OTTAWA, Oct. 13, 2017 (GLOBE NEWSWIRE) -- Mercal Capital Corporation (“Mercal” or the “Corporation”), a capital pool company, has agreed to amend the proposed terms of the loan to Folia Biotech Inc. (“Folia”), the target company with which Mercal has entered into a letter of intent for a qualifying transaction, as that term is defined in Policy 2.3 of the TSX Venture Corporate Policy Manual (the “Qualifying Transaction”).
Under the revised terms of the loan and subject to Exchange approval, the Corporation will loan Folia $225,000 (the “Principal”) with an interest rate of 15% per annum until March 31, 2018. After March 31, 2018 the Principal will carry 25% interest per annum calculated daily.
The loan shall be evidenced by Folia delivering a promissory note (the “Note”) to the Corporation. The Note shall mature and be repayable on the earlier of (i) the closing of a Qualifying Transaction between Mercal and Folia; (ii) May 18, 2018; or (iii) the termination of the Qualifying Transaction, and all principal and other amounts owing or outstanding under the Note will be due and payable on such date. The Note shall be secured by way of Deed of Hypothec registered against Folia with respect to the universality of all of its movable (personal) property, present and future, corporeal and incorporeal, of whatever nature or wherever situated.
This loan transaction is subject to approval by the TSX Venture Exchange pursuant to policy 2.4. Mercal submitted its application for such approval on June 1, 2017 and is presently working towards obtaining such approval.
Funds from the loan transaction are intended to allow Folia to continue working with partners and complete the Qualifying Transaction with Mercal and close the concurrent financing.
Update on Qualifying Transaction
Since the Qualifying Transaction was announced on June 27, 2016 (the “Comprehensive News Release”), the Corporation and Folia have sought to engage an agent to solicit subscriptions for shares as part of the concurrent private placement announced in the Comprehensive News Release (the “Concurrent Financing”). The Concurrent Financing will be a condition of closing the Qualifying Transaction.
Engagement of Ferghana Partners Inc.
Mercal and Folia have engaged Ferghana Partners Inc., and its affiliates, including Ferghana Securities Inc., and Ferghana Partners LLP in London, England (collectively referred to as “Ferghana”), for the following purposes:
- Identifying potential investors for a private placement of approximately $5,000,000 to 15,000,000 and introducing such potential investors to Folia management or to Mercal as part of the Concurrent Financing;
- Out-licensing of various development and marketing rights to one or more products based on its adjuvants, vaccines and immunomodulators related to its novel and proprietary adjuvant derived from a re-engineered Papaya mosaic virus (PapMV), on a global or regional basis (an “Outward Corporate Partnering Transaction” or “OCP Transaction”); or
- Sale or disposition of 40% or more of the voting rights of Folia or all or a substantial portion of its business or assets (technology and/or products) to another company, whether effected in a single transaction or a series of related transactions, (an “M&A Transaction”). Folia has agreed to this mandate although it does not at present intend to enter such transaction.
Under the terms of the engagement, Ferghana will be entitled to a retaining fee of $12,500 by Folia to Ferghana as well as a cash commission on closing of the Concurrent Financing equal to 6% of the gross proceeds arising from the Concurrent Financing plus common share purchase warrants to purchase common shares in Folia in value of 2% of the Concurrent Financing. Ferghana is also entitled to a success fee if Folia completes an OCP Transaction or an M&A Transaction.
It also receives compensation on closing of an OCP Transaction or an M&A Transaction. Following the completion of the Qualifying Transaction and Concurrent Financing, Mercal and Folia may consider pursuing an M&A Transaction or OCP Transaction at the appropriate time.
Ferghana is not a registrant pursuant to National Instrument 31-103. The Corporation will continue to seek the engagement of a Canadian registrant to solicit subscriptions as part of the Concurrent Financing.
This news release shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any state in the United States in which such offer, solicitation or sale would be unlawful. The securities referred to herein have not been and will not be registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
ABOUT MERCAL The Corporation is a capital pool company (a "CPC") that has not commenced commercial operations and has no assets other than cash. Except as specifically contemplated in the TSX Venture Exchange Inc.'s CPC policy, until the completion of its qualifying transaction, the Corporation will not carry on business, other than the identification and evaluation of businesses or assets with a view to completing a proposed qualifying transaction.
ABOUT FOLIA Folia is a clinical stage biopharmaceutical company focused on exploiting its proprietary immuno-therapeutic platform to bring to market highly efficacious therapeutic products that fulfill large unmet needs principally in oncology and certain infectious diseases.
For further information, please contact: Tim McCunn Chief Executive Officer Mercal Capital Corporation Telephone: (613) 566-2831 Email: tmccunn@perlaw.ca
