/NOT FOR DISTRIBUTION TO U.S. NEWS WIRE
SERVICES OR FOR DISSEMINATION IN THE
UNITED STATES/
TSX Venture Exchange
Trading Symbol: NTW
VANCOUVER, BC, Sept. 28, 2020 /CNW/ - Northway Resources
Corp. (the "Company") and Kenorland Minerals Ltd.
("Kenorland") jointly announce that further to their press
release dated September 14, 2020,
Kenorland has entered into an agreement with a syndicate of agents
led by Stifel GMP and including Canaccord Genuity Corp, Haywood
Securities Inc., Laurentian Bank Securities Inc. and Echelon Wealth
Partners Inc. (the "Agents") pursuant to which the Agents will
undertake a brokered private placement of up to 12 million
Kenorland subscription receipts (each, a "Subscription Receipt"),
on a best efforts basis, at a price of C$1.00 per Subscription Receipt (the "Offering
Price") for gross proceeds of up to C$12
million (the "Offering").
Kenorland has agreed to grant the Agents an option (the "Agents'
Option"), which will allow the Agents to offer such number of
additional Subscription Receipts as is equal to up to 25% of the
Subscription Receipts issued under the Offering, having the same
terms as the Subscription Receipts. The Agents' Option may be
exercised in whole or in part at any time up to two days prior to
the closing of the Offering. Each Subscription Receipt will
entitle the holder thereof to receive, without any further action
on the part of the holder or payment of any additional
consideration, one common share of the resulting issuer (each, a
"Resulting Issuer Share"), upon completion of the Transaction (as
defined below) (the "Resulting Issuer"), subject to the
satisfaction or waiver of the Escrow Release Conditions (as defined
herein) prior to December 31, 2020
(or such later date as may be agreed to by Kenorland and the
Agents) (the "Outside Date"), and provided that the Transaction has
not otherwise been terminated.
As set out in the press release of September 14, 2020, Northway's acquisition of Kenorland is to be
conducted by way of a three-cornered amalgamation among
Northway, Kenorland and a
wholly-owned subsidiary of Northway (the "Amalgamation") which will
result in the reverse takeover of Northway by Kenorland (the "Transaction"). The
Resulting Issuer is expected to be named "Kenorland Minerals Ltd."
or such other name as the Company and Kenorland may determine.
As previously announced, prior to the completion of the
Transaction, Northway intends to
undertake a common share consolidation (the "Consolidation") on a
7-to-1 basis. In addition, pursuant to the Amalgamation, the
common shares of Kenorland (the "Kenorland Shares") will be
exchanged for common shares of the Resulting Issuer on a 1-for-2
basis. Following the Consolidation and Amalgamation, each
Subscription Receipt will entitle the holder to receive one
Resulting Issuer Share on completion of the Transaction. In the
event that the Consolidation is not completed on a 7-to-1 basis
and/or the exchange of Kenorland shares under the Amalgamation is
not completed on a 1-for-2 basis, the number of Kenorland Shares
that each Subscription Receipt will entitle a holder to acquire
shall be adjusted accordingly.
The gross proceeds of the Offering less 50% of the Agents' fee
and certain expenses will be held in escrow and, upon the
satisfaction or waiver of certain conditions (the "Escrow Release
Conditions"), including all conditions to the closing of the
Transaction, the net proceeds will be released to the Company and
the remaining Agents' fee will be released to the Agents. In
the event that the Escrow Release Conditions are not satisfied by
the Outside Date, the proceeds of the Offering will be returned to
the holders of the Subscription Receipts and the Subscription
Receipts will be cancelled.
The net proceeds will be used by the Resulting Issuer, Kenorland
Minerals Ltd., to fund exploration activities across its portfolio
of projects in Alaska and
Canada and for general corporate
purposes.
Kenorland has agreed to pay the Agents a cash commission equal
to 6.0% of the gross proceeds of the Offering (including any
proceeds derived from exercise of the Agents' Option), other than
in respect of proceeds of up to C$8
million raised from purchasers on a President's list in
respect of which the Agent will receive a corporate advisory fee of
2.0% of the gross proceeds. In addition, Kenorland will issue
to the Agents such number of broker warrants (each, a "Broker
Warrant") as is equal to 6.0% of the aggregate Subscription
Receipts sold under the Offering (Including on any exercise of the
Agents' Option but excluding up to C$8
million worth of sales to subscribers on the President's
List), each of which will entitle the Agents to purchase one
Kenorland Share at a price of at C$1.00 for a period of 24 months following the
date of issuance of the Broker Warrants.
Completion of the Transaction will be subject to a number of
conditions, including but not limited to, closing conditions
customary to transactions of this nature, including the completion
of the Consolidation and Amalgamation, the completion of the
Offering, approval of the shareholders of the Company and
Kenorland, approvals of all regulatory bodies having jurisdiction
in connection with the Transaction and approval of the TSX Venture
Exchange including the satisfaction of its initial listing
requirements. There can be no assurance that the Transaction will
be completed as proposed or at all, or that the Escrow Release
Conditions will be satisfied.
The Subscription Receipts will be offered by way of private
placement pursuant to exemptions from prospectus requirements to
residents in all Provinces of Canada and such other Canadian jurisdictions
as may be agreed to by Kenorland and the Agents. Subject to
applicable laws and the provisions of the agency agreement to be
entered into among Kenorland, Northway and the Agents with respect to the
Offering, the Agents may offer the Subscription Receipts outside of
Canada, including in the United States in reliance with applicable
private placement exemptions under United
States federal and state securities laws.
The closing of the Offering is expected to take place on or
around October 27, 2020.
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.
The Exchange has not yet conditionally approved the listing of
the Resulting Issuer Shares underlying the Subscription
Receipts.
The Subscription Receipts will not be listed on any exchange and
shall be subject to an indefinite hold period as set out in
National Instrument 45-102 - Resale of Securities. The
Resulting Issuer Shares issuable upon the conversion of the
Subscription Receipts will not be subject to a hold period under
applicable securities legislation in Canada.
Northway anticipates that
certain "related parties" of Northway may participate in the Offering.
Participation of such "related parties" in the Offering will
constitute a "related party transaction" as defined under
Multilateral Instrument 61-101 -- Protection of Minority Security
Holders in Special Transactions ("MI 61-101"). Northway expects that the Offering will be
exempt from the formal valuation and minority shareholder approval
requirements of MI 61-101 as neither the fair market value of
securities being issued to insiders nor the consideration being
paid by insiders will exceed 25% of Northway's market capitalization.
Forward-Looking Statements
This news release contains certain "forward looking statements"
including, for example, statements relating to the completion of
the Transaction and Offering, Use of Proceeds, the receipt of all
necessary approvals and the Resulting Issuer's anticipated share
capital. Such forward-looking statements involve risks and
uncertainties, both known and unknown. The results or events
depicted in these forward-looking statements may differ materially
from actual results or events. In addition to other factors
and assumptions which may be identified herein, assumptions have
been made regarding and are implicit in, among other things:
receipt of regulatory approvals, the Company's ability to complete
the Transaction and Offering, the state of the capital markets, the
impact of the COVID-19 pandemic, the ability of the Resulting
Issuer to successfully manage the risks inherent in pursuing
business opportunities in the mining industry, and the ability of
the Resulting Issuer to obtain qualified staff, equipment and
services in a timely and cost efficient manner to develop its
business. Any forward-looking statement reflects information
available to the Company as of the date of this news release and,
except as may be required by applicable securities laws, the
Company disclaims any intent or obligation to update any
forward-looking statement, whether as a result of new information,
future events or results or otherwise.
For more information visit our website
www.northwayresources.com
On behalf of the Board of Directors
Zachary Flood
President and Chief Executive Officer
Telephone: (604) 363-1779
zach@kenorlandminerals.com
Completion of the Transaction is subject to a number of
conditions, including but not limited to, TSX-V acceptance and if
applicable pursuant to TSX-V requirements, disinterested
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 the Company should be considered highly speculative.
The TSX-V has in no way passed upon the merits of the
Transaction and has neither approved nor disapproved the contents
of this news release.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
SOURCE Northway Resources Corp.
