Tantalus Systems to Raise US $8 Million Financing and go public via Qualifying Transaction with RiseTech CapitalTuesday, September 15, 2020
Tantalus Systems and RiseTech Enter into Letter of Intent for Qualifying Transaction
Burnaby, BC, September 15, 2020--(T-Net)--RiseTech Capital Corp. (TSXV: RTCC.P) announced it has entered into a letter of intent with Tantalus Systems Holding Inc., a private company incorporated pursuant to the federal laws of Canada.
RiseTech and Tantalus have agreed to complete a plan of arrangement, merger, amalgamation, share exchange and/or other similar transaction, whereby RiseTech will acquire all of the issued and outstanding shares of Tantalus.
The Transaction is subject to the approval of the TSX Venture Exchange (the "Exchange"), and is intended to constitute RiseTech's Qualifying Transaction (as defined under Policy 2.4 - Capital Pool Companies of the Exchange ("Policy 2.4")).
The Transaction is an arm's length transaction and therefore will not require shareholder approval under Policy 2.4. However, if, for example, the Transaction is structured as an amalgamation or a plan of arrangement, shareholder approval may otherwise be required for corporate law reasons.
The precise terms of the Transaction, including the structure of the Transaction, will be incorporated into a definitive agreement (the "Definitive Agreement") to be negotiated between the Parties.
In connection with the Transaction, Tantalus intends to undertake an equity offering to raise gross proceeds of approximately USD$8,000,000 (the "Concurrent Financing") on terms to be mutually agreed upon by the Parties.
RiseTech is a capital pool company ("CPC") as defined under Policy 2.4. It is expected that RiseTech (following closing of the Transaction, referred to as the "Resulting Issuer") will be listed on the Exchange as a Tier 1 Technology issuer.
There is no finder's fee payable in connection with the Transaction and no deposits or advances have, or will be made to Tantalus with respect to the Transaction.
Trading in RiseTech's shares has been halted, and the halt is expected to remain in place until the Transaction is completed.
Tantalus Systems Holding Inc.
Over the past three decades, Tantalus has been consistently and creatively developing technology that enhances the safety, security, reliability and efficiency of public power and electric cooperative utilities across North America and the Caribbean Basin. Tantalus provides mission-critical smart grid solutions that include a market-leading edge computing platform, robust software applications and an advanced IoT communications network.
By leveraging technology, Tantalus empowers its utility customers to access granular data from both legacy meters and cutting-edge two-way intelligent devices to improve customer service, facilitate consumer engagement, realize cost savings and streamline system operations.
The Company's comprehensive suite of smart grid solutions includes advanced metering infrastructure, demand-management technologies, data analytics, distribution automation and street lighting control systems - a broad portfolio built purposefully to support smart community initiatives essential to both the near-term and long-term success of the utilities Tantalus supports and the communities they serve. Following the closing of the Transaction (the "Closing"), the business of the Resulting Issuer will be the business of Tantalus.
Tantalus (following the planned combination with a holding company) has 59 shareholders. Of these, Redpoint Ventures, a venture capital firm located in the United States with a large number of investors, is the only shareholder expected to hold in excess of 10% of the Resulting Issuer following the Concurrent Financing (and it is expected that Redpoint Ventures will, directly or indirectly, hold less than 20% of the Resulting Issuer following the Concurrent Financing).
For the twelve-month period ended December 31, 2019, Tantalus generated total revenue of US$41,638,000 and had a total loss of US$599,000. As at the most recent year-end of December 31, 2019, Tantalus had total assets of US$21,093,000 and total liabilities of US$23,551,000. The foregoing amounts are audited and determined in accordance with United States generally accepted accounting principles.
Summary of the Transaction
The LOI sets out the general terms of the Transaction as currently contemplated by the Parties. The precise terms and conditions of the Transaction will be contained in the Definitive Agreement to be negotiated and entered into by the Parties. The Parties intend to negotiate in good faith to reach the Definitive Agreement on or before September 21, 2020 (the "Expiry Date"), and to consummate the Transaction on or before December 1, 2020 (the "Closing Date").
Concurrently with the execution of the Definitive Agreement, each Party will use its commercially reasonable efforts to cause its directors, officers and shareholders holding 5% or more of its issued and outstanding shares to enter into lock-up and support agreements in a form to be negotiated in good faith between the Parties.
The Transaction will take the form of a plan of arrangement, merger, amalgamation, share exchange and/or other similar transaction whereby all of the outstanding Tantalus Shares will be acquired in exchange for common shares of RiseTech (each, a "Consideration Share", and, collectively, the "Consideration Shares"), in consideration of the issuance to the Tantalus shareholders (including persons who acquire shares in the capital of Tantalus pursuant to the Concurrent Financing), on a pro rata basis, of Consideration Shares for all Tantalus shares held immediately prior to the Closing.
Tantalus shareholders, on a fully diluted basis, will receive Consideration Shares representing 98% of the Resulting Issuer, on a fully diluted basis, prior to giving effect to the Concurrent Offering. The Consideration Shares may be subject to Exchange escrow restrictions and to hold periods as required pursuant to applicable securities laws. The Transaction will be completed pursuant to, and in strict accordance with, corporate law requirements and available exemptions under applicable securities legislation.
The completion of the Transaction is subject to the satisfaction of various conditions as are standard for a transaction of this nature, including but not limited to: (i) receipt of all necessary consents, waivers, permissions and approvals for the Transaction, including the approval of the Exchange; (ii) the Resulting Issuer meeting the minimum listing requirements of the Exchange; (iii) the Closing Date occurring no later than December 1, 2020, unless otherwise extended in writing by mutual agreement of both Parties; (iv) the representations, warranties and covenants made by each Party being true and correct in all material respects as of the Closing Date; (v) no Party being in material breach of its obligations under the Definitive Agreement; (vi) no event or change occurring that would reasonably likely to have a material adverse effect on either RiseTech or Tantalus; (vii) the completion of the Concurrent Financing; (viii) the issuance of the Consideration Shares being exempt from prospectus requirements under applicable securities laws; (ix) Tantalus providing RiseTech with such financial statements as are required for the Qualifying Transaction; (x) if required, Tantalus providing RiseTech with a formal valuation acceptable to the Exchange; and (xi) RiseTech having a minimum cash on its balance sheet equal to or greater than the cash on its balance sheet as of June 30, 2020.
The Parties may not consider alternative transactions until 5:00 p.m. on November 23, 2020.
In connection with the Transaction, it is anticipated that Tantalus will complete the Concurrent Financing to raise gross proceeds of approximately USD$8,000,000. The Concurrent Financing is expected to be conducted using subscription receipts. The subscription receipts will be sold at an issue price to be determined in the context of the market.
Tantalus has entered into an engagement letter with Canaccord Genuity Corp. in connection with the Concurrent Financing providing for a syndicate of agents comprised of Canaccord Genuity and Cormark Securities Inc., as co-lead agents and joint bookrunners, and PI Financial Corp. The syndicate members in the Concurrent Financing will receive cash compensation equal to 6% of the gross proceeds of the Concurrent Financing and warrants to purchase shares of the Resulting Issuer equal to 6% of the shares issued pursuant to the Concurrent Financing (excluding shares issued pursuant to certain subscribers). When the terms of the Concurrent Financing are determined and the sale price of the subscription receipts has been finalized, RiseTech will issue a further press release to update the market with respect to the Concurrent Financing.
The Resulting Issuer plans to use the proceeds of the Concurrent Financing to accelerate several strategic growth initiatives aimed at expanding Tantalus' existing product portfolio through research and development, strategic partnerships and targeted acquisitions to provide additional software applications, services and support to its growing user community of utilities and for general working capital purposes.
Tantalus has been advised by PenderFund Capital Management that it intends to participate in the Concurrent Offering as a lead investor.
Directors, Officers of the Resulting Issuer
Following the Closing, the management and Board of Directors of the Resulting Issuer will each be comprised of the current management team and Board of Directors of Tantalus and one director of RiseTech.
Peter Londa - President & Chief Executive Officer, Director - Pete Londa is a seasoned smart grid technology executive with over 20 years of experience in leadership roles who joined Tantalus as President & Chief Executive Officer in 2014. Pete is also a director of Tantalus. Prior to joining Tantalus, Pete served as the Independent Chair of the Board of Directors for World Energy Solutions, Inc., a publicly traded company on NASDAQ where he also served as the Chair of the Mergers and Acquisitions Committee. Pete was actively involved in leading World Energy's sale to EnerNOC, Inc., another publicly traded company on NASDAQ. Previously, Pete served as the Chief Executive Officer of BPL Global, Ltd., a leading smart grid company delivering technology solutions to the electric utility industry with operations in the United States, Europe, Middle East, India, and China. While there, he was responsible for driving and managing all aspects of corporate strategy, operations, engineering, corporate development and financing, and was instrumental in executing the sale of BPL Global to a division of the Danaher Corporation. Additionally, he has held various leadership positions in the technology and investment banking industries at companies including The Chart Group, L.P., Thoughtworks, Inc., and SG Cowen. Pete is a graduate of Emory University and holds a J.D., MBA in Finance and Corporate Law, and a B.A. in Economics.
Dermot O'Leary - Chief Operating Officer - Dermot O'Leary is a 40-year veteran of the utility industry, with expertise in all aspects of strategic planning, product development, manufacturing and supply chain processes, customer deployments, business development, contracting, and international business, and currently serves as Chief Operating Officer of Tantalus. Before joining Tantalus in 2014, he served as Executive Vice President and General Manager of the substation group of Serveron, a VC-funded technology company that was acquired by BPL Global. Prior to his roles at Serveron and BPL Global, Dermot spent the majority of his career in a number of international executive leadership positions within Schlumberger, including as VP and GM of Schlumberger RMS U.K. and Southern Africa, Managing Director of Schlumberger M&S South Africa, and VP-Sales of Schlumberger Industries North America. Dermot also served as Vice President and General Manager of Cellnet, where he was responsible for the business unit P&L of the AMR group.
George Reznik - Chief Financial Officer - George Reznik brings over 25 years of expertise in executive financial leadership and operations having held key roles at rapidly growing public companies in the high technology industry. George currently serves as Chief Financial Officer of Tantalus. Prior to joining Tantalus in September 2020, George served as Chief Financial Officer and Corporate Secretary of Intrinsyc Technologies Corporation, an IoT edge computing company. George also served as the Corporate Finance Valuation Practice Leader of Deloitte, where he was a member of the accounting practice in Canada and the United Kingdom for over 12 years. George is a Chartered Professional Accountant - Chartered Accountant, a Chartered Business Valuator, a Certified Fraud Examiner and the 2017 recipient of the BC Public Company CFO of the Year award. Additionally, George is the current Chair of the BC Tech Association CFO Council.
Hugo Hodge - Executive Vice President & General Manger, Caribbean Basin - Hugo Hodge serves as Executive Vice President and General Manager of the Caribbean Basin for Tantalus. Hugo has dedicated his career to the success of utilities and most recently served as Chief Executive Officer of the Virgin Islands Water & Power Authority prior to joining Tantalus. At Tantalus, Hugo leads strategic efforts to expand Tantalus' presence in the Caribbean Basin through his extensive experience in distribution utility operations coupled with his understanding of the unique business and operational issues in the region. Hugo has also held technical and leadership roles at Griffin Power (GA), Marietta Power (GA), and Georgia Power. Hugo is actively involved with the Caribbean Electric Utility Services Corporation (CARILEC), American Public Power Association (APPA), and the Electric Cities of Georgia (ECG) to support public power utilities across North America and the Caribbean.
Michael Julian - Executive Vice President, Sales and Marketing - Mike Julian currently serves as Executive Vice President, Sales and Marketing of Tantalus. Mike Julian leads Tantalus' sales organization and is responsible for growing Tantalus' revenue profile and market presence across the public power and electric cooperative utility market segment throughout North America. A former United States Air Force officer, Mike brings over 20 years of leadership, sales and sales management experience within the energy and communications industries through prior roles at General Electric, Ericsson, Tekelec and Catapult Communications. Mike is a graduate of General Electric's Technical Sales Program. He earned an MBA from the W.P. Carey School of Business at Arizona State University and holds a B.S. in Electrical Engineering from Villanova University
Michael Grandis - General Counsel and Corporate Secretary - Mike Grandis currently serves as the General Counsel of Tantalus and is responsible for all legal matters across the company and its affiliates. He oversees contracting, corporate governance, partnerships, intellectual property, employment, compliance and other transactional matters, as well as serving as a strategic member of the senior leadership team. Prior to joining Tantalus, Mike was a corporate partner in the New York law office of Loeb & Loeb LLP where he also acted as outside general counsel to Tantalus for several years. Mike has nearly two decades of experience practicing in New York City law firms representing clients on a broad range of corporate, securities and other transactional engagements. Additionally, Mike serves as the chairman of the Board of Trustees of a charter school network in New York and also on the Board of Directors of a large youth sports organization. He also lectures on venture finance and other entrepreneurial topics at Cornell Tech, a joint academic venture between Cornell University and the Technion-Israel Institute of Technology, in New York. Mike received his B.S. in Marketing and Management from the McDonough School of Business at Georgetown University and his J.D. from Columbia University School of Law where he was a member of the Columbia Business Law Review.
Board of Directors
Laura Formusa - Chair and Director - Laura Formusa has more than 30 years of experience in the utilities industry and is currently the Chair of the Board of Directors of Tantalus. She served as President and Chief Executive Officer of Hydro One Inc. from 2007 until her retirement at the end of 2012. She joined Hydro One Inc. in 1980, and took on roles of increasing responsibility, including Vice-President, General Counsel and Secretary. Ms. Formusa serves on the boards of Equitable Life Insurance Company of Canada where she is Chair of the Governance Committee, 407 International Inc., and ENMAX where she is Chair of the Safety and Human Resources Committee. She has also served on the Boards of DHX Media Ltd., the Canadian Electricity Association, ICES, the Banting Research Foundation and York University. Ms. Formusa has a Bachelor of Laws from York University's Osgoode Hall Law School and holds the Institute of Corporate Directors Designation.
Dr. Francis Harvey - Director - Dr. Francis Harvey is currently a director of Tantalus. He served as the 19th Secretary of the United States Army from November 2004 to March 2007. As the Secretary, Dr. Harvey was responsible for the Department of the Army's annual budget and supplemental of over $200 billion. He led a workforce of over one million Active Duty, Army National Guard, Army Reserve Soldiers and Department of the Army civilian employees. Just prior to becoming the Secretary, Dr. Harvey served on six corporate Boards including three portfolio companies of the Carlyle Group. He served as the vice chairman for two of those companies. Currently, Dr. Harvey is on the corporate or advisory boards of six companies and private equity firms in the energy, defense and information technology sectors, including Tantalus. The majority of Dr. Harvey's business career was spent with the Westinghouse Electric Corporation, which he joined in 1969 as a senior engineer and retired from in 1997 as the Chief Operating Officer. During the course of his Westinghouse career, he held several senior leadership positions including Vice President of Science and Technology, President of the Government and Environmental Services Company and President of the Defense and Electronics Systems Group. Dr. Harvey holds a B.S. from the University of Notre Dame and a PhD in Metallurgy and Material Science from the University of Pennsylvania.
Tom Liston - Director - Tom Liston is a director of RiseTech (TSXV: RTCC.P) and WELL Health Technologies. Mr. Liston is a technology investor and advisor. He is the founder of Water Street Corp and currently serves on the Board of Directors for several public and private technology companies, and has a strong track record of shareholder value creation in that capacity. Prior to his current role, he was the Chief Investment Officer of a leading technology-focused venture capital firm, which provided growth capital to late-stage private companies with a focus on technology, media and healthcare. Mr. Liston is a Chartered Financial Analyst and was a consistent top-ranked research analyst covering the technology sector.
Peter Londa - President & Chief Executive Officer, Director - See above.
John McEwen - Director - John McEwen is a co-founder of Discovery Capital and a director of the BC Discovery Fund (VCC) Inc., as well as currently a director of Tantalus. He has worked with nearly 200 technology companies, and serves on several investee company boards of directors. He spearheaded corporate finance initiatives for companies such as Sierra Wireless Inc. and Circon Systems Corp., accelerating their development by attracting key corporate and additional venture capital backing. Prior to co-founding Discovery Capital, he worked with IBM Canada Ltd. He holds a B.Comm from U.B.C.
Sponsorship of a Qualifying Transaction of a Capital Pool Company is required by the Exchange unless an exemption from the sponsorship requirement is available. RiseTech intends to apply for a waiver from the sponsorship requirements. There is no assurance that RiseTech will be able to obtain such a waiver.
About RiseTech Capital Corp.
RiseTech is a Capital Pool Company as defined by the policies of the Exchange. The Company's principal business activity is to identify and evaluate opportunities for acquisition of assets or business. The Company is headquartered in Vancouver, British Columbia.
About Tantalus Systems Holding Inc.
Over the past three decades, Tantalus has been consistently and creatively developing technology that enhances the safety, security, reliability and efficiency of public power and electric cooperative utilities across North America and the Caribbean Basin. Tantalus provides mission-critical smart grid solutions that include a market-leading edge computing platform, robust software applications and an advanced IoT communications network. By leveraging technology, Tantalus empowers its utility customers to access granular data from both legacy meters and cutting-edge two-way intelligent devices to improve customer service, facilitate consumer engagement, realize cost savings and streamline system operations. The Company's comprehensive suite of smart grid solutions includes advanced metering infrastructure, demand-management technologies, data analytics, distribution automation and street lighting control systems - a broad portfolio built purposefully to support smart community initiatives essential to both the near-term and long-term success of the utilities Tantalus supports and the communities they serve.
A comprehensive press release with further particulars relating to the Transaction, including further particulars of the Resulting Issuer and the Concurrent Financing, will follow in accordance with the policies of the Exchange.
All information contained in this press release with respect to RiseTech and Tantalus was supplied, for inclusion herein, by the respective Parties and each Party and its directors and officers have relied on the other Party for any information concerning the other Party.
Completion of the Transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange Requirements, majority of the minority shareholder approval. Where applicable, the Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.
The TSX Venture Exchange Inc. 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 Manny Padda, the CEO of RiseTech, by email at firstname.lastname@example.org or by telephone at 778-381-6322.
Notice on Forward-Looking Information
Information set forth in this news release contains forward-looking statements. These statements reflect management's current estimates, beliefs, intentions and expectations regarding the future, including, but not limited to, RiseTech's completion of the Transaction and related transactions, RiseTech entering into the Definitive Agreement, the completion of the Concurrent Financing, PenderFund Capital Management's intention to participate in the Concurrent Financing as a lead investor, the proposed officers of the Resulting Issuer and the conditions to be satisfied for the completion of the Transaction. Such statements are not guarantees of future performance. They are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the statements, including risks related to factors beyond the control of RiseTech. Such factors include, among other things: the Parties may not enter into the Definitive Agreement; the requisite corporate approvals of the directors and shareholders of the Parties may not be obtained; the Exchange may not approve the Transaction; sufficient funds may not be raised pursuant to the Concurrent Financing and certain anticipated participants including PenderFund Capital Management may not invest; and other risks that are customary to transactions of this nature. No assurance can be given that any of the events anticipated by the forward-looking statements will occur or, if they do occur, what benefits RiseTech will obtain from them. Except as required under applicable securities legislation, RiseTech undertakes no obligation to publicly update or revise forward-looking information.
Burnaby, BC (InfoTech)
Other Recent Company News
Tantalus Systems Corp.
Copyright © T-NET. All Rights Reserved. | https://www.bctechnology.com