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Pond Technologies enters into Non-Binding Letter of Intent to acquire Regenurex Health Corporation

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Pond Technologies enters into Non-Binding Letter of Intent to acquire Regenurex Health Corporation

Canada NewsWire

CALGARY, Aug. 27, 2018 /CNW/ - Pond Technologies Holdings Inc. (TSX.V: POND) is pleased to announce that on August 23, 2018, it entered into a non-binding letter of intent ("LOI") to acquire all of the issued and outstanding shares (the "Purchased Shares") of Regenurex Health Corporation, ("Regenurex") a British Columbia based owner and operator of an algae production facility, engaged in the cultivation and extraction of astaxanthin, a valuable nutraceutical product.  Driven by the demonstrated synergies of the two companies, Pond will acquire the Regenurex brand, plant, and related production assets, through acquisition of the Purchased Shares for a minimum of $2,269,599 (the "Minimum Share Purchase Price"), comprised of $500,000 cash ("Pond Cash Investment") to be invested in Regenurex in consideration for the issuance to Pond of Regenurex common shares and 737,333 Pond shares valued at $2.40 per share (the "Pond Minimum Share Price Shares").  The LOI provides for an additional earn-out (the "Performance Earn-Out") of up to 3,154,658 Pond shares at a deemed value of $2.40 (the "Pond Earn-Out Shares") for a maximum capped value of $7,595,180 (the "Maximum Performance Earn-Out"), pro-rated, based upon actual achieved financial performance of Regenurex in 2020.  Additionally, upon closing Pond will eliminate the total outstanding debt of Regenurex of $565,000 (the "Regenurex Debt Pre-Payment") in exchange for Pond shares issued to the debtholders priced at the 30 day average closing share price immediately prior to the closing date of the transaction and such Pond shares shall be subject to a five month contractual hold period. The Pond Cash Investment proceeds will be used for the integration of Pond technology into the Regenurex production facility and for working capital purposes.  

Following the completion of satisfactory legal and financial due diligence, the approval of both boards of directors, and the receipt of all necessary third party approvals including the TSXV, Pond and Regenurex intend to negotiate and enter into a binding definitive agreement targeted for completion by the end of September, 2018. The anticipated closing of this transaction is October 31, 2018 ("Closing").

Holders of Regenurex Senior Preferred Shares will, as a class, receive the right to convert at any time up to and including August 1, 2022 their Regenurex Senior Preferred Shares for their proportionate share of the Pond Minimum Share Price Shares issued from the treasury of Pond and such Pond shares shall be subject to a 12 month contractual hold period from Closing.

Holders of Regenurex Junior Preferred Shares will receive a conversion right for their proportionate amount of the actual Pond Earn-Out Shares issued for the Performance Earn-Out.  The Performance Earn-Out will be determined no earlier than January 1, 2021 based upon the actual earnings before interest and taxes ("EBIT") as defined by International Financial Reporting Standards for Regenurex from January 1, 2020 to December 31, 2020. Regenurex has estimated EBIT for this period to be $1,738,297 (the "Target EBIT") which, at a multiple of 6 times is $10,429,779, from which is subtracted the $2,269,599 Minimum Share Purchase Price and the $565,000 Regenurex Debt Pre-Payment for a total maximum potential Performance Earn-Out of  $7,595,180.  Any shortfall below the Target EBIT will result in a reduction in the Pond Earn-Out Shares issued.

In addition to the above conditions precedent to the parties entering into the definitive agreement, completion of the transaction will be subject to a number of conditions, including but not limited to, certain Regenurex employees entering into employment agreements with Pond, and obtaining an extension to the term of Regenurex's current facility lease.

"The decision for us was straightforward", said Curtis Braun, Regenurex CEO, "We are completely aligned with Pond management's view of astaxanthin's future as both a stand alone product and as a blend with other health and wellness ingredients. We believe that the investment along with Pond's proprietary growth platform will allow us to better realize the future value for our shareholders and will have a transformative effect on the global astaxanthin market and we are excited to be a part of it."

Steve Martin, Pond CEO, commented, "We are very happy that Regenurex has chosen to join us. The synergies between our approaches made this transaction very attractive.  We expect that our growth platform will significantly increase the output of their BC facility, and when coupled with their proprietary natural  extraction technology, will serve to give us a sustainable competive advantage, in both the upstream production and downstream processing of this very valuable product worldwide."

Astaxanthin is one of nature's most powerful anti-oxidants. It is used in aquaculture and for human consumption. Oxidative stress in the body has been linked to the development of several major health problems. Astaxanthin helps to reduce or repair the damage caused by oxidation by surrounding the body's cells with a protective layer. It has been found to have a positive effect on muscle, joint, eye, brain, heart and skin health.

About Regenurex:

Regenurex Health Corporation, https://canada.regenurex.com, is developing a line of products which help the body to regenerate. The first product, astaxanthin, is naturally derived from algae, and is a very powerful antioxidant and anti-inflammatory.  Regenurex operates a 10,000 square foot algae production facility, in Agassiz, British Columbia, Canada.  The Company's process is sustainable, and its process is environmentally friendly. Regenurex's astaxanthin is unique because they use a proprietary natural extraction process that produces the most natural astaxanthin on the market, which preserves the benefits of the whole algae.

About Pond Technologies:

Located in Markham Ontario, Pond is a technology company that provides profitable solutions to the global health and wellness challenges of pollution abatement and nutrition. Pond's proprietary growth platform optimizes key growth inputs in order to provide a controlled environment that maximizes the growth of algae and other organisms. It enables industrial emitters to generate new revenue streams from the transformation of waste CO2 to valuable algae-based products used as proteins for animal feed and nutraceutical products like Chlorella, Spirulina and Astaxanthin for human consumption.

Forward-looking Statements

This press release contains forward-looking statements within the meaning of applicable securities laws, including statements regarding Pond's anticipated acquisition of Regenurex, the use of proceeds of Pond's investment in Regenurex and the expected synergies of the transaction on Pond's and Regenurex's combined business. Such forward-looking statements are based on certain key expectations and assumptions made by Pond, including expectations and assumptions concerning the satisfaction of legal and financial due diligence, obtaining board approval, receipt of TSXV and all other applicable third party consents, the negotiation and entering into of the definitive agreement and satisfaction of all closing conditions in respect of the transaction, including the reorganization of Regenurex. Although Pond believes that the expectations and assumptions on which such forward-looking statements are based are reasonable, undue reliance should not be placed thereon and Pond can give no assurance that they will prove to be correct. By its nature, such forward-looking statements are subject to various risks and uncertainties, which could cause the actual results and expectations to differ materially from the anticipated results or expectations expressed, including the possible failure of the parties to enter into the definitive agreement or to close the transaction. Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date hereof, and to not use such forward-looking information for anything other than its intended purpose. Pond does not undertake any obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.

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. No stock exchange, securities commission or other regulatory authority has approved or disapproved of the information contained herein.

View original content: www.pondtech.com  

SOURCE Pond Technologies Holdings Inc.

View original content: http://www.newswire.ca/en/releases/archive/August2018/27/c7901.html

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