Canadian food group GreenSpace Brands said it has signed a “definitive investment agreement” with Vancouver-based PenderFund Capital Management.
GreenSpace Brands said in a statement today (19 February) the agreement gives PenderFund “certain rights to acquire a control position in the company, including the right to appoint a majority of the company’s board of directors”. The Toronto-based firm also announced further details of a private placement of shares, the plans of which were revealed in January.
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It had previously said it was seeking to raise CAD5m (US$3.7m) through a “non-brokered” private placement after completing a five-month strategic review.
The company said today, the terms of the “new” plan will see PenderFund “become the lead order of the financing”. GreenSpace will issue up to 100 million common shares priced at 6.5 Canadian cents each to raise CAD6.5m. The private placement is available to accredited investors in Canada and will be offered in tranches through to 15 April.
Following the closing of the first batch, GreenSpace said PenderFund will acquire 19.9% of its outstanding common shares, while four of the company’s existing board members will resign. And thirdly, PenderFund will nominate three new directors, one of whom is Paul Henderson.
Henderson, who has 30 years experience in the food industry and was CEO of Golden Boy Foods, a subsidiary of US food business Post Holdings, until 2015, will become executive chairman.
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By GlobalDataThe transactions are subject to approval from the TSX Venture Exchange on which GreenSpace is listed. And the company’s “disinterested shareholders” will also need to sign off on PenderFund’s “control position”.
If cleared, the investment manager will acquire the balance of the shares not taken up by other investors and another board director will resign.
On completion of the proposed transaction, the board of directors will be made up of five, three of whom will have been appointed by PenderFund.
“Pender’s right to nominate the majority of the board will continue for two years following completion of the initial tranche of the private placement. After such a two-year period, and for so long as Pender and its affiliates own at least 5% of the outstanding common shares of the company, Pender will be entitled to nominate one director to the company’s board,” GreenSpace said.
It continued: “Proceeds of the private placement will be used to pay or otherwise satisfy the company’s accounts payable and inventory build needs and for general corporate purposes.”
In addition, GreenSpace said one of its creditors – Primary Capital – has agreed to settle the company’s outstanding debt with it by converting into equity at the 6.5 cents issue price, equating to around CAD3.6m.
GreenSpace Brands’ portfolio consists of nuts and seed mixes under its Central Roast brand, organic plant-based cheeses through the Go Veggie and Riot Eats lines, Love Child baby foods and Cedar cold-pressed juices. Over the past year, it has sold off two business units – Kiju organic juices and the Rolling Meadow Dairy brand – to boost profit margins and improve its balance sheet.
