s he served as Executive Assistant to the Minister of the Environment, Lands, Parks and Housing in the British Columbia Government.

Mr. Hodgson has held a number of senior positions in both the public sector, for the NWT and BC Governments and private industry, at International Jetfoil Ltd., First Fund Capital, Intrawest, Sea Breeze Power, Timmins Gold Corp., and Corpfinance International Limited as Vice President of the Western Region involving providing advice on finance, public and government policy and corporate affairs.

He has served on the Board of Directors of various corporations including Grandfield Pacific Corporation, First Class Systems Inc., Arimex Resources Inc., Equitable Real Estate Investment Corp., Amwest Properties Inc., Sea Breeze Power Corp., Alda Pharmaceuticals Corp, Silvermex Resources Inc., Timmins Gold Corp., Pacific Cascade Minerals Inc., Maxtech Ventures Inc., and Red Fund Capital Corp. (formerly Parana Copper Corporation) and is the former Chair of the Board of Governors of Vancouver Community College. See “Other Reporting Issuer Experience”.

Mr. Hodgson holds a Bachelor of Arts degree from the University of Calgary.

Kristi Miller, Director – (Age 49)

Ms. Miller has been providing mid-market businesses with relationship-focused, strategic financing and advice for more than twenty years.  As Founder and former National Managing Director of First West Capital, a junior capital firm serving the Canadian mid-market, Ms. Miller grew the business from start-up to a national junior capital firm that funded over $250 million to more than 100 businesses.  Ms. Miller is honoured to have been recognized by Ernst & Young as the Pacific Region’s 2019 Entrepreneur of the Year in the category of Business Disrupter for this work.

In addition to serving on the board of Douglas College, Kristi currently serves on a number of corporate and non-profit boards, including Private Debt Partners, Aisle (formerly Lunapads), LIFT Philanthropy Partners, Junior Achievement of BC and the Fulmer Foundation.  Kristi also mentors for [email protected] and MaRS.  In 2017, Kristi received the Canadian Venture Capital Association’s Ted Anderson Community Leadership Award.

Kristi holds a Master of Business Administration from UBC, as well as the ICD.D designation.

Maya Kanigan, Director – (Age 48)

For the past 20 years, Ms. Kanigan has been creating and directing solutions to advance women in leadership and empower the next generation. In 2001, she founded the Women in Leadership Foundation (“WIL”), a national, non-profit organization dedicated to advancing women in leadership positions and creating a platform to promote diverse & inclusive workplaces. WIL’s award winning, 5-month Mentorship Program matches emerging women leaders with mentors from diverse industries from the business community to build confidence, develop leadership skills, and propel career advancement. WIL has chapters in Toronto, Ottawa, Montreal, Kelowna, Victoria, Vancouver, and Calgary.

In 2015, Ms. Kanigan co-founded Leading Talent, Canada’s first dedicated career portal for women.

Ms. Kanigan holds a Bachelor of Commerce degree from the University of Victoria.

Sponsorship of the Qualifying Transaction

Sponsorship of a “Qualifying Transaction” of a CPC is required by the Exchange unless exempt therefrom in accordance with the Exchange’s policies or a waiver is granted.  Given the size and nature of the Amalgamation, including the amount of the Concurrent Financing, Spartan will apply for a waiver from the sponsorship requirements pursuant to the policies of the Exchange. If the waiver is not granted by the Exchange, then Spartan would be required to engage a sponsor.

About Spartan Acquisition Corp.

Spartan is a Capital Pool Company whose principal business is to identify and evaluate assets or businesses with a view to completing a Qualifying Transaction.  Subject to approval of the Exchange, Spartan intends the Amalgamation to constitute its Qualifying Transaction.

Spartan is a company incorporated under the BCBCA.  Spartan’s head office is located at 4400 Wallace Hill Road, Kelowna, British Columbia V1W 4C3 and its registered office is located at 301, 1665 Ellis Street, Kelowna, British Columbia V1Y 2B3. The Spartan Shares trade on the Exchange under the symbol “VKDA.P”.

About Forbidden Distillery Inc.

Forbidden is a craft distillery licensed by the province of British Columbia to manufacture, bottle and sell alcohol from its on-site tasting room directly to retail customers or from its manufacturing plant directly to on-premise customers such as restaurants, pubs, hotels, and golf courses and directly to off-premise customers such as private beer, wine and spirits stores. Forbidden is also licensed by the government of Canada to produce and sell hand & surface sanitizer.  Forbidden was incorporated under the Business Corporations Act (British Columbia) in 2014 and is headquartered in Kelowna, British Columbia.

For the Year Ended
December 31, 2019 (unaudited)

For the Year Ended

December 31, 2018 (unaudited)

Income Statement Data

Net sales or total revenues

$205,766

$25,050

Total Expenses

$1,024,708

$664,893

Comprehensive Loss

($937,967)

($655,465)

As at December 31, 2019

As at December 31, 2018

Balance Sheet Data

Total Assets

$3,094,637

$2,983,575

Total Current Liabilities

$816,809

$663,641

Total Long Term Liabilities

$446,112

$508,751

All information in this Press Release relating to Forbidden is the sole responsibility of Forbidden. Management of Spartan has not independently reviewed this disclosure nor has Spartan’s management hired any third party consultants or contractors to verify such information

Cautionary Note

As noted above, completion of the Amalgamation is subject to a number of conditions including, without limitation, approval of the Exchange, approval of the shareholders of Spartan, including on a “Majority of the Minority Approval” basis, approval of the shareholders of Forbidden and completion of the Concurrent Financing by Forbidden. Where applicable the Amalgamation cannot close until the required approvals have been obtained. There can be no assurance that the Amalgamation will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the continuous disclosure document containing full, true and plain disclosure regarding the Amalgamation and related transaction, required to be filed with the securities regulatory authorities having jurisdiction over the affairs of the Company, and information released or received with respect to the Amalgamation may not be accurate or complete and should not be relied upon. The trading in the securities of Spartan on the Exchange, if reinstated prior to the completion of the Amalgamation, should be considered highly speculative.

Resignation of Directors

The Company announces that Joe Miller has resigned as a director of the Company effective the date hereof.  The Company thanks Mr. Miller for his contributions and wishes him well in his future endeavors.  It is anticipated that Karen Danard will resign as a director of Spartan in connection with the completion of the Amalgamation.

ON BEHALF OF THE BOARD OF DIRECTORS:

Blair Wilson
Chief Executive Officer

NT4

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