Sustainable Produce Urban Delivery closes $24.2M going public financing

CPE News (12/23/2020) – Sustainable Produce Urban Delivery Inc. (SPUD) has completed its previously announced private placement of subscription receipts (SRs) by issuing 3,227,500 SRs at $7.50 each for gross proceeds to SPUD of approximately $24.2 million

The financing is part of SPUD going public transaction by way of reverse take-over of capital pool company (CPC) Rainy Hollow Ventures Inc. (TSX0V: RHV.P).

On December 21, 2020, SPUD and Rainy Hollow entered into an arrangement agreement which sets out the terms of the RTO by way of a statutory plan of arrangement.

Concurrently with the arrangement, Rainy Hollow intends to consolidate its common shares on an eight-to-one basis and change its name to “Sustainable Produce Urban Delivery Inc.” or such other name as may be agreed to by SPUD and Rainy Hollow.

Upon completion of the arrangement, approximately 43,267,801 post-consolidation Rainy Hollow shares will be issued to former holders of SPUD shares and that an aggregate of 8,292,349 post-consolidation Rainy Hollow shares will be reserved for issuance to former holders of SPUD options and SPUD warrants.

At the price of subscription receipts financing, SPUD would be be valued at $324.1 million including previosuly closed $15.5 milloin convertible debenture financing and the subscription receipts financing.

New SPUD will be led by CEO and director Peter van Stolk. SPUD board will consist of Monique A. Wilberg, a founding shareholder of Gateway Casinos and Entertainment Inc.; Todd Cherniak, CEO & General Counsel of Canadian Magnetic Imaging; Eric Phaneuf, President & CEO of Walter Capital Partners; and Terry Vanderkruyk, President of ZT Capital Inc and former executive at Coastal Contacts.

photo credit: Sustainable Produce Urban Delivery Inc. (SPUD)

News Release

Sustainable Produce Urban Delivery Inc. and Rainy Hollow Ventures Inc. Announce Closing of Subscription Receipt Private Placement

VANCOUVER, British Columbia, December 23, 2020 – Sustainable Produce Urban Delivery Inc. (“SPUD”) and Rainy Hollow Ventures Inc. (TSXV: RHV.P) (“Rainy Hollow”) are pleased to announce that SPUD has closed its previously-announced private placement of subscription receipts (“Subscription Receipts”) by issuing 3,227,500 Subscription Receipts at a price of $7.50 each, for gross proceeds to SPUD of approximately $24.2 million, pursuant to an agency agreement dated December 23, 2020 between Canaccord Genuity Corp. and Desjardins Securities Inc., who acted as co-lead agents, Cormark Securities Inc., PI Financial Corp. (collectively, the “Agents”), SPUD and Rainy Hollow.

The gross proceeds from the sale of the Subscription Receipts, less the Agents’ expenses paid at the closing of the private placement, are being held in escrow by Computershare Trust Company of Canada (“Computershare”) in accordance with a Subscription Receipt Agreement dated December 23, 2020 among SPUD, Computershare, Canaccord Genuity Corp. and Desjardins Securities Inc. and will be released to SPUD upon satisfaction and/or waiver of certain escrow release conditions (the “Escrow Release Conditions”), including completion of the Arrangement (as defined below). If the Arrangement closes on or before April 22, 2021, the escrowed proceeds from the private placement of Subscription Receipts will be released to SPUD. If the Arrangement fails to close by that date or is terminated prior thereto, the gross proceeds and pro rata entitlement to interest earned on the escrowed proceeds will be paid to the holders of the Subscription Receipts. SPUD will use the net proceeds from the private placement: (a) to fund the business plan of SPUD; (b) for Arrangement expenses; and (c) for general corporate purposes and future working capital of the Resulting Issuer (as defined below). Although SPUD intends to use the net proceeds from the private placement as described herein, the actual allocation of proceeds may vary, depending on future operations or unforeseen events or opportunities.

Upon satisfaction of the Escrow Release Conditions, each Subscription Receipt will be automatically exchanged, without any further action by its holder, and for no additional consideration, for one common share of SPUD (a “SPUD Share”). Upon completion of the Arrangement, each underlying SPUD Share issued pursuant to exchange of the Subscription Receipts will be exchanged for one post-consolidation common share of Rainy Hollow.

In connection with the private placement, SPUD paid the Agents a cash commission in an aggregate amount of $1,446,367.50 and issued an aggregate of 192,849 broker warrants (the “Subscription Receipt Broker Warrants”) to the Agents, each entitling its holder to purchase one SPUD Share or one share of the Resulting Issuer, as applicable, at a price of $7.50 for a period of 24 months following the release of escrow funds. The Agents’ cash commission has been deposited in escrow with Computershare and will be released to the Agents upon satisfaction and/or waiver of the Escrow Release Conditions.

As previously announced, on December 21, 2020, SPUD and Rainy Hollow entered into an Arrangement Agreement, which sets out the terms of the reverse take-over of Rainy Hollow by SPUD by way of a statutory plan of arrangement under Section 288 of the Business Corporations Act (British Columbia) involving Rainy Hollow, SPUD and its securityholders (the “Arrangement”). It is anticipated that the Arrangement will constitute the Qualifying Transaction (as such term is defined in Policy 2.4 – Capital Pool Companies of the TSX Venture Exchange (the “TSXV”)) of Rainy Hollow, which is seeking conditional approval from the TSXV in respect thereof.

Concurrently with the Arrangement, Rainy Hollow intends to consolidate its common shares on an eight-to-one basis and change its name to “Sustainable Produce Urban Delivery Inc.” or such other name as may be agreed to by SPUD and Rainy Hollow and accepted by the relevant regulatory authorities. Upon completion of the Arrangement, the combined entity (the “Resulting Issuer”) will carry on the current business of SPUD and will qualify as a Tier 1 Industrial Issuer pursuant to the policies of the TSXV.

About Rainy Hollow

Rainy Hollow is a Capital Pool Company governed by the policies of the TSXV. Rainy Hollow’s principal business is the identification and evaluation of assets or businesses with a view to completing a Qualifying Transaction. Investors are cautioned that trading in the securities of a Capital Pool Company should be considered highly speculative.

About SPUD

SPUD provides an online grocery shopping platform focused on organic and natural foods through SPUD.ca, where consumers can order and schedule home delivery of groceries and other essentials.

FoodX Technologies is the software behind SPUD.ca’s integrated food business eco-system that includes online retail, community retail locations, food preparation services, wholesale and last mile distribution. FoodX Technologies is the only scalable end-to-end eGrocery Management Solution (eGMS) designed to meet the needs of large and small grocery retailers while providing profitable unit economics. FoodX’s award winning eGrocery platform is the culmination of 20 years of experience in online grocery and has a proven track record of delivering efficiency, sustainability and profitability. FoodX utilizes Microsoft as its technology partner and has partnered with Canada’s Digital Technology Super Cluster in the advancement of its innovation pipeline.

SPUD is headquartered in Vancouver, British Columbia. For more information, please visit http://spud.ca.

Investors are cautioned that, except as disclosed in the management information circular of SPUD or filing statement of Rainy Hollow to be prepared in connection with the Arrangement, any information released or received with respect to the Arrangement may not be accurate or complete and should not be relied upon. Trading in the securities of Rainy Hollow should be considered highly speculative.

Neither the TSXV nor the Toronto Stock Exchange has in any way passed upon the merits of the proposed Arrangement and has neither approved nor disapproved the contents of this news release.

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or any state securities laws and may not be offered or sold within the United States or to U.S. persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

For further information:
Sustainable Produce Urban Delivery Inc.
Peter van Stolk – Chief Executive Officer
Phone: (604) 215-7783

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.