Calgary, Alberta--(Newsfile Corp. - July 22, 2024) - Odessa Capital Ltd. (TSXV: ALFA.P) ("Odessa"), a capital pool company as defined under Policy 2.4 - Capital Pool Companies ("CPC") of the TSX Venture Exchange (the "Exchange"), is pleased to announce that, further to its news release dated March 20, 2024, it has entered into a definitive arrangement agreement dated July 22, 2024 (the "Arrangement Agreement") with Margaux Real Estate Investment Trust ("Margaux") and 16080022 Canada Inc. ("Subco"), a wholly-owned subsidiary of Margaux. Pursuant to the Arrangement Agreement, Margaux will acquire all of the issued and outstanding common shares of Odessa ("Odessa Shares") by way of a plan of arrangement under the Canada Business Corporations Act (the "Arrangement"), to complete Odessa's qualifying transaction (the "Transaction") in accordance with the policies of the Exchange.
In connection with the Transaction, the resulting issuer will be named "Margaux Real Estate Investment Trust" (the "Resulting Issuer") and is expected to trade under the symbol "ALFA". The Transaction is subject to the receipt of all necessary regulatory and shareholder approvals required by applicable laws, including the approval of the Exchange, receipt of court approval, as well as the satisfaction of conditions to closing as set out in the Arrangement Agreement. It is intended the Resulting Issuer will continue the business of Margaux and be listed on the Exchange as a Real Estate Investment Trust, subject to Exchange approval.
About Margaux
Margaux is a real estate investment trust established by a contract of trust dated October 29, 2021 in Quebec. Margaux owns and operates three self-storage facilities in Quebec. The storage facilities are located in Cowansville, Roxton Pond and Drummondville, Quebec.
The Drummondville facility was purchased by Margaux in December 2021 and is comprised of 100,000 square feet of land on which there are 48 self-storage units. Margaux has had nearly a 100% occupancy rate on the facility, and accordingly has applied and obtained a permit to build additional units. Construction of the facility expansion is expected to begin in September 2024, following the closing of the Transaction.
The Cowansville facility was purchased in September 2022 and is comprised of approximately 500,000 square feet of land on which there are two buildings housing 90 self-storage units. There is also 2 parking lots on the site, one of which is used for long term parking, and the other is leased to a nearby hospital on a long term basis. The occupation rate of this facility is also near 100%.
The Roxton Pound site was purchased in March 2023 and is comprised of approximately 100,000 square feet of land divided in two lots and on which there are presently four buildings housing 156 self-storage units. A fifth building housing 28 self-storage units is under construction and is expected to be completed in August 2024. The occupation rate of this facility is also near 100%.
Margaux has 4,195,059 units ("REIT Units") issued and outstanding, and 700,000 incentive stock options to purchase REIT Units ("Margaux Options") issued and outstanding.
Terms of the Proposed Transaction
The Transaction will be carried out pursuant to the terms of the Arrangement Agreement, a copy of which is, or shortly will be, filed on Odessa's SEDAR+ profile at www.sedarplus.ca. The below description of the terms of the Transaction and the Arrangement Agreement is qualified in its entirety by reference to the full text of the Arrangement Agreement.
Pursuant to the terms of the Arrangement Agreement, at the effective time of the Arrangement, each holder of common shares of Odessa Shares shall exchange their Odessa Shares for REIT Units ("Resulting Issuer Units") on the basis of one (1) fully paid and non-assessable Resulting Issuer Unit for every one (1) post-Consolidation (as defined below) Odessa Shares held, for a deemed price of $1.20 per REIT Unit, options to acquire Odessa Shares shall be exchanged for options to acquire Resulting Issuer Units adjusted for the Consolidation Ratio (as defined below), and Odessa will amalgamate with Subco to form an amalgamated entity ("Amalco"), which will continue as a wholly-owned subsidiary of Margaux. As part of the Arrangement, all issued and outstanding Odessa Shares will be consolidated (the "Consolidation") based on a ratio of one (1) post-consolidation Odessa Share for every twelve (12) pre-consolidation Odessa Shares held (the "Consolidation Ratio").
The Arrangement may constitute a "business combination" within the meaning of Multilateral Instrument 61-101 - Protection of Minority Securityholders in Special Transactions (in Québec, Regulation 61-101 respecting Protection of Minority Security Holders in Special Transactions) ("MI 61-101"). If the Arrangement is determined to constitute a "business combination", Odessa will be required to obtain "minority approval" for the Arrangement in accordance with MI 61-10.
Odessa intends to hold an annual and special meeting of its shareholders (the "Odessa Meeting") in September 2024 to approve certain annual matters and matters related to the Transaction, including, among other matters, the:
- Election of the directors of Odessa;
- Appointment of MNP LLP, Chartered Professional Accountants as the auditors of Odessa and the authorization of the board of directors of Odessa to fix the remuneration thereof;
- Approval of the current stock option plan of Odessa;
- Approval of the Arrangement;
- If applicable, minority approval of the Arrangement; and
- Approval of the continuance of Odessa from a corporation incorporated under the laws of the Province of Alberta to a corporation continued under the Canada Business Corporations Act (collectively, the foregoing approvals, the "Required Approvals").
Additional details regarding the Odessa Meeting will be available in a management information circular (the "Information Circular") that is expected to be delivered to shareholders of Odessa in respect of the Odessa Meeting.
In connection with the proposed Transaction, it is expected that 1,666,667 Resulting Issuer Units will be issued to the holders of Odessa Shares. Based on the number of REIT Units outstanding as of the date hereof, and assuming the completion of the Private Placement (as defined below), it is expected that there would be a minimum of approximately 6,261,726 Resulting Issuer Units and a maximum of approximately 7,061,726 Resulting Issuer Units outstanding upon completion of the Transaction, on a non-diluted basis. On completion of the Transaction, the current shareholders of Odessa are expected to hold an aggregate of approximately 1,666,667 Resulting Issuer Units, representing approximately 27% of the minimum number of Resulting Issuer Units and approximately 21% of the maximum number of Resulting Issuer Units, the current unitholders of Margaux would hold an aggregate of 4,195,059 Resulting Issuer Units, representing approximately 67% of the minimum number of Resulting Issuer Units and approximately 59% of the maximum number of Resulting Issuer Units, and investors in the Private Placement would hold an aggregate of a minimum of approximately 400,000 Resulting Issuer Units and $520,000 in Debentures (assuming the Minimum Offering) and a maximum of approximately 1,200,000 Resulting Issuer Units and $1,560,000 in Debentures (assuming the Maximum Offering), representing approximately 12% of the minimum number of Resulting Issuer Units and approximately 20% of the maximum number of Resulting Issuer Units.
The completion of the Transaction is conditional on obtaining all necessary regulatory, court and shareholder approvals in connection with the matters described above and other conditions customary for a transaction of this type. Odessa and Margaux anticipate closing the Transaction in mid to late October 2024.
Summary Financial Information of Margaux
Based on the audited annual financial statements for Margaux as at and for the year ended December 31, 2022 and December 2023 and the company prepared financial information for the period ended March 31, 2024:
| March 31, 2024 | December 31, 2023 | December 31, 2022 | |
| Assets | |||
| Current Assets | $555,265 | $555,889 | $1,423,854 |
| Total Assets | $7,251,339 | $7,296,698 | $5,003,175 |
| Liabilities | |||
| Current Liabilities | $184,156 | $178,175 | $49,465 |
| Total Liabilities | $3,016,879 | $3,021,827 | $906,465 |
| Total Shareholders Equity | $4,234,460 | $4,274,871 | $4,096,710 |
| For the period ended March 31, 2024 | For the year ended December 31, 2023 | For the year ended December 31, 2022 | |
| Revenues | |||
| Product Revenues | $122,629 | $414,766 | $122,175 |
| Grant Revenues | nil | Nil | Nil |
| Total Revenues | $122,629 | $414,766 | $122,175 |
| Cost of Sales | $37,580 | $144,932 | $47,533 |
| Net operating income | $85,049 | $269,834 | $74,642 |
| Acquisition costs | Nil | ($67,731) | ($49,449) |
| Gain on purchase | $290,000 | Nil | |
| Total | $492,103 | $25,193 | |
| Expenses | |||
| Unit-based compensation | Nil | $108,000 | $258,820 |
| Administrative expenses | $11,289 | $80,400 | $60,425 |
| Financial expenses | $29,331 | $88,546 | $7,455 |
| Equipment Amortization | $50,315 | $205,798 | $57,806 |
| Amortization of Intangible Assets | $34,525 | $138,098 | $33,227 |
| Net Profit (loss) | ($40,411) | ($128,739) | ($392,540) |
| Cash Flow | $44,429 | $116,787 | ($45,394) |
Further financial information will be included in the filing statement to be prepared in connection with the Transaction.
Private Placement of PP Units of Margaux
Prior to the completion of the Transaction, Margaux is expected to complete a non-brokered private placement (the "Private Placement") of units ("PP Units") for aggregate gross proceeds of a minimum of $1,000,000 (the "Minimum Offering") and a maximum of $3,000,000 (the "Maximum Offering"), at a price of $1,000 per PP Unit. Each PP Unit will consist of $520 in principal amount of a convertible debentures ("Debenture") and 400 REIT Units. The Debentures will bear interest at 6% per year and the interest thereon will be payable semi-annually. The Debentures will have a maturity of five years from the date of issuance and will be convertible into REIT Units at a price of $1.40 per REIT Unit. No warrants are expected to be issued in connection with the PP Units.
It is not expected that any finders fees will be paid in connection with the Private Placement.
Proceeds of the Private Placement
It is intended that the net proceeds from the Private Placement will be used for future acquisitions, expansion of current facilities, and for general working capital following completion of the Qualifying Transaction.
Sponsorship
Under the policies of the Exchange, the parties to the Transaction will be required to engage a sponsor for the Transaction unless an exemption or waiver from this requirement can be obtained. Odessa intends to apply to the Exchange for a waiver from the sponsorship requirements for the Transaction based upon the waivers available in Exchange policies. There is no assurance that a waiver from this requirement can or will be obtained.
Resulting Issuer
Immediately following the completion of the Transaction, the Resulting Issuer is expected to be named "Margaux Real Estate Investment Trust," and the Resulting Issuer will be a real estate trust issuer under the policies of the Exchange.
Conditions to Completion of the Transaction
It is intended that the Transaction, when completed, will constitute Odessa's "Qualifying Transaction" in accordance with Policy 2.4 of the Exchange. Completion of the Transaction is subject to a number of conditions precedent, including, but not limited to, (i) acceptance by the Exchange and receipt of other applicable regulatory approvals; (ii) receipt of the Required Approvals at the Odessa Meeting; (iii) receipt of the requisite approval of the unitholders of Margaux of the Transaction; (iv) court approvals; and (iv) completion of the Private Placement. There can be no assurance that the Transaction will be completed as proposed or at all.
Proposed Management and Board of Trustees of Resulting Issuer
Concurrent with the completion of the Transaction, it is expected that certain directors and officers of Odessa will resign and the trustees and officers of the Resulting Issuer will be as follows:
Michel Lassonde, Saint Bruno de Montarville, QC - Chairman of the board of trustees, Chief Executive Officer and Trustee
Michel Lassonde has had a career in law and business. He was called to the Barreau du Québec in 1967 and practiced as a corporate finance, M&A and securities lawyer. As a corporate attorney for Coscient Inc (a TSX-V listed company at the time) he did many public financing by way of tax shelters to finance films and tv shows. In October 1991, he was appointed to the bench, becoming a judge of the civil division of the Cour du Québec. He retired in March 2008 and a few months later was name president of Fronsac Capital Inc, a capital pool company then listed on the TSX-V. He completed the qualifying transaction transforming the company into a real estate business. In August 2011, he then transformed the company to a real estate investment trust, named Fronsac REIT.
He retired from Fronsac Real Estate Investment Trust ("Fronsac REIT") (now called Canadian Net Real Estate Investment Trust) in May 2020. Since October 2021, he has been a trustee and the Chairman of the board of trustees of Margaux.
Mr. Lassonde holds a B.A. from Montreal University , a law degree (L.L.L) from Montreal University and a Masters degree (L.L.M.) in International law from New York University, NYC. He was a lecturer during many years in corporate law and corporate financing at the law faculty of Montreal University.
M. Luc Poirier, Candiac, QC - President of the REIT, Chief Operating Officer and a Trustee
Mr. Poirier is a well known, experienced real estate investor in Quebec. Over the last twenty years he has been directly involved in projects which have obtained many awards in Quebec. Mr. Poirer was involved in the Rubic, a building built using for the first time ever the Upbrella technology. In 2014, he was involved in the Griffix building, a twenty-storey residential building which obtained the Habitation Gala prize. He was also involved in well known projects like St Lambert-sur-le-golf, a condominium development, Saint-Bruno-sur-le-lac, also a condominium project. Recently, Mr. Poirier was involved in a sale of industrial land for over $240MM, which was the highest price ever paid in Quebec for a piece of land to be used for industrial purposes.
Andre Verrier, Drummondville, QC - Chief Financial Officer, Secretary and a Trustee
Mr. Verrier is a Chartered Professional Accountant and has been practicing since 1972. He has experience advising companies at all stages of their life cycle. Mr. Verrier holds a business degree from Laval University and has been a member of the CPA in Quebec since 1972. Since 2007, Mr. Verrier has been the President and founder of Verritex Inc., a advisory firm which specializes in mergers and acquisitions for small and mid-cap companies, as well as real estate venture. Prior thereto he was a partner of the accounting firm Verrier Paquin Hebert CPA from 1976 to 2006.
Richard Morrison, Terrebonne, QC- Independent Trustee
Mr. Morrison is the Managing Director and President of IRR Conseil, a boutique firm advising public and private companies on their financing. He has been active with IRR Capital/IRR Conseil from December 2008 to February 2020, and from January 2023 until now. Previously from March 2020 to December 2022, Mr. Morrison was the Associate Director at Roynat Inc., a division of Scotia Bank, a lender offering flexible financing solutions to medium-size businesses. Before founding IRR Conseil, Mr. Morrison was Vice-President at SIPAR Inc. from April 2004 to September 2008, a portfolio manager specializing in small- and mid-cap companies, where he was co-head of the firm's main accounts.
Mr. Morrison holds a Bachelor's degree in business and a Masters of Business Administration from HEC Montreal. Mr. Morrison is also a Chartered Professional Accountant holder since 1993 and a Chartered Financial Analyst since 1999.
Pierre Colas, Outremont, QC - Independent Trustee
Mr. Colas is the President of Gestion Pierre Colas Inc., a company that owns shares of Gestion Colas Inc., that has a portfolio of residential apartment buildings in Montreal. Since December 2022, Mr. Colas has acted as trustee of Margaux REIT, which owns self-storage facilities in Quebec. In January 2015, Mr. Colas joined the board of Brunswick Exploration Inc., a Canadian company, where he also serves as chair of the audit committee.
Mr. Colas was the Vice President Investment Banking of Industrial Alliance Securities Inc. from 2010 to 2014 and Desjardins Securities Inc. from 2005 to 2010. Mr. Colas is retired from the securities industry, but has served on the board of various public companies in Canada and has occupied other senior roles over his 25 year career.
Mr. Colas holds a diploma from College Jean de Brebeuf in Montreal and a Bachelor of Commerce degree from Concordia University.
Arm's Length Transaction
Michel Lassonde is the Chief Executive Officer, President and a director of Odessa and a trustee of Margaux and holds 1,000,000 Odessa Shares (5%) and 125,000 REIT Units (2.99%). Pierre Colas is a director of Odessa and a trustee of Margaux and holds 500,000 Odessa Shares (2.50%) and 50,000 REIT Units (1.19%). Andre Verrier and Richard Morrison do not hold any REIT Units.
As no party is a control person of both Odessa and Margaux, the proposed Transaction does not constitute a "Non-Arm's Length Qualifying Transaction" within the meaning of Exchange Policy 2.4 and, as such, Majority of the Minority Approval (as defined in Exchange Policy 2.4) is not required to approve the proposed Transaction.
Notwithstanding the foregoing, as disclosed above, the Arrangement may constitute a "business combination" within the meaning of MI 61-101, in which case Odessa will be required to obtain "minority approval" for the Arrangement in accordance with MI 61-101.
Finder's Fees
No finder's fees or commissions are payable by Odessa or Margaux in connection with the closing of the Transaction.
Information Circular
In connection with the Transaction and pursuant to Exchange requirements, Odessa will prepare and file the Information Circular under its profile on SEDAR+ at www.sedarplus.ca, which will contain details regarding the Transaction, the Arrangement, the Private Placement, Odessa, Margaux and the Resulting Issuer.
Shareholder approval is not required with respect to the Transaction under the rules of the Exchange, however, as the Transaction constitutes a business combination transaction pursuant to MI 61-101, minority shareholder approval will be required. In the event any of the conditions set forth above are not completed or the Transaction does not proceed, Odessa will notify shareholders. Trading in the common shares of Odessa will remain halted. In the event that the Transaction is completed, and provided that the Exchange receives all requisite documentation, the Resulting Issuer Units will be listed for trading on the Exchange.
This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction, nor shall there be any offer, sale, or solicitation of securities in any state in the United States in which such offer, sale, or solicitation would be unlawful.
ABOUT ODESSA
Odessa is a capital pool company (a "CPC") that has not commenced commercial operations and has no assets other than cash. Except as specifically contemplated in the Exchange's CPC Policy, until the completion of its qualifying transaction, the Corporation will not carry on business, other than the identification and evaluation of businesses or assets with a view to completing a proposed qualifying transaction.
For further information, please contact:
Michele Lassonde
Director
Odessa Capital Ltd.
Telephone: 514-795-6955
Email: milass2610@gmail.com
Andre Verrier
Trustee
Margaux REIT
Telephone: 819 475-7377
Email: andre.verrier@strategesma.com
ANY SECURITIES REFERRED TO HEREIN WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 (THE "1933 ACT") AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO A U.S. PERSON IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE 1933 ACT.
NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAW.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. The Exchange has in no way passed upon the merits of the Transaction and has neither approved nor disapproved the content of this press release.
The information contained or referred to in this press release relating to Margaux has been furnished by Margaux. Although Odessa has no knowledge that would indicate that any statement contained herein concerning Margaux is untrue or incomplete, neither Odessa nor any of its respective directors or officers assumes any responsibility for the accuracy or completeness of such information.
Completion of the Transaction is subject to a number of conditions, including but not limited to, Exchange acceptance, receipt of requisite regulatory approvals, minority shareholder approval, and completion of the Private Placement. Where applicable, the Transaction cannot close until the required shareholder approvals, and any ancillary matters thereto, are 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.
This forward-looking information in respect of Odessa and Margaux reflects Margaux's or Odessa 's, as the case may be, current beliefs and is based on information currently available to Odessa and Margaux, respectively, and on assumptions Odessa and Margaux, as the case may be, believes are reasonable. These assumptions include, but are not limited to, management's assumptions about the Exchange approval for the Transaction, closing of the Private Placement, closing of the Arrangement announced above and Margaux's assumptions regarding its business objectives.
Forward-Looking Information Cautionary Statement
This release includes forward-looking information ("forward-looking information") within the meaning of Canadian securities laws regarding Odessa, Subco, Amalco, Margaux, the Resulting Issuer and their respective businesses, which may include, but is not limited to, statements with respect to the completion, and the terms and conditions, of the Transaction, the Margaux business plans, the satisfaction of conditions to closing, the sponsorship requirements and intended application for exemption therefrom, the proposed composition of the board of directors of the Resulting Issuer, the proposed business and business plans of the Resulting Issuer, the Private Placement and the amount of the financing, the terms and timing on which the Transaction and the Private Placement are intended to be completed, the use of the net proceeds from the Private Placement, the ability to obtain regulatory and shareholder approvals, the name of the Resulting Issuer, the appointment of the certain auditors and the continuance of Odessa. Often, but not always, forward-looking information can be identified by the use of words such as "plans", "is expected", "expects", "scheduled", "intends", "contemplates", "anticipates", "believes", "proposes", "estimates" or variations of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Such statements are based on the current expectations and views of future events of the management of each entity, and are based on assumptions and subject to risks and uncertainties. Although the management of each respective entity believes that the assumptions underlying the forward-looking information as applicable to them or their respective businesses or the Transaction are reasonable, such forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Odessa, Margaux and the Resulting Issuer to be materially different from those expressed or implied by such forward-looking information and may prove to be incorrect. The forward-looking information, events and circumstances discussed in this release, including but not limited to regulatory approval, minority shareholder approval, completion of the Transaction (and the proposed terms upon which the Transaction is proposed to be completed) and the Private Placement, may not occur by certain specified dates or at all and could differ materially as a result of known and unknown risk factors and uncertainties affecting the companies, including the risk that Margaux and Odessa may not obtain all requisite approvals for the Transaction, including the approval of the Exchange for the Transaction (which may be conditional upon amendments to the terms of the Transaction), the risk that the applicable parties will not receive requisite court approvals for the Arrangement, risks of the self storage industry, failure to obtain regulatory or shareholder approvals, general business, economic, economic, competitive, political and social uncertainties; any estimated amounts, timing of the Private Placement, the equity markets generally and risks associated with growth, exploration and development, general capital market conditions and market prices for securities, junior market securities; real estate company market conditions and the market conditions of the real estate industry in general; competition; and changes in legislation affecting Odessa, Margaux and the Resulting Issuer. Although Odessa and Margaux have attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking information, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. Accordingly, readers should not place undue reliance on any forward-looking information contained herein. No statements comprising forward-looking information can be guaranteed. Except as required by applicable securities laws, forward-looking information contained herein speak only as of the date on which they are made and Odessa and Margaux undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.
NOT FOR DISTRIBUTION TO THE U.S. NEWSWIRE SERVICES OR
FOR DISSEMINATION IN THE UNITED STATES
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/217365
SOURCE: Odessa Capital Ltd.
