CPE News (3/19/2021) – VLCTY Capital Inc. (TSX-V: VLCY.P), a capital pool company (CPC), and BuildDirect.com Technologies Inc. have entered into a binding letter of intent (LOI) pursuant to which VLCTY and BuildDirect will complete a transaction that will result in a reverse take-over (RTO) of VLCTY by BuildDirect.
The transaction will constitute as VLCTY’s “Qualifying Transaction” (QT).
BuildDirect is an innovative marketplace for purchasing and selling building materials online. The BuildDirect platform connects homeowners and home improvement professionals in North America with suppliers and sellers of quality building materials from around the world, including flooring, tile, decking and more.
Incorporated in 1999 and originally backed by Pelecanus Investments Ltd., Lyra Growth Partners Inc., Beedie Capital Partner, OMERS Ventures, Mohr Davidow Ventures (MDV), BDC Capital, Kingfisher Equity Partners, and BMO Asset Management, BuildDirect sought Companies’ Creditors Arrangement Act (CCAA) protection on October 31, 2017.
BuildDirect emerged from CCAA in 2018 with US $43 million (including DIP financing) financing led by MDV with participation of Fidelity Investments Canada ULC, Pelecanus Investments, Lyra Growth Partners, and Beedie Capital.
BuildDirect has recently closed a new round of financing from existing investors.
The proposed RTO/QT transaction is subject to VLCTY and BuildDirect entering into a definitive agreement. VLCTY and BuildDirect will issue a subsequent news release setting out further information regarding the transaction.
In connection with the proposed transaction, BuildDirect will undertake a brokered private placement of subscription receipts, to be led by CIBC Capital Markets and Canaccord Genuity Corp.
photo credit: BuildDirect.com Technologies
VLCTY CAPITAL INC. AND BUILDDIRECT ENTER INTO LETTER OF INTENT TO COMPLETE QUALIFYING TRANSACTION AND LISTING ON THE TSX VENTURE EXCHANGE
NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
VANCOUVER, BRITISH COLUMBIA – March 19, 2021 – VLCTY Capital Inc. (TSXV:VLCY.P) (“VLCTY”) and BuildDirect.com Technologies Inc. (“BuildDirect” or the “Corporation”) are pleased to announce that they have entered into a binding letter of intent dated March 19, 2021 (the “Letter of Intent”), which outlines the terms and conditions pursuant to which VLCTY and the Corporation will complete a transaction that will result in a reverse take-over of VLCTY by the Corporation (the “Proposed Transaction”). The Proposed Transaction will be an arm’s length transaction, and, if completed, will constitute VLCTY’s “Qualifying Transaction” (as such term is defined in Policy 2.4 – Capital Pool Companies (“Policy 2.4”) of the TSX Venture Exchange (the “TSXV”) Corporate Finance Manual (the “Manual”)).
In connection with the Proposed Transaction, VLCTY and the Corporation will issue a subsequent news release setting out further information contemplated in Policy 2.4.
BuildDirect.com Technologies Inc.
BuildDirect was incorporated on October 20, 1999 pursuant to the Canada Business Corporations Act (“CBCA”). The Corporation is not a reporting issuer in any province or territory of Canada. BuildDirect is an innovative marketplace for purchasing and selling building materials online. The BuildDirect platform connects homeowners and home improvement professionals in North America with suppliers and sellers of quality building materials from around the world, including flooring, tile, decking and more. BuildDirect’s year-over-year growth, proprietary heavyweight delivery network, and digital reach have served to solidify its role as a ground-breaking player in the home improvement industry.
VLCTY Capital Inc.
VLCTY was incorporated on September 16, 2019 pursuant to the provisions of the Business Corporations Act (British Columbia) and is a Capital Pool Company (as defined in the Manual) listed on the TSXV and a reporting issuer in the Provinces of British Columbia, Alberta and Ontario. VLCTY has no commercial operations and no assets other than cash.
Proposed Transaction Summary
The Proposed Transaction is expected to be structured as a three-cornered amalgamation pursuant to the provisions of the CBCA, whereby VLCTY will incorporate a wholly-owned subsidiary under the CBCA, which will amalgamate with the Corporation (the “Amalgamation”) to form a newly amalgamated company (“Amalco”). In connection with the Amalgamation, holders of common shares in the capital of the Corporation (“BuildDirect Shares”) will receive common shares in the capital of the Resulting Issuer (as defined below) for each BuildDirect Share held immediately before the Amalgamation and the holders of stock options to purchase BuildDirect Shares will receive stock options to acquire common shares in the capital of the Resulting Issuer for each BuildDirect stock option held immediately before the Amalgamation.
In addition, prior to the Amalgamation, each outstanding VLCTY common share (the “VLCTY Shares”) and security convertible into a VLCTY Share shall be adjusted in accordance with its terms to account for the Consolidation (as defined below) and, in respect of certain of the VLCTY stock options, to amend the expiry date of such options to a date that is 12 months following completion of the Proposed Transaction.
In connection with the Proposed Transaction, it is anticipated that VLCTY will consolidate the VLCTY Shares (the “Consolidation”) on the basis of an agreed upon formula which will correspond with the issue price of the securities to be issued by BuildDirect pursuant to its Concurrent Financing as defined below.
The Proposed Transaction is subject to the parties entering into a definitive agreement in respect of the Proposed Transaction (the “Definitive Agreement”) on or before April 15, 2021, or such other date as VLCTY and the Corporation may mutually agree. Completion of the Proposed Transaction is also subject to a number of other customary conditions, including obtaining all necessary board, shareholder and regulatory approvals, including TSXV approval. Pursuant to the Proposed Transaction, VLCTY shall change its name (“Name Change”) to “BuildDirect.com Technologies Inc.”, or such other name to be determined by the Corporation and as may be acceptable to the TSXV and regulatory authorities (the “Resulting Issuer”) and it will adopt a new stock option plan and stock symbol. Upon completion of the Proposed Transaction, the Resulting Issuer will carry on the business of BuildDirect, and Amalco will be a wholly-owned subsidiary of the Resulting Issuer.
In connection with the Proposed Transaction, VLCTY will convene a meeting of its shareholders for the purpose of approving, among other matters, the Consolidation (if required by applicable law), the election of the Board Nominees (if required by applicable law; as defined herein), the Proposed Transaction (if required by the policies of the TSXV), the Name Change and the adoption of a new stock option plan on terms acceptable to the TSXV and applicable regulatory authorities. BuildDirect will convene a meeting of its shareholders for the purpose of approving the Amalgamation.
As at the date hereof it is not possible for the parties to determine the number of common shares of the Resulting Issuer (“Resulting Issuer Shares” that will be issued upon completion of the Proposed Transaction nor the ownership percentages associated with VLCTY and the Corporation as this will depend upon the Concurrent Financing and the Consolidation, both factors having an impact on the total number of Resulting Issuer Shares that will be issued in connection with the Amalgamation.
In connection with the Proposed Transaction, BuildDirect will undertake a brokered private placement of subscription receipts the proceeds of which will be placed into escrow pending the closing of the Proposed Transaction. The subscription receipts which will automatically convert into post-Consolidation VLCTY Shares immediately prior to the completion of the Proposed Transaction (the “Concurrent Financing”). The Concurrent Financing will be led by CIBC Capital Markets and Canaccord Genuity Corp., as co-lead agents. Notwithstanding the foregoing, at the time of such financing, the Corporation will consider, among other things, general market conditions, the development and growth of the Corporation along with the capital requirements necessary to execute on the business plan and strategy of the Corporation and may revise or adjust the scope of the financings accordingly.
Officers and Directors
Prior to completion of the Proposed Transaction and subject to approval by the TSXV and the filing of all required materials, BuildDirect will reconstitute the board of the directors of VLCTY with nominees suitable to BuildDirect which individuals will comprise the board of directors of the Resulting Issuer. Further, the officers of the Resulting Issuer will be determined prior to completion of the Proposed Transaction.
Non-Arm’s Length Parties
No party to the Proposed Transaction or their respective Associates or Affiliates (as such terms are defined in the Manual), is a Control Person (as defined in the Manual) of both VLCTY and the Corporation and as such the Proposed Transaction will not be a Non-Arm’s Length Party Transaction (as defined in the Manual).
Trading in VLCTY Shares
Trading in VLCTY Shares has been halted in compliance with the policies of the TSXV. Trading in VLCTY Shares will remain halted pending the review of the Proposed Transaction by the TSXV and satisfaction of the conditions of the TSXV for resumption of trading. It is likely that trading in the VLCTY Shares will not resume prior to the closing of the Proposed Transaction.
For more information, please contact Andrew Elbaz the Chief Executive Officer of VLCTY or Reid Adrian, the Director of Marketing at BuildDirect:
Andrew Elbaz, Chief Executive Officer
VLCTY Capital Inc.
Reid Adrian, Director of Marketing
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.