Northern Private Capital backs Taiga Motors going public transaction with Canaccord Genuity Growth II

CPE News (2/17/2021) – Canaccord Genuity Growth II Corp. (TSX/NEO: CGGZ.UN), a special purpose acquisition company (SPAC), and Taiga Motors Inc. have entered into a proposed merger transaction. The merger will constitute Canaccord Genuity Growth II’s qualifying acquisition (QA) and Taiga Motors’ going public transaction.

Canaccord Genuity Growth II intends to close a $100 million private placement, anchored by institutional investors including Northern Private Capital, to fund Taiga’s growth strategy, working capital and general corporate purposes, along with remaining funds from CGGZ’s $102 million of escrowed funds.

The QA values Taiga at a pre-money valuation of $300 million. Including the private placement, combined pro forma implied market capitalization of $537 million.

The transaction is expected to close in April 2021, subject to stock exchange approval and other customary closing conditions.

Following the closing of the transaction, Canaccord Genuity Growth II will be renamed to Taiga Corporation and will be led by Samuel Bruneau, Taiga’s current Chief Executive Officer and co-founder, and Taiga’s current management team.

New Taiga common shares and warrants will be listed on the TSX.

photo credit: Taiga Motors

News Release

Electrifying Powersports: Canaccord Genuity Growth II Corp. Announces Qualifying Transaction with Taiga Motors Inc.

/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/

Transaction provides CGGZ shareholders with exposure to a very attractive segment of the electric vehicle market

All amounts expressed in Canadian dollars (C$) unless otherwise noted

Well positioned for early leadership in the mass-production of next-generation electric powersports vehicles and fully integrated modular powertrain technology.
Growth plans include expanding in manufacturing and distribution capability to fulfill demand for high-performance powersports vehicles with reduced environmental impact.
Qualifying Acquisition values Taiga at a pre-money valuation of $300 million.
Combined pro forma implied market capitalization of $537 million1 including a $100 million oversubscribed and upsized private placement anchored by institutional investors including Northern Private Capital.
Transaction and Private Placement expected to result in approximately $185 million in net cash proceeds available to pursue Taiga’s fully-funded growth strategy.2
Combined company to be led by Samuel Bruneau, Chief Executive Officer and Co-Founder of Taiga Motors, and Taiga’s current management team.
Completion of the transaction is expected in April 2021, subject to stock exchange approval and other customary closing conditions.

TORONTO and MONTREAL, Feb. 17, 2021 /CNW/ – Canaccord Genuity Growth II Corp. (TSX: CGGZ.UN) (NEO: CGGZ.UN) (“CGGZ” or the “Corporation”), a special purpose acquisition company, and Taiga Motors Inc. (“Taiga”) are pleased to announce the proposed merger transaction (the “Merger”) between the Corporation and Taiga. The Merger will constitute the Corporation’s qualifying acquisition (the “Qualifying Acquisition”).

The Corporation also announces a $100 million private placement (the “Private Placement”) to fund Taiga’s growth strategy, working capital and general corporate purposes along with remaining funds from CGGZ’s $102 million of escrowed funds.

“We are excited to present this qualifying acquisition to our shareholders and we believe that Taiga Motors provides a compelling opportunity to participate in a new segment of the electric vehicle market,” said Michael Shuh, Chairman and Chief Executive Officer of Canaccord Genuity Growth II Corp. “We are confident that the Taiga team is positioned to take early leadership in this segment and has demonstrated a clear path for growth. We look forward to supporting the Taiga team as they begin their journey as a public company.”

Taiga Motors Co-Founder and CEO Sam Bruneau added: “Taiga’s mission is to revolutionize the powersports industry with all-electric, off-road vehicles that outperform peers without sacrificing the environment. We are a product first company that believes a mass market shift towards electrification in powersports can only be achieved by building electric vehicles offering superior performance at a competitive price when compared to class leading combustion alternatives. With the funds from this transaction, we plan to accelerate our existing production capabilities and execute on our pre-orders while moving full speed ahead with plans for a second, mass-production facility, which will significantly increase our capacity by 2025. As the only mass-production-ready electric powersport vehicle manufacturer, we will continue to push technological boundaries with an aim to offer class leading vehicles in this segment and capitalize on the rise in consumer interest in electric vehicles and related technologies.”

Northern Private Capital Chief Investment Officer Andrew Lapham commented, “We look for innovative companies that have the potential to disrupt industries and believe that Taiga’s years of work developing its fit for purpose-built electric drivetrain technology positions it to do just that to the powersports industry. We are thrilled to be investing alongside Sam and his management team as they build what we think will become the premier manufacturer of powersports EVs.”

In connection with the Closing, it is the Corporation’s intention to rename itself Taiga Corporation / Corporation Taiga.

Following the closing of the Merger (“Closing”), Taiga Corporation will be led by Samuel Bruneau, Taiga’s current Chief Executive Officer and Co-Founder, and Taiga’s current management team.

The Corporation’s currently issued and outstanding Class A restricted voting units (the “Class A Restricted Voting Units”), which are each comprised of one Class A restricted voting share (the “Class A Restricted Voting Shares”) and one-half of a share purchase warrant (the “Warrants”), are listed on the Toronto Stock Exchange (the “TSX”) and the Neo Exchange Inc. (the “NEO”).

It is a condition of Closing that the New Taiga Common Shares (as defined below) and the Warrants be listed on the Toronto Stock Exchange (TSX). The Corporation has reserved the symbols “TAIG” and “TAIG.W” for the common shares and warrants, respectively.

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1 Based on the Private Placement offering price of $3.00 per share.

2 Assuming no redemption by the Corporation’s shareholders.

Taiga Motors Investment Highlights

Access to a $50 Billion Powersports Market: Growing environmental concerns have expedited demand for the electrification of passenger vehicles and commercial equipment, with off-road vehicle electrification as the next logical step. Aggregate sales from the top five manufacturers of snowmobiles, personal watercraft, and side-by-side vehicles in 2019 and International Council of Marine Industry Associations data indicate a $50 billion3 market opportunity for snowmobiles, personal watercrafts, other recreational marine applications, and side-by-side vehicles, with $400 billion4 of upside identified in adjacent applications such as other off-road vehicles, motorcycles, agriculture and commercial vehicles, construction and heavy machinery, and lightweight aviation.
Cutting Edge Technology: Taiga offers a modular hardware and software platform that has been designed to simplify its production and assembly process and decrease development time for new electric vehicle models. The electric powertrain currently used in Taiga’s snowmobiles and personal watercrafts is the fourth generation of Taiga’s electric powertrain technology, developed through years of innovation, R&D and interactive field testing.
Early Entrant Advantage in Mass Production of Electric Powersports Vehicles: Taiga management believes it is the only electric-focused powersports vehicle manufacturer positioned to commence mass production and distribution of its offering in the near or medium term. Taiga Management believes that Taiga holds a significant advantage over other potential all-electric powersports manufacturers based on an estimated minimum three-year research and development time frame to design, pilot, validate and move to mass production of electric powersports vehicles.
Compelling Unit Economics Encourage Consumer Adoption: Taiga’s snowmobiles and personal watercrafts offer a significantly lower total cost of ownership relative to traditional internal combustion alternatives. Data from applicants to Taiga’s fleet program, as well as model estimates, indicate a potential average annual savings of over $2,000 per vehicle for snowmobile fleet operators.5 Taiga’s proprietary telematics fleet management software provides ancillary opportunities to generate accretive, high margin, SaaS revenues.
Transformational Roadmap for Achieving Scale: Taiga currently operates in a 50,000 square foot R&D assembly facility in Montréal, Québec, which is estimated to ramp-up production capacity to 2,000 vehicles per year by the second half of 2021. Taiga also has plans to build an approximately 340,000 square foot mass-production assembly facility over the coming years. Taiga’s planned mass-production facility is anticipated to operate at peak capacity of 60,000 vehicles and 20,000 powertrains per annum by 2025.6 Additional economies of scale may be driven by Quebec’s multi-pronged $7 billion electrification strategy, which is engineered to mitigate supply chain risk and provide access to a highly skilled labor force of more than 120,000 people.
Dealer and Customer Demand: To date, 760+ local and international dealers have applied to carry Taiga’s products, and more than 200 commercial fleet operators have submitted applications to Taiga’s fleet program. To date, Taiga has received over 1,400 snowmobile and personal watercraft pre-orders.

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3 Based on top 5 manufacturers aggregate sales of snowmobiles, personal watercrafts and side-by-sides in 2019 and International Council of Marine Industry Associations data.

4 Based on OEM aggregate sales, Global Info Research report and International Council of Marine Industry Associations Recreational Boating Statistics report for adjacent applications and powertrains.

5 Savings based on averages from data collected by Taiga from fleet operators – 3500km travelled per snowmobile per year and $825 in maintenance costs per snowmobile per year. Costs variable dependent on gas and electricity prices per region.

6 Notes: Manufacturing plans based on Taiga management financial and operational forecasts. This forecast assumes that none of the risk factors referenced in “Forward-Looking Statements” materializes. See “Forward-Looking Statements”.

Summary of the Merger

The Corporation, its sponsor CG Investments Inc. III (the “Sponsor”), and a subsidiary created to facilitate the acquisition (the “Merger Sub”), have entered into a merger agreement (the “Merger Agreement”) with Taiga dated February 17, 2021. The Merger Agreement provides for the acquisition by the Corporation of all the issued and outstanding shares of Taiga by way of a three-cornered amalgamation of Taiga with the Merger Sub.

In consideration for the acquisition of Taiga, common shares of the Corporation (the “New Taiga Common Shares”) will be issued to the existing shareholders of Taiga. The Merger values Taiga at $300 million on a pre-money basis and implies a market capitalization of $537 million based on the Private Placement offering price of $3.00 per share. In connection with the Merger, certain outstanding options to acquire Taiga shares will be exchanged for options to acquire New Taiga Common Shares and outstanding warrants to acquire Taiga shares will be exchanged for warrants to purchase New Taiga Common Shares. As a result of the Merger, Taiga will become a wholly-owned subsidiary of New Taiga.

As the Merger constitutes the Corporation’s qualifying acquisition, holders of the Class A Restricted Voting Units have the right (conditional on the Closing) to redeem all or a portion of their Class A Restricted Voting Units, provided that they deposit their Class A Restricted Voting Units for redemption prior to the deadline for such announcements, which will be publicly disclosed by the Corporation once determined.

In connection with the Merger, the Class A Restricted Voting Shares underlying the Class A Restricted Voting Units not required to be redeemed will convert into New Taiga Common Shares on a one for one basis. The New Taiga Common Shares and the Warrants will then separate, and the New Taiga Common Shares and the Warrants will trade separately. It is a condition of Closing that the New Taiga Common Shares and the Warrants be listed on the TSX. The Corporation has reserved the symbols “TAIG” and “TAIG.W” for the New Taiga Common Shares and Warrants, respectively.

The Merger is subject to the satisfaction of customary conditions, including TSX and NEO approvals. Completion of the Merger is currently expected to occur in April 2021.

Summary of the Private Placement

The Private Placement is of $100 million of non-voting common shares of CGGZ Finance Corp. (“CGI”), a wholly-owned subsidiary of the Corporation, at a price of $3.00 per common share (the “CGI Shares”). The closing of the Private Placement will occur contemporaneously with the Closing, and, in connection with the Closing, the CGI Shares will be exchanged for New Taiga Common Shares on a one-for-one basis. The Private Placement is subject to customary conditions, including the closing of the Merger.

Timing and Additional Information

Pursuant to applicable rules, the Corporation will file with the Canadian securities regulatory authorities in each of the provinces and territories of Canada a non-offering prospectus containing disclosure regarding Taiga and the Merger. The preliminary long-form prospectus is expected to be filed with Canadian securities regulatory authorities in the coming days.

In connection with the proposed Qualifying Acquisition, the Corporation will call special meetings of the shareholders and warrantholders of the Corporation (the “Meetings”). At the Meeting of the Corporation’s shareholders, shareholders will be asked to consider and approve (a) a consolidation of the issued and outstanding New Taiga Common Shares on a 5:1 basis, (b) a name change of the Corporation to Taiga Corporation / Corporation Taiga, and (c) the adoption of a new omnibus equity incentive plan. If required, the Corporation’s shareholders may also be asked to approve an extension of the date by which the Corporation has to consummate a qualifying acquisition. At the Meeting of holders of the Warrants, such holders will be asked to consider and approve a consolidation of the issued and outstanding Warrants. Approval of the matters considered at the Meetings are not conditions to Closing.

Goodmans LLP is acting as legal counsel to the Corporation. Canaccord Genuity Corp. and National Bank Financial Inc. (“NBF”) are acting as lead agents on the Private Placement, and Stikeman Elliott LLP is acting as legal counsel to the lead agents. NBF is also acting as sole financial advisor to Taiga. Fasken Martineau DuMoulin LLP is acting as legal counsel to Taiga.

Further details are set out in an investor presentation (the “Investor Presentation”) and in the Merger Agreement, which will be filed shortly on SEDAR at www.sedar.com.

About Canaccord Genuity Growth II Corp.

The Corporation is a special purpose acquisition corporation incorporated under the laws of the Province of British Columbia for the purpose of effecting an acquisition of one or more businesses or assets, by way of a merger, amalgamation, arrangement, share exchange, asset acquisition, share purchase, reorganization, or any other similar business combination involving the Corporation. The Corporation received $100.05 million of proceeds from its initial public offering which was completed on April 5, 2019. The gross proceeds of the offering were placed in an escrow account with Odyssey Trust Company immediately following the initial public offering and will be released upon consummation of its qualifying acquisition in accordance with the terms and conditions of the escrow agreement.

About Taiga Motors Inc.

Taiga is a Canadian based company, founded in 2015, that is reinventing the powersports landscape with breakthrough electric off-road vehicles. Through a clean-sheet engineering approach, Taiga has pushed the frontiers of electric technology to achieve extreme power-to-weight ratios and thermal specifications that outperform comparable high-performance combustion powersports vehicles. The first models released include a lineup of electric snowmobiles and personal watercraft to deliver on a rapidly growing recreational and commercial customer demand who are seeking better ways to explore the great outdoors without compromise. For more information, visit www.taigamotors.ca.

SOURCE Canaccord Genuity Growth II Corp.

For further information: Canaccord Genuity Growth II Corp., Michael Shuh, Chairman and Chief Executive Officer, CGGZ_investors@cgf.com; Investor Relations Contact: Cody Slach and Tom Colton, Gateway Group, (949) 574-3860, taiga@gatewayir.com; Media Contact: Tatiana Ramirez, Taiga Motors Inc., (514) 516-8559, tatiana.ramirez@taigamotors.ca