From Cannabis To Luxury Vehicles: Captor Capital Signs LOI For Reverse Takeover By Rimstock

Captor Capital Corp. CPTR NMVA NMVA has entered into a binding letter of intent (the “LOI”) dated July 15, 2022, with UK-based Rimstock Holdings Limited in respect of a proposed business combination pursuant to which the company will acquire 64.11% of Rimstock in exchange for share capital in the company and cash considerations, which will result in the reverse takeover of Captor Capital by Rimstock.

It is currently contemplated that the transaction will be effected by way of a share exchange of common shares of the company for common shares of Rimstock. The resulting issuer that will exist upon completion of the transaction will change its business from cannabis to the electric and luxury vehicle industry. Upon closing of the transaction, it is expected that shareholders holding 64.11% of Rimstock will hold 72% of the issued and outstanding shares of the resulting issuer and current shareholders of Captor Capital will hold 28% of the issued and outstanding resulting issuer shares.

About Rimstock

Rimstock designs and manufactures quality, lightweight, forged alloy wheels for some of the world’s most prestigious automotive OEMs. Rimstock manufactures wheels at its facility in West Bromwich in the West Midlands and operates foreign sales and marketing subsidiaries in Germany and the USA.

The Transaction

The LOI contemplates that Captor and Rimstock will negotiate and enter into a definitive agreement in respect to the transaction, pursuant to which it is anticipated that the company will acquire 64.11% of Rimstock’s issued and outstanding share capital in exchange for the aggregate purchase price of $31.74 million, which shall be paid in the following amounts:

• $22.24 million in shares of the company with a deemed value of CA$0.25 per share, due upon the closing.

• $7 million in cash, which shall be reserved in the treasury of the company for use by the resulting issuer as working capital.

• $2.5 million in cash as a non-refundable deposit, which will be converted into shares of Rimstock at a fully-diluted valuation of $49.52 million upon the earlier of: the closing or the expiration of the exclusivity period set out under the LOI, which is 180 days from the date of the LOI.

Any additional cash in the treasury of the company as of the closing in excess of $7 million will be credited to the benefit of the issuer’s existing shareholders.

It is anticipated that the resulting issuer will continue the business of Rimstock under a name to be determined by the company and Rimstock, which will result in a change of business of the resulting issuer.

Upon the completion of the transaction, the resulting issuer shall have the option to acquire the remaining 35.89% of Rimstock’s issued and outstanding shares from its remaining shareholders. The call option may not be exercised until 12 months from the closing and will expire 24 months from the date thereof. The exercise price for the call option shall be based on a valuation to be determined by mutual agreement of the company and Rimstock, acting reasonably, as of the date of exercise; however, in no circumstance will the valuation be less than $49.52 million.

Management of the Resulting Issuer

Upon closing, the board of directors and executive management of the company will be reconstituted and consist of a select number of nominees from Rimstock, subject to the approvals of the governing regulatory bodies, as applicable, and in compliance with applicable securities and corporate laws.

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