Castlecap Capital Inc. Provides Update on Its Qualifying Transaction with Plexus Technology Corp.

Tickers: XTSX:CSTL.P
Tags: #Business, #CapitalPoolCompany

Calgary, Alberta - TheNewswire - September 17, 2019 -- CastleCap Capital Inc. (TSVX:CSTL.P) ("CastleCap" or the "Corporation") is pleased to provide an update on its proposed qualifying transaction (the "Proposed Transaction") with Plexus Technology Corp. ("Plexus"), as per its initial press release of June 13, 2019, pursuant to which CastleCap has agreed to acquire all of the issued and outstanding Class A common shares of Plexus ("Plexus Shares"). The Transaction is subject to certain conditions and applicable shareholder, corporate and TSX Venture Exchange (the "Exchange") approvals and will constitute the Corporation's "Qualifying Transaction" as such terms are defined under the policies of the Exchange.

CastleCap and Plexus have entered into an Amalgamation Agreement dated August 27, 2019, pursuant to the letter of intent ("Letter of Intent") entered into by both parties June 11, 2019. The Qualifying Transaction is subject to customary closing conditions, including (i) requisite shareholder approvals for the Qualifying Transaction, the consolidation and the name change by each of CastleCap and Plexus, as applicable, and (iv) receipt of the applicable regulatory approvals, including the conditional approval of the Exchange.

The Proposed Transaction is currently expected to be completed by way of a three-cornered amalgamation or other similar transaction between CastleCap and Plexus which will result in Plexus becoming a wholly-owned subsidiary of CastleCap.

Overview of Plexus

Plexus Technology Corp. was incorporated under the "ABCA" Business Corporations Act (Alberta) on July 25, 2018 and is engaged in the business of utilizing local natural gas to generate electricity for various wholly owned enterprises. Plexus owns generation equipment to create electricity using Alberta's low-cost natural gas. The electricity will be sold to third parties, through multi-year power purchase agreements ("PPA's"). A portion of the remaining generated electricity will be used to power large scale datacenters, blockchain miners, cannabis growers and greenhouse modules. Plexus enjoys a unique competitive advantage as stakeholder relationships have led to partnerships with energy producers that improve production net-backs for Plexus partners and provide wholesale priced electricity to off-take clients and to Plexus wholly-owned enterprises.

Following the Closing and completion of the Plexus Financing (as defined below) and Ancillary Acquisitions (also as defined below), Plexus is anticipating that it will acquire substantial power generation and will be one of North America's lowest marginal cost electrical providers.

On May 27, 2019, Plexus completed the closing of assets ("Asset Acquisition #1") from Pendulum Craft Corp. whereby it has acquired various assets, including 141 high speed computer "mining rigs" used to support the Bitcoin econsystem , for a total consideration of CDN$35,000, paid by the issuance of 100,000 Plexus shares at a deemed price of $0.35 per share plus 100,000 purchase warrants at an exercise price of $0.50 per Plexus Share for a period of two (2) years from closing.

On June 4, 2019, Plexus closed a private placement for aggregate proceeds of $599,872 and issued a total of 1,713,922 Plexus Shares priced at $0.35 per share plus a full purchase warrant at an exercise price of $0.50 per Plexus Share exercisable for 2 years following closing.

On July 1, 2019 Plexus completed the closing of assets from Helios Blockchain Solutions Inc. whereby it has acquired various assets ("Asset Acquisition #2"), including 750 high speed computer "mining rigs" to support the Bitcoin econsystem and three (3) Helios Hash Box Data Centers. Each Hash Box includes: 1 (one) storage container, installed racking system for server storage, integrated stand-alone electrical distribution system to facilitate power to servers, multi-layer network equipment system and a proprietary HVAC design for a total consideration of CDN$700,000, paid by the issuance of 1,000,000 Plexus Shares at a deemed price of $0.35 per share plus 1,000,000 warrants at an exercise price of $0.50 per Plexus Share exercisable for a period of two (2) years following closing, plus up to $350,000 cash consideration based on various earnout thresholds.

On July 5, 2019 Plexus appointed both Scott Reeves and Charles Chebry to its board of directors and also named Charles Chebry as VP Finance and Chief Financial Officer (CFO).

Plexus Selected Financial Information:

Selected financial information for Plexus for the period ended June 30, 2019 (unaudited), is as follows.

For the period

ended June 30, 2019



Gross profit


Net (loss)


Total assets


Total liabilities


Stockholder's equity


About the Transaction

Pursuant to the Transaction, CastleCap and Plexus will complete a "three-cornered" amalgamation under the provisions of the ABCA, pursuant to which Plexus will amalgamate with Subco (the "Amalgamation").

Pursuant to the Amalgamation, CastleCap will consolidate its shares on a 3:1 basis and will reduce the number of outstanding securities from 4,000,000 common shares to approximately 1,333,333 post-consolidated common shares on a non-dilutive basis. No fractional shares will be issued with any fraction of a share rounded up to the nearest whole number if 0.5 or greater and down to the nearest whole number if less than 0.5 of a share.

Pursuant to the Amalgamation, post consolidation, the outstanding Plexus shares will be exchanged for common shares of CastleCap ("CastleCap Shares") on the basis of 1:1.2 CastleCap Shares for each Plexus Share, resulting in the existing holders of Plexus Shares (including investors under the Private Placement) becoming holders of CastleCap Shares post-Transaction. The amalgamated entity will be a wholly-owned subsidiary of CastleCap post-Transaction and Plexus on a post-Transaction basis will be the "Resulting Issuer".

Based on the Definitive Agreement, a total of 16,290,986 common shares of the Resulting Issuer ("Resulting Issuer Shares") will be issued to Plexus Shareholders (as defined below), at a deemed price of $0.80 per Resulting Issuer Share.

About the Private Placement

Prior to the completion of the Transaction, Plexus is expected to complete a non-brokered best efforts private placement (the "Plexus Financing") of up to 4,375,000 subscription receipts of Plexus (the "Subscription Receipts") for aggregate gross proceeds of approximately $3.5 million at a price of $0.80 per Subscription Receipt (the "Private Placement"). Each Subscription Receipt will be automatically converted into one common share and one full warrant exercisable at $1.20 for a period of one (1) years from issuance CastleCap Share (subject to adjustment for certain events) without further action on the part of the holder thereof upon the satisfaction or waiver of all conditions for closing of the Transaction.

Pursuant to the terms of the Subscription Receipt Agreement, each Subscription Receipt issued in the Private Placement will automatically convert into one Resulting Issuer Share upon completion of the Subscription Receipt Conditions. The Subscription Receipt Conditions include: (a) the Definitive Agreement shall have been entered into and the completion or satisfaction of all conditions precedent to the Amalgamation set forth in the Definitive Agreement shall have occurred or been waived, other than the filing of the articles of amalgamation and the release of the proceeds of the Private Placement; (b) the receipt of all required shareholder, third party (as applicable) and regulatory approvals required for the Amalgamation, and the Private Placement; (c) the receipt of conditional approval of the Exchange for the Amalgamation and the listing of the Resulting Issuer Shares to be issued in connection with the Amalgamation; (d) Plexus shall not be in breach or material default of any of its representations, warranties or covenants under the Private Placement Agency Agreement except to the extent they have been waived by the agents under the Private Placement (the "Agents"); (e) there shall not have been discovered any previously undisclosed material fact relating to either the Corporation or Plexus that, in the reasonable opinion of the Agents, would reasonably be expected to have a material adverse effect on Plexus or, upon completion of the Amalgamation, the Resulting Issuer, which shall be confirmed to be true to the Agents in a joint certificate signed by a senior officer of each of the Corporation and Plexus; and (f) CastleCap and the Agents shall have delivered a notice to the Subscription Receipt agent confirming that all of the conditions have been satisfied or waived.

In connection with the Private Placement, Plexus shall pay a cash commission to the Agents equal to 8.0% of the gross proceeds from the sale of subscriptions settled with Agents, as well as a number of Private Placement broker warrants ("Broker Warrants") equal to 8.0% the number of Subscription Receipts sold in the Private Placement. Each Broker Warrant entitles the holder thereof to acquire a Resulting Issuer Share at a price of $1.20 per share for a period of twelve months from the date of issuance.

The net proceeds of the Private Placement are expected to be used to fund growth of the Resulting Issuer's power and technology business in Alberta, for general working capital and corporate purposes, and may also be used to pay for expenses incurred in connection with the Transaction and for future acquisition opportunities.


CastleCap will seek a waiver of the requirement to engage a sponsor pursuant to the Exchange Policy 2.2 - Sponsorship and Sponsorship Requirements.

Directors, Officers and Insiders of the Resulting Issuer

Upon completion of the transaction, it is anticipated that the board of directors of the Resulting Issuer will be comprised of five individuals. As of the date of this news release, the following persons are anticipated to be the directors, officers and insiders of the Resulting Issuer following completion of the transaction:

Damon Umsheid, Chairman and Director

+15 years as business entrepreneur with companies in the optometry, real-Estate, Investment, and Technology sectors. With Experience in Business strategy, branding, growth, and acquisitions, he brings a wealth of knowledge on building companies from the ground up. Damon holds his Doctor of Optometry and is part of the Top 40-Under-40 in Optometry as well as sitting on a number of professional committees.

Cameron MacDonald, Chief Executive Officer and Director

+15 years Oil & Gas public company experience founding & CEO Macam Group of Companies, specializing in capital markets. M&A, banking, financial management and operations.

Archie Craig, President

+15 years of increasing responsibilities in the private sector. Archie has been managing an underground construction and heavy civil contracting business operating in Western Canada providing project and business management of aggregated revenue of several hundred million with project sizes ranging from $1-30M.

Charles Chebry, Chief Financial Officer and Director

+30 years of experience in the public markets sector. He has worked in a variety of senior executive roles on the TSX Venture Exchange. Mr. Chebry has also works in a variety of management & supervisory roles in the oil and gas industry. Mr. Chebry has further served in several senior executive roles including Chief Financial Officer and Director of Olympia Trust and Olympia Financial Group Inc.

Scott Reeves, Corporate Secretary and Director

+25 years as a Canadian corporate securities lawyer focused on securities, corporate finance, M&A, and commercial transactions, currently as a senior partner at the Calgary-based corporate law firm of TingleMerrett LLP. He acts for a large number of TSX, TSX Venture Exchange and CSE-listed companies in a wide range of industries In addition to serving on several TSX and TSX Venture exchange-listed companies across multiple industries and sits as a director and/or corporate secretary for many public and private companies, providing detailed corporate governance and continuous disclosure advice to his clients. He is a member of the advisory boards of both the TSX Venture Exchange and CSE, has acted as a lead instructor for the Masters degree program in eBusiness from Osgoode Hall Law School and has taught advanced corporate finance and corporations law at the University of Alberta's Faculty of Law.

Significant Shareholders of the Resulting Issuer

Michael Kennedy, resident of Alberta, is the controlling shareholder of Helios Blockchain Solutions Inc. and is expected to beneficially own, directly and indirectly upon completion of the Transaction and the Private Placement, approximately 4,698,978 Resulting Issuer Shares or approximately 21.36% of the total issued and outstanding Resulting Issuer Shares.

Damon Umsheid, resident of Alberta, is the controlling shareholder of Vytal Alternative Investment Inc. and is expected to beneficially own, upon completion of the Transaction and the Private Placement, approximately 4,076,189 Resulting Issuer Shares or approximately 18.53% of the total issued and outstanding Resulting Issuer Shares.

Other than as disclosed above, no person is expected to own more than 10% of the Resulting Issuer Shares.

Assuming the closing of the Transaction, the following holders (collectively, the Plexus Shareholders") of Plexus's issued and outstanding Class A Common Shares (the "Plexus Shares") will beneficially own Resulting Issuer Shares as follows:

Plexus Shareholders

Resulting Issuer Shares

Approximate % of Total Issued and Outstanding Resulting Issuer Shares at Transaction Closing 1

Helios Blockchain Solutions Inc.



Vytal Alternative Investments Inc.



  1. 1.Calculated on a fully-diluted basis. Assumes full subscription under the Private Placement.

Further Information

In accordance with the policies of the Exchange, a complete description of Plexus business will be contained in a filing statement of CastleCap containing further details about the Transaction and Resulting Issuer (as defined here)(the "Filing Statement"). The Filing Statement will be prepared and filed by CastleCap on SEDAR at upon acceptance by the TSXV which will provide further details on Plexus and the Proposed Transaction.

Investors are cautioned that, except as disclosed in the disclosure document to be prepared in connection with the Proposed Transaction, any information released or received with respect to the Proposed Transaction may not be accurate or complete and should not be relied upon.

For further information, please contact:

Charles Chebry, President and Chief Executive Officer of CastleCap Capital Inc.
Phone: (403) 680-8511

Cameron MacDonald, Chief Executive Officer of Plexus Technology Corp.
Phone: (403) 585-9875

All information contained in this press release with respect to CastleCap and Plexus was supplied by the parties, respectively, for inclusion herein, and CastleCap and its directors and officers have relied on Plexus for any information concerning such party.

Completion of the Proposed Transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and, if applicable,
pursuant to the requirements of the TSXV, majority of the minority shareholder approval. Where applicable, the Proposed Transaction cannot close until the required shareholder and regulatory approval is obtained. There can be no assurance that the Proposed 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 Proposed Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of the Corporation should be considered highly speculative.

This press release is not an offer of securities for sale in the United States. The securities described in this press release have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under the U.S. Securities Act of 1933, as amended) absent registration or an exemption from registration. This press release shall not constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction where such offer, solicitation, or sale would be unlawful.

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.


CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION: This news release includes certain "forward-looking statements" under applicable Canadian securities legislation. Forward-looking statements include, but are not limited to, statements with respect to: the terms and conditions of the Proposed Transaction; the terms and conditions of the proposed Financing; future developments and the business and operations of the "Resulting Issuer" after the Proposed Transaction. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general business, economic, competitive, political and social uncertainties; and delay or failure to receive board, shareholder or regulatory approvals. There can be no assurance that the Proposed Transaction will proceed and that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Corporation and Plexus disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Copyright (c) 2019 TheNewswire - All rights reserved.

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