Shell Summary for March 7, 2014
2014-03-07 21:02 ET - Market Summary
by Stockwatch Business Reporter
The TSX Venture Exchange added 3.65 points to 1,043.01 Friday, ending the week up 17.64 points. Chuck Rifici's Tweed Inc., the qualifying transaction target of Larry Poirier's halted capital pool shell, LW Capital Inc. (LWI), says it does not have an exact date for listing on the Toronto Stock Exchange, but it expects to have details about the deal soon. In less than one month, on April 1, a new law will require Canadians with a doctor's note to buy their medical marijuana from a commercial supplier that is authorized by the Canadian government. So far, Health Canada has approved nine companies that have applied to grow and sell medical marijuana. Tweed, one of the nine, is the only one with plans of going public right away and has attracted plenty of interest from investors. It will be Canada's first publicly-traded pot shop.
In early January, LW Capital entered a letter of intent to acquire Tweed, and has since asked shareholders to approve a 1:5 rollback and a name change to Tweed Holdings Corp. The two companies have yet to sign a definitive agreement, file a filing statement or receive exchange approval, but the target has had no trouble raising money. Most recently, on Dec. 27, 2013, GMP Securities LP handled a $3-million financing of 21,900 units at $137 a unit. The brokerage collected a finder's fee of $180,018 plus an option to buy shares 1,314 shares at $137 a share for two years. The units comprise one share and one right; 10 rights will buy one share at no additional cost. Tweed will presumably split those shares in connection with the going-public transaction.
Tweed's chief executive officer, Mr. Rifici, who is also the chief financial officer of the Liberal Party of Canada, has already been richly rewarded on paper. According to an exempt distribution document signed by Mr. Rifici on Sept. 13, a trust he controls acquired 38,500 shares for a total of $70. He then paid $100,010 for 730 units from the Dec. 27 financing, bringing his total position to 39,230 at a cost of $100,080. At $137 per unit, his 39,230 units are worth $5.37-million. Bruce Linton, Tweed's chairman and a co-founder, acquired 16,500 shares for $30, and subscribed for 450 units from the Dec. 27 financing at a cost of $61,650. His 16,950 units are worth $2.32-million. Mr. Linton will promote Tweed on the Lang & O'Leary Exchange tonight on CBC.
Of the $3-million worth of units that Tweed sold in December, the largest subscriber was Delta Sigma Holdings, a company represented by Ontario resident Margaret Smeaton, which spent $342,500 on 2,500 units. There was also William Holland's Eastwood Capital Corp., which spent $198,650 on 1,450 units. Mr. Holland is chairman of Bay Street firm CI Financial Corp. (CIX: $35.03) which, as of Feb. 28, had assets under management totalling $95.1-billion. Another large Toronto fund worth noting, Redwood Diversified Equity Fund, managed by LDIC Inc., spent $218,378 on 1,594 units. Tweed should have no shortage of buy recommendations once the company goes public.
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