Pond Technologies enters into Non-Binding LOI to acquire Regenurex Health Co. – $POND

Pond Technologies Holdings Inc. (TSXV: POND) is pleased to announce that on August 23, 2018, it entered into a non-binding letter of intent to acquire all of the issued and outstanding shares of Regenurex Health Corporation, a British Columbia based owner and operator of an algae production facility engaged in the cultivation and extraction of astaxanthin, a valuable nutraceutical product.  Driven by the demonstrated synergies of the two companies, Pond will acquire the Regenurex brand, plant, and related production assets, through acquisition of the Purchased Shares for a minimum of $2,269,599, comprised of $500,000 cash to be invested in Regenurex in consideration for the issuance to Pond of Regenurex common shares and 737,333 Pond shares valued at $2.40 per share.  The LOI provides for an additional earn-out of up to 3,154,658 Pond shares at a deemed value of $2.40 for a maximum capped value of $7,595,180, pro-rated, based upon actual achieved financial performance of Regenurex in 2020.  Additionally, upon closing Pond will eliminate the total outstanding debt of Regenurex of $565,000 in exchange for Pond shares issued to the debtholders priced at the 30 day average closing share price immediately prior to the closing date of the transaction and such Pond shares shall be subject to a five month contractual hold period. The Pond Cash Investment proceeds will be used for the integration of Pond technology into the Regenurex production facility and for working capital purposes.

Following the completion of satisfactory legal and financial due diligence, the approval of both boards of directors, and the receipt of all necessary third party approvals including the TSXV, Pond and Regenurex intend to negotiate and enter into a binding definitive agreement targeted for completion by the end of September, 2018. The anticipated closing of this transaction is October 31, 2018.

Holders of Regenurex Senior Preferred Shares will, as a class, receive the right to convert at any time up to and including August 1, 2022 their Regenurex Senior Preferred Shares for their proportionate share of the Pond Minimum Share Price Shares issued from the treasury of Pond and such Pond shares shall be subject to a 12 month contractual hold period from Closing.

Holders of Regenurex Junior Preferred Shares will receive a conversion right for their proportionate amount of the actual Pond Earn-Out Shares issued for the Performance Earn-Out.  The Performance Earn-Out will be determined no earlier than January 1, 2021 based upon the actual earnings before interest and taxes  as defined by International Financial Reporting Standards for Regenurex from January 1, 2020 to December 31, 2020. Regenurex has estimated EBIT for this period to be $1,738,297 which, at a multiple of 6 times is $10,429,779, from which is subtracted the $2,269,599 Minimum Share Purchase Price and the $565,000 Regenurex Debt Pre-Payment for a total maximum potential Performance Earn-Out of  $7,595,180.  Any shortfall below the Target EBIT will result in a reduction in the Pond Earn-Out Shares issued.

In addition to the above conditions precedent to the parties entering into the definitive agreement, completion of the transaction will be subject to a number of conditions, including but not limited to, certain Regenurex employees entering into employment agreements with Pond, and obtaining an extension to the term of Regenurex’s current facility lease.

“The decision for us was straightforward”, said Curtis Braun, Regenurex CEO, “We are completely aligned with Pond management’s view of astaxanthin’s future as both a stand alone product and as a blend with other health and wellness ingredients. We believe that the investment along with Pond’s proprietary growth platform will allow us to better realize the future value for our shareholders and will have a transformative effect on the global astaxanthin market and we are excited to be a part of it.”

Steve Martin, Pond CEO, commented, “We are very happy that Regenurex has chosen to join us. The synergies between our approaches made this transaction very attractive.  We expect that our growth platform will significantly increase the output of their BC facility, and when coupled with their proprietary natural  extraction technology, will serve to give us a sustainable competive advantage, in both the upstream production and downstream processing of this very valuable product worldwide.”

Astaxanthin is one of nature’s most powerful anti-oxidants. It is used in aquaculture and for human consumption. Oxidative stress in the body has been linked to the development of several major health problems. Astaxanthin helps to reduce or repair the damage caused by oxidation by surrounding the body’s cells with a protective layer. It has been found to have a positive effect on muscle, joint, eye, brain, heart and skin health.

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