pcJ News Briefs – Peeks Social Ltd. (TSX-V: PEEK) has singed a binding letter of intent (LOI) to acquire the technology assets of the Peeks Social livestreaming product launched in November 2016, along with certain other related technology assets from Personas.com Corporation and Riavera Corporation for an deemed purchase price of $128 million.
Riavera Corporation and Personas.com Corporation, a wholly owned subsidiary of Riavera Corporation, are controlled by Mark Itwaru, Chairman & CEO of Peeks Social.
The LOI contemplates Peeks Social issuing 175,150,520 common shares at a negotiated price of $0.7308 per common share for an acquisition cost of $128,000,000 in exchange for the assets. The closing price of Peaks Social’s common shares on the TSX Venture Exchange on November 10, 2017, was $0.37.
Upon closing of the transaction, Peeks Social will have 234,126,791 common shares issued and outstanding.
photo credit: Peaks Social
Peeks Social Ltd. Signs Binding LOI with Personas to Acquire Peeks Social Technology
TORONTO, Nov. 14, 2017 — Peeks Social Ltd. (TSXV:PEEK) (OTCQB:PKSLF) (“Peeks Social” or “the Company”) is pleased to announce that it has entered into a binding Letter of Intent (“LOI”) with Personas.com Corporation (“Personas”) and Riavera Corporation (“Riavera”) for the acquisition of the technology assets of the Peeks Social livestreaming product launched in November 2016, along with certain other related technology assets (the “Technology”).
By way of background, the Company initially entered into a technology licensing agreement with Personas on August 14, 2015, pursuant to which Personas agreed to pay the Company a licensing fee equal to 10% of the gross revenue earned by Personas through the use of the Company’s platforms (the “Licensing Agreement”). The Licensing Agreement was subsequently amended in October 2016 to increase the licensing fee payable to the Company from 10% to 30%. The Licensing Agreement formed the foundation for the product initiative “Peeks Social”, a commerce enabled livestreaming service currently available for download in the iOS and Android app stores. Upon a successful completion of the proposed transaction, the Company would receive 100% of the gross revenue of the Peeks Social livestreaming product.
The LOI contemplates the Company acquiring the Technology in exchange for the issuance of 175,150,520 common shares at a negotiated price of $0.7308 per common share, an acquisition cost of $128,000,000 (the “Transaction”). The closing price of the Company’s common shares on the TSX Venture Exchange on November 10, 2017, was $0.37. It is anticipated that following the Transaction there will be 234,126,791 issued and outstanding common shares of the Company.
There are currently 61,976,271 issued and outstanding common shares of the Company. The Company has a fully diluted common share count of 79,454,933. Following the Transaction, the existing shareholders of Peeks Social Ltd. are anticipated to own 26.5% of the Company on an undiluted basis, and 31.6% of the Company on a fully diluted basis. Personas is an existing shareholder of the Company and currently owns 3,000,000 common shares which are anticipated to be returned to treasury for no additional consideration as part of the Transaction.
Description of the Transaction
It is anticipated that Personas and the Company will effect the Transaction by entering into a definitive agreement to complete an amalgamation, plan of arrangement, reorganization, or similar transaction, and subsequently carry on business as “Peeks Social Ltd.” The principal components of the Transaction are anticipated to be as follows:
a. Immediately prior to the Transaction, the Technology will reside in Personas;
b. Immediately prior to the Transaction, the Company will be continued as a corporation under the Business Corporations Act of Ontario (from Alberta);
c. The parties will have received a final independent valuation report that confirms that the value of the Technology is at least $130,000,000; and
d. Personas will use its good faith efforts to require its shareholders not to sell, transfer, or encumber their respective shares of the Company for a period of four months following the completion of the Transaction.
Relationship between the Company, Personas, and Riavera
Personas is a private company controlled by Mr. Mark Itwaru, Chairman & CEO of the Company. Riavera is an existing “Control Person” of the Company within the meaning of the rules and policies of the TSX Venture Exchange, and is a significant shareholder of the Company and a related party to Personas. Collectively, these parties own an aggregate of 18,602,388 common shares of the Company, representing 30.0% of the issued and outstanding shares of the Company (nondiluted). Accordingly, the proposed Transaction between the Company and Personas would be considered a “related-party transaction” pursuant to the rules of the TSX Venture Exchange and Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions, and the Transaction is subject to minority shareholder approval and valuation requirements, as well as TSX Venture Exchange approval.
The Company established an independent special committee of its Board of Directors in July 2017 to explore and negotiate the acquisition of the Technology. Mr. Itwaru recused himself from the negotiations as a result of his interest in Personas. The independent special committee has recommended the Company proceed with the Transaction, subject to the terms and conditions of the LOI.
Definitive Agreements, Conditions, and Proposed Closing
The LOI currently contemplates the parties entering into a definitive agreement (the “Definitive Agreement”) prior to November 30, 2017, and completing the Transaction by December 31, 2017, unless otherwise agreed by the parties. The LOI may be terminated by either party in certain circumstances, including if the Definitive Agreement is not executed prior to November 30, 2017, or if either party is not satisfied with its due diligence review. The Transaction is subject to requisite regulatory approvals, including the approval of the TSX Venture Exchange, shareholder approval and standard closing conditions, including the approval of the Definitive Agreement by the boards of the respective companies and completion of due diligence investigations to the satisfaction of each of the parties. The legal structure for the Transaction will be confirmed after the parties have considered all applicable tax, securities law, and accounting efficiencies.
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.
For further information, please contact:
Peeks Social Ltd.
Chairman & Chief Executive Officer
Director Investor Relations
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) has reviewed or accepts responsibility for the adequacy or accuracy of this Release.