Forward Water Technologies Corp (TSX-V:FWTC) announced that it has entered into a letter of intent (LOI) with Fraser Mackenzie Accelerator which outlines the terms and conditions of a proposed strategic business combination.
The companies said that Forward Water, a firm pioneering water filtering technology, would benefit from the contribution of Fraser Mackenzie’s founders’ extensive public market and business experience.
“With Forward Water’s proven concept and existing customer base coupled with Fraser Mackenzie’s financial resources and access to capital, this partnership heralds an era of accelerated growth and innovation,” they said in a statement.
“Together, we are poised to revolutionize the water filtration industry, offering enhanced solutions that drive efficiency, sustainability, and profitability. This combination not only amplifies the strengths of both entities but also underscores our collective commitment to delivering value to our stakeholders and shaping the future of the industry.”
Fraser Mackenzie is a TSX Venture Exchange-listed “capital pool company.” It has not commenced operations and has no assets except cash.
Per the LOI, which was negotiated at arm’s length, all Fraser Mackenzie shares will be exchanged for Forward Water shares at an exchange ratio of 10.3666848 Forward Water shares for every one Fraser Mackenzie share.
Each outstanding option and warrant to purchase a Fraser Mackenzie share will be exchanged for or converted into comparable Forward Water options or broker warrants based on the exchange ratio allowing the holder to purchase Forward Water shares at the applicable exercise prices with appropriate adjustments for the exchange ratio.
Concurrently, Fraser Mackenzie will complete a minimum $1.5 million financing consisting of one or more private placements of subscription receipts priced at $0.15.
Each subscription receipt will entitle the holder to receive one common share and one-half of a common share purchase warrant, with each whole such warrant entitling the holder to purchase one Fraser Mackenzie share at an exercise price of $0.20 for three years from the date of issue.
Fraser Mackenzie will also provide Forward Water with a secured loan amounting to $250,000, among other terms outlined in the LOI.
Upon completion of the transaction, it is anticipated that Forward Water will hold an approximately 26.91% stake in the resulting issuer and current Fraser Mackenzie shareholders will hold approximately 48.54%. It is anticipated that Forward Water will complete a 10 for 1 share consolidation immediately following the completion of the transaction.
Is also expected that the management team of the resulting issue will remain Forward Water’s management team to be supplemented by two additional officers.
The board of directors of the resulting issuer will have seven members, four to be nominated by Fraser Mackenzie, two to be nominated by Forward Water and one independent director to be agreed upon by the parties.