MISSISSAUGA, Ontario – Further to its announcement dated November 3, 2014, The Second Cup Ltd. (TSX:SCU) (“Second Cup” or the “company”) is pleased to announce that it has entered into an agreement with GMP Securities L.P. (“GMP”) to undertake a private placement of common shares (“Shares”) for gross proceeds of up to CDN $5 million (the “Offering”).
The Offering will be made on a fully marketed best efforts basis at a price per Share equal to CDN $2.75 (the “Issue Price”). As part of the Offering, Second Cup’s directors and other insiders have agreed to purchase an aggregate amount of CDN $2.7 million of the Shares, being the maximum permissible insider participation.
In addition, the company hereby grants to GMP an option, exercisable any time prior to the Closing Date (defined later), to arrange for the purchase of up to an additional 15% of the number of Shares at a price per share equal to the Issue Price for additional gross proceeds of up to CDN $0.75 million.
Proceeds from the Offering will be used to support Second Cup’s strategic growth plan including the renovation of company-owned cafés in priority locations, and for general corporate purposes.
The renovations will include some of the 17 newly acquired cafés in the Greater Toronto Area, formerly owned by franchisees Debbie and Bob Riche. Second Cup finalized the acquisition of these cafés on November 6, 2014. Further details on the business can be found in the Investor Presentation available on Second Cup’s website at www.secondcup.com.
The Offering is expected to close on or about November 27, 2014 or such date as the company and GMP may agree (the “Closing Date”). All securities issued by the company in connection with this Offering will be subject to a statutory hold period of four months plus one day. Completion of the Offering is subject to TSX approval.
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 unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.
The participation by the company’s directors and other insiders in the Offering is considered to be a “related party transaction” as defined in Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”).
The Offering is exempt from the formal valuation and minority shareholder approval requirements of Multilateral Instrument 61-101, as neither the fair market value of the securities being issued to insiders, nor the consideration being paid by such insiders, exceeds 25% of Second Cup’s market capitalization.
This news release is being issued less than 21 days before the closing of the Offering. This shorter period is reasonable and necessary in the circumstances as the company wishes to complete the Offering in a timely manner.
