Sustainable Produce Urban Delivery Inc. provided an update on its proposed transaction with Rainy Hollow Ventures Inc., a Capital Pool Company listed on the TSX Venture Exchange. As previously-announced by Rainy Hollow, the Company and Rainy Hollow entered into a letter of intent (the “LOI”) dated September 30, 2020 which outlines the terms and conditions pursuant to which Rainy Hollow and SPUD will complete a transaction that will result in a reverse take-over of Rainy Hollow by SPUD (the “Transaction”).
In connection with the Transaction, SPUD intends to complete a brokered private placement financing (the “Offering”) of subscription receipts (the “Subscription Receipts”) of SPUD for gross proceeds of at least C$25,000,000 and up to C$30,000,000. Each Subscription Receipt shall entitle the holder thereof to receive, upon the satisfaction or waiver (to the extent such waiver is permitted) of certain escrow release conditions prior to the escrow release deadline, including all conditions precedent to the Transaction being satisfied, and without payment of additional consideration therefor, one common share of SPUD (a “SPUD Share”). The Company expects the Offering to close on or about December 9, 2020.
Canaccord Genuity Corp. and Desjardins Securities Inc., are acting as co-lead agents in connection with the Offering (the “Co-Lead Agents”) on behalf of a syndicate of agents, including Cormark Securities Inc. and PI Financial Corp. The Co-Lead Agents have also been granted an option (the “Over-Allotment Option”), exercisable in whole or in part at any time up to 48 hours before the Closing Date of the Offering, to increase the size of the Offering by up to 15%.
Upon completion of the Transaction, the proceeds of the Offering are anticipated to be used principally for expansion of its operations, working capital and general corporate purposes.