NOT FOR DISTRIBUTION TO UNITED STATES WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES. 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. THIS NEWS RELEASE DOES NOT CONSTITUTE AN OFFER OR SALE OF SECURITIES IN THE UNITED STATES.
TORONTO, Jan. 18, 2023 (GLOBE NEWSWIRE) — ESG Capital 1 Inc. (TSXV: ESGO-P) (the “Company” or “ESG Capital”), is pleased to announce that further to the Company’s press releases dated December 13, 2022 and January 17, 2023, ESG and Full Circle Lithium Inc. (“Full Circle”) have closed the previously announced private placement of subscription receipts (the “Subscription Receipts”) for aggregate gross proceeds of approximately C$9,782,350 (the “Concurrent Financing”). The Concurrent Financing was comprised of a brokered private placement offering of Subscription Receipts (the “Brokered Offering”) by Clarus Securities Inc. (“Clarus”), PowerOne Capital Markets Limited (together with Clarus, the “Co-Lead Agents”) and Canaccord Genuity Corp. (together with the Co-Lead Agents, the “Agents”) and a concurrent non-brokered offering of Subscription Receipts (the “Non-Brokered Offering”), in connection with a proposed business combination transaction (the “Proposed Transaction”) between the Company and Full Circle which will include the listing of the common shares of the resulting issuer under the Proposed Transaction (the “Resulting Issuer”).
Pursuant to the Brokered Offering, Full Circle issued an aggregate of 11,800,000 Subscription Receipts at a purchase price of $0.70 per Subscription Receipt for gross proceeds of $8,260,000, and ESG Capital issued an aggregate of 1,789,000 Subscription Receipts at a purchase price of $0.70 per Subscription Receipt for gross proceeds of $1,252,300. Pursuant to the Non-Brokered Offering, Full Circle issued an aggregate of 385,786 Subscription Receipts for gross proceeds of approximately $270,050. Each Subscription Receipt entitles the holder thereof to receive, without payment of any additional consideration and without further action on the part of each subscriber, subject to adjustment, one common share in the capital of ESG Capital or Full Circle, as applicable (each, an “Underlying Share”), and one half of one common share purchase warrant in the capital of ESG Capital or Full Circle, as applicable (each, an “Underlying Warrant”), in accordance with the terms of subscription receipt agreements entered into between each of Full Circle and ESG Capital, and the Co-Lead Agents, and Marrelli Trust Company Limited, dated January 17, 2023 (the “Subscription Receipt Agreements”), upon the satisfaction or waiver of the escrow release conditions described in the Subscription Receipt Agreements (the “Escrow Release Conditions”). Upon the closing of the Proposed Transaction, the Underlying Shares and Underlying Warrants issued pursuant to the conversion of the Subscription Receipts will be automatically exchanged for shares and warrants, respectively, of the Resulting Issuer on a one-for-one basis.
In connection with the Concurrent Financing, and pursuant to the terms of an agency agreement dated January 17, 2023, entered into by the Agents, the Company and Full Circle, the Agents are entitled to: (i) a cash commission of $608,646.50 (the “Cash Fee”); and (ii) 869,495 compensation options (the “Compensation Options”). Each Compensation Option will be exercisable for one common share of the Resulting Issuer (a “Resulting Issuer Share”) and one half of one warrant to purchase a common share of the Resulting Issuer (a “Resulting Issuer Warrant”), at a price of $0.70 subject to adjustment, for a period of 24 months commencing upon satisfaction of the Escrow Release Conditions, with each Resulting Issuer Warrant underlying the Compensation Options being exercisable into one Resulting Issuer Share at a price of $1.10 until the date that is 24 months following the satisfaction of the Escrow Release Conditions.
The gross proceeds of the Concurrent Financing, less 25% of the Cash Fee paid to the Agents by Full Circle, have been deposited in escrow pending the satisfaction of the Escrow Release Conditions. The Compensation Options issued to the Agents in connection with the ESG Capital portion of the Brokered Offering will be held in escrow until completion of the Proposed Transaction.
Full Circle intends to use the net proceeds of the Concurrent Financing for the development of the Georgia operational plant, business development, general corporate and working capital purposes.
The Subscription Receipts issued by ESG Capital will be subject to a statutory hold period of four months and a day in accordance with applicable securities legislation.
The Concurrent Financing is subject to certain conditions including, but not limited to, the receipt of all necessary approvals including the acceptance by the TSXV. This news release does not constitute an offer to sell or a solicitation of an offer to sell any of 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.
Related Party Transaction
David D’Onofrio, a director and insider of ESG, acquired 115,000 Subscription Receipts of ESG under the Brokered Offering, representing approximately 6.4% of the Subscription Receipts sold by ESG pursuant to the Brokered Offering and approximately 0.85% of the total Subscription Receipts sold pursuant to the Brokered Offering, which constituted a “related party transaction” within the meaning of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”). ESG was exempt from the formal valuation and minority shareholder approval requirements of MI 61-101 pursuant to section 5.5(a) and section 5.7(1)(a), as the fair market value of the Subscription Receipts acquired by Mr. D’Onofrio was not greater than 25% of ESG’s market capitalization. A material change report will be filed in connection with the participation of Mr. D’Onofrio in the Brokered Offering less than 21 days in advance of the closing of the Brokered Offering, which the Company deemed reasonable in the circumstances so as to be able to avail itself of potential financing opportunities and complete the Brokered Offering in an expeditious manner.
About Full Circle Lithium Inc.
With a fully permitted lithium processing plant in Georgia, USA and a complement of experts, Full Circle is a lithium processor focused on lithium and battery materials reintegration to meet the demand for crucial battery-grade raw materials, utilizing proprietary technology and know-how. Full Circle is focused on three complementary battery material processing divisions: battery recycling from end-of-life lithium-ion batteries, lithium feedstock recycling from industrial and chemical feedstock, and lithium refinery from upstream feedstock. Full Circle is a private company incorporated under the laws of the Province of Ontario.
About ESG Capital 1 Inc.
ESG Capital is a capital pool company created pursuant to the policies of the TSXV and intends that the Proposed Transaction will constitute its “Qualifying Transaction” under the policies of the TSXV. The Proposed Transaction will not constitute a non-arm’s length qualifying transaction or a related party transaction pursuant to the policies of the TSXV. It does not own any assets, other than cash or cash equivalents and its rights under the LOI. The principal business of ESG Capital is to identify and evaluate opportunities for the acquisition of an interest in assets or businesses and, once identified and evaluated, to negotiate an acquisition or participation subject to acceptance by the TSXV so as to complete a Qualifying Transaction in accordance with the policies of the TSXV.
For more information about ESG Capital, please contact Robert Pollock, Chief Executive Officer, at:
Robert Pollock President, CEO, CFO, Corporate Secretary and Director
T: 416 214-9672
Forward-Looking Statements Disclaimer
Certain information in this press release may contain forward-looking statements. This information is based on current expectations that are subject to significant risks and uncertainties that are difficult to predict. Actual results might differ materially from results suggested in any forward-looking statements. ESG Capital assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those reflected in the forward looking-statements unless and until required by securities laws applicable to ESG Capital.
Additional information identifying risks and uncertainties is contained in filings by ESG Capital with the Canadian securities regulators, which filings are available at www.sedar.com.
Completion of the Proposed Transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and, if applicable pursuant to TSXV requirements, majority of the minority 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 Proposed 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.
The TSX Venture Exchange Inc. has in no way passed upon the merits of the Proposed Transaction and has neither approved nor disapproved the contents of this press release.