The Company is also pleased to announce that it has entered into an agreement with a syndicate of underwriters led by
Strategic Benefits of the PanGeo Transaction
Completion of the PanGeo Transaction will significantly accelerate the Company's vertical move into the provision of offshore survey and inspection services using Kraken technology as part of a robotics/data as a service business model. The PanGeo Transaction will also increase Kraken's exposure to the non-defense market, including the offshore renewable energy market (PanGeo's largest market) which will help to diversify its client base. Following closing of the PanGeo Transaction, Kraken will be able to offer a holistic solution of world-leading technologies and services in subsea acoustic and optical imaging using Kraken's suite of ultra-high resolution seabed 3D acoustic imaging sensors, autonomous robotics, and optical laser scanning paired with PanGeo's suite of leading-edge sub-seabed high-resolution 3D acoustic imaging capabilities.
Transaction Details
The aggregate purchase price for PanGeo is up to
$3 million payable in immediately available funds (the "Cash Consideration") on the closing date of the PanGeo Transaction (the "Closing Date");-
12,068,965 Common Shares having a deemed value of
$0.58 each and$7 million in the aggregate to be issued on the Closing Date; $4 million to be paid in cash, plus interest at a rate of 6% per annum, on the second anniversary of the Closing Date, to be evidenced by non-transferable promissory notes (the "Promissory Notes"); and-
Up to an aggregate of
$9 million to be paid pursuant to an earn-out on the following terms: - an amount equal to 300% of the amount by which certain qualifying revenue in the one-year period immediately following the Closing Date exceeds
$9,500,000 , up to a maximum payment of$4,500,000 (the "First Earn-Out Amount"); and -
the amount equal to 300% of the amount by which certain qualifying revenue in the two-year period immediately following the Closing Date exceeds
$21,500,000 , up to a maximum payment of$4,500,000 less any amount paid pursuant to the First Earn-Out Amount (the "Second Earn-Out Amount", and together with the First Earn-Out Amount, the "Earn-Out Amounts").
The Earn-Out Amounts will be paid within thirty (30) business days following the filing deadline date or the actual filling date on SEDAR, whichever is the earliest, of Kraken's quarterly financial statements for the quarter that includes first or second year anniversary of the Closing Date, as the case may be. At Kraken's option and, subject always to the approval of the
The Promissory Notes also provide Kraken with the option, subject to TSXV approval at the time, to satisfy up to 40% of any principal amount owing under the Promissory Notes by issuing Common Shares in accordance with the terms of the PanGeo Agreement.
Based on the unaudited consolidated financial statements prepared on a review engagement basis using Canadian accounting standards for private enterprises for the operating entities, being
Kraken will also assume ordinary course debt owing to a Canadian chartered bank in the amount of approximately
Completion of the PanGeo Transaction is subject to certain closing conditions including all required regulatory and stock exchange approvals and the completion of a financing for gross proceeds of not less than
Management Comments
Commenting on the PanGeo Agreement,
Offering Details
In connection with the Offering, the Company will file a prospectus supplement (the "Prospectus Supplement") to its short form base shelf prospectus dated
The net proceeds from the Offering will be used: (i) to fund the Cash Consideration; (ii) to provide working capital to PanGeo to accelerate the growth of its service business; (iii) to repay a portion of the PanGeo Indebtedness; and (iv) for general working capital for Kraken to strengthen its balance sheet and provide flexibility to position the Company for future growth.
The Company has granted the Underwriters an option (the "Over-Allotment Option") to cover over-allotments and for market stabilization purposes, exercisable at any time, in whole or in part, until the date that is 30 days following the closing of the Offering, to purchase up to an additional number of Units equal to 15% of the Units sold pursuant to the Offering on the same terms and conditions of the Offering. The Over-Allotment Option will be exercisable to acquire Units, Common Shares and/or Warrants (or any combination thereof) at the discretion of the Underwriters.
The closing of the Offering is expected to occur on or about
A copy of the Base Shelf Prospectus can be obtained on SEDAR at www.sedar.com and from
The Units, and the Common Shares and Warrants comprising the Units, have not been and will not be registered under the United States Securities Act of 1933, as amended (the "
This news release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Units in
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ABOUT
Certain information in this news release constitutes forward-looking statements. When used in this news release, the words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "seek", "propose", "estimate", "expect", and similar expressions, as they relate to the Company, are intended to identify forward-looking statements. In particular, this news release contains forward-looking statements with respect to, among other things, the completion of the PanGeo Transaction, including the satisfaction of all closing conditions, potential business synergies as a result of the PanGeo Transaction, the anticipated market for Kraken's products and services following completion of the PanGeo Transaction, business objectives, expected growth, results of operations, performance, business projects and opportunities, financial results, and statements relating to the Offering, including the terms, timing, potential completion and the use of proceeds of the Offering. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Such statements reflect the Company's current views with respect to future events based on certain material factors and assumptions and are subject to certain risks and uncertainties, including without limitation, the ability of the Company to satisfy all closing conditions of the PanGeo Transaction; the ability to integrate the operations of PanGeo into Kraken's Robotics and Data as a Service business model; the positive reception of the PanGeo Transaction by Kraken's target market for sub-seabed acoustic imaging; changes in market; competition; governmental or regulatory developments; the ability of Kraken to satisfy the conditions to closing of the Offering, including obtaining approval of the TSXV on a timely basis, or at all; that the Offering may not be completed on the terms and timeline indicated, or at all; that the Company's use of proceeds of the Offering may differ from those indicated; additional financing requirements, general economic conditions and other factors set out in the Company's public disclosure documents. Many factors could cause the Company's actual results, performance or achievements to vary from those described in this news release, including without limitation those listed above. These factors should not be construed as exhaustive. Should one or more of these risks or uncertainties materialize, or should assumptions underlying forward-looking statements prove incorrect, actual results may vary materially from those described in this news release and such forward-looking statements included in, or incorporated by reference in this news release, should not be unduly relied upon. Such statements speak only as of the date of this news release. The Company does not intend, and does not assume any obligation, to update these forward-looking statements. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement.
Neither the
SOURCE
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