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Mineral Hil Industries Ltd.l Announces the Execution of a Binding LOI for the Acquisition of a “REIT“ Company

09.10.2019  |  CNW
VANCOUVER, Oct. 8, 2019 - Mineral Hill Industries Ltd. ("MHI" or "Company"), trading on the TSX Venture Exchange ("TSXV") under the trading Symbol "MHI", on the Deutsche Boerse, Frankfurt under the trading Symbol "N8Z1 wishes to announce that in reference to its News Release dated September 5, 2019, it has executed a binding Letter of Intent ("LOI") on September 30, 2019 with a privately held "REIT" company ("Target-REIT") incorporated under the laws of the state of Florida, USA. As previously announced, Target-REIT leases its real estate tracts and properties which it assembled over the past five years and leased to RV-parks, agriculture cultivation centers and Cannabis dispensaries in Florida and Colorado.

After recent management meetings in Florida, the parties confirmed the terms of the previously non-binding LOI and manifested the basic terms for a Definitive Acquisition Agreement ("DA-Agr") with this binding LOI. The parties have scheduled its next meetings in Colorado during the first half of October in order to continue its due diligence on Target-REIT's real estate tracts and properties which are to be included in MHI's proposed acquisition in preparation for the DA-Agr. The total value of Target-REIT's assets ("Assets- REIT") being subject to the acquisition is deemed to be CAD$ 24,467,766 ("Deemed-Value") derived from the projected average value of the Assets-REIT for the next three years of operation, minus the presently outstanding debt and/or mortgages against the Assets-REIT. The deemed values are conditional upon the confirmation by an independent valuation and/or Target-REIT's audited financial statements and, if necessary, will be adjusted in the DA-Agr.

All shareholders, direct and/or indirect beneficiaries of Target-REIT including its directors and officers are Arm's Lengths to the Company as defined under the TSXV Policy 1.1. Under the terms of the binding LOI, the parties agree that subsequent to the confirmation of the Deemed-Value and the approval of the transaction by the TSXV, the Company will issue 48,934,766 common shares at a deemed value of CAD$ 0.50 per share (the "Consideration-Shares") to Target-REIT's shareholders as consideration for the acquisition and that prior to the issuance of the Consideration-Shares, Target-REIT will have arranged an initial Private Placement funding ("PP1") for up to CAD$1.5 million whereby PP1 will consist securities units ("PP1-Units) with one common share and one full share purchase warrant at CAD$0.20 per PP1-Unit and its proceeds will be dedicated as general working capital, reflected in the to be completed consolidated pro-forma financial statements, being part of the approval submission to the TSXV. There will be no finder's fees in respect to the transaction and the proposed PP1 funding.

The LOI provides that MHI will issue Series "2" and Series"3" of its Class "A" convertible preference shares ("Pref-A2 Shares and "Pref-A3 Shares") whereby:

(a)

the Pref-A2 Shares will be issued at a deemed value of CAD$1.25 to present mortgage holders and lenders in order to minimize the risk for present and future investors and to satisfy and eliminate certain debt and mortgages or part thereof in the amount of up to CAD$ 1.5 million, which are presently outstanding against some of Target-REIT's assets. The Pref-A2 Shares will be issued at a deemed value of CAD$1.25 per share, are convertible into common shares of MHI as Resulting Issuer at a ratio of 1:1 (one Pref-A2 Share for one common share of the Resulting Issuer) at any time at the option of the Pref-A2 Shares holder, will be non-voting, but will be interest bearing at an annual rate of 8%. As of date of this News Release, there are no agreements with the present mortgage holders or lenders regarding the settlement of debt; and



(b)

the Pref-A3 Shares will be issued at a deemed value of CAD$1.50 to the present shareholders of Target-REIT in order to recognize the projected higher value in the amount of CAD$ 6,246,988 of Target-REIT's assets after the third year of operations compared to the deemed value used for the issuance of the Consideration-Shares. Under the terms of the LOI and the above assumptions, the number of Pref-A3 Shares to be issued will be 4,164,659 non-voting and non-interest bearing Pref-A3 Shares which can only be convertible into common shares of the Resulting Issuer at a conversion ratio of 1:1 (one Pref-A3 Share for one common share of the Resulting Issuer), when the projected three-year value of CAN$ 30,549,533.00 for the acquired assets has been achieved on the third anniversary of the in the LOI defined effective date of the transaction and confirmed by the audited financial statements of the Resulting Issuer.

Under the terms of the binding LOI, Target-REIT also agreed to obtain commitments for an additional "PP2" funding of up to CAD$ 6.0 Million to be earmarked towards further acquisitions. At this point, it is assumed that PP2 will be an equity issue with a share or unit price to be determined by the prevailing share price of the Company's common shares quoted on the TSXV subsequent to the approval of the proposed transaction. The proposed transaction will be considered a Reversed Takeover ("RTO") and a change of the Company's business direction with the future controlling shareholders of the Resulting Issuer being citizens of the USA. In addition, the Company will apply to be listed as a "Real Estate" or "Investment" issuer and intends to make an application for a waiver from sponsorship requirements.

Subsequent to the execution of the DA-Agr and after a comprehensive news release and satisfactory Filing Statement has been filed, the Company plans to obtain the approval for the transaction from shareholders holding more than 51% of its outstanding shares for the submission to the TSXV of the transaction approval. The names and backgrounds of all Persons who will constitute Principals or Insiders of the Resulting Issuer and, if any of such Persons is a Company, the full name and jurisdiction of incorporation, who directly or indirectly beneficially holds a controlling interest in or who otherwise controls or directs that Company will be addressed in the announcement following the execution of the Definitive Acquisition Agreement.

"Completion of the transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable, 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 [insert name of Issuer] 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 news release."

"Neither the 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 Company seeks Safe Harbor

SOURCE Mineral Hill Industries Ltd.



Contact

contact the Company or: Dieter Peter, President & CEO; Phone: (604) 617-6794

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