Rumbu Holdings Announces Execution of Definitive Agreement for Qualifying Transaction

Calgary, Alberta–(Newsfile Corp. – May 1, 2023) – Rumbu Holdings Ltd. (TSXV: RMB.P) (“Rumbu” or the “Company”), a capital pool company listed on the TSX Venture Exchange (“TSXV”), is pleased to announce that it has entered into a binding Letter of Agreement (the “Definitive Agreement”) with Daryl and Jamie Lockyer (the “Lockyers”), effective as of May 1, 2023. The Definitive Agreement sets forth the terms and conditions of the proposed business combination of Rumbu and the Funeral Home Business (the “Funeral Business”) owned by the Lockyers (the “Transaction”), with the ongoing public company acquiring the Funeral Business. The Transaction will constitute as a Qualifying Transaction (“QT”) pursuant to the rules of the TSXV. The Definitive Agreement sets forth the detailed terms of the Transaction and contains such other terms and conditions as are customary for transactions of the nature and magnitude contemplated in the Definitive Agreement. If completed, the proposed Transaction will constitute the Company’s Qualifying Transaction as set forth in Policy 2.4 of the policies of the TSXV (“Exchange Policy 2.4”). There are no finder’s fees or commissions and there are no deposits, advances or loans to be made in connection with the QT.

About Rumbu Holdings

Rumbu is a reporting issuer in good standing in Alberta and British Columbia and its Common Shares (the “Rumbu Shares”) are listed for trading on the TSX Venture Exchange ( the “TSXV”). Currently, Rumbu has 6,500,000 Common Shares issued and outstanding, stock options outstanding to acquire 650,000 Common Shares at a price of $0.10 per share until December 10, 2032 (the “Stock Options”) and Agent’s Options outstanding to acquire 400,000 Common Shares at a price of $0.10 per share until December 10, 2027 (the “Agent’s Options”).

About the Funeral Home Business of the Lockyers

The Lockyers jointly own a Funeral Home Business (the “Funeral Business”) with a primary funeral home located in Smithers, British Columbia. Daryl Lockyer is 49 and Jamie Lockyer is 42 and together they have a combined 65 years of funeral service experience in Western Canada. The Funeral Business is a funeral and cremation business that provides all funeral and cremation related services to the public in its market area. The Lockyers believe that Rumbu will allow and provide a vehicle to them to expand their Funeral Business in Western Canada and particularly in Alberta and British Columbia. They also believe that Rumbu will enable them to access faster growth opportunities in this market place today where succession planning is booming. There are a lack of corporate purchasers of funeral homes in Western Canada and the Lockyers have already identified a number of opportunities that may be acquired by Rumbu after completion of the Transaction. They plan to take advantage of the current times to purchase funeral homes in condensed geographic areas and to create clusters of funeral homes with synergistic benefits in those geographic areas. The Lockyers believe that based upon proven results and experience by them in the past that the partnership with Rumbu will fuel growth in the funeral home business and unlock additional potential value. In the Transaction, Rumbu will acquire the business and assets of the Funeral Business in exchange for the issuance of 6,000,000 Common Shares of Rumbu to the Lockyers.

Selected Financial Information about the Funeral Business

The following table sets out selected financial information with respect to the Funeral Business. This information has not been verified by independent appraisals, however, the Lockyers are in the process of completing audited financial statements for the Funeral Business and such financial statements will be included in the documents being prepared in connection with the Transaction. The information disclosed below is based upon financial information which has not been audited or verified by independent accountants or certified business valuators. The Lockyers have retained an audit firm to completed the audited financial statements and when completed, these statements will be included in the Information Circular to be provided to all Shareholders for the approval of the Transaction.

Proposed Qualifying Transaction

Pursuant to the terms of the Definitive Agreement, Rumbu will acquire the Funeral Business in exchange for the issuance by Rumbu of 6,000,000 Common Shares of Rumbu (the “QT Shares”) to the Lockyers. The value of the Common Shares as determined by the Directors of Rumbu to be issued to the Lockyers is $0.10 per share. The outstanding management and director options of Rumbu and the Agent’s Options, as the case may be, shall remain outstanding and shall be governed by their applicable Option Agreements. The QT Shares shall be distributed to the Lockyers and shall be distributed pursuant to their instructions.

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The Transaction may be considered a “Related Party Transaction” pursuant to Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI-61-101“) and Rumbu shall be required to hold a Special Meeting of the Shareholders of Rumbu (the “Shareholders”) and obtain a majority of the minority shareholder approval, as Daryl Lockyer is a Director of Rumbu and the Transaction constitutes a Non-Arms Length Transaction pursuant to the policies of the TSXV. Mr. Lockyer is a Director and Shareholder of Rumbu holding 500,000 Common Shares and 125,000 Options of Rumbu. Therefore, the Transaction will be subject to shareholder approval and Rumbu specifically confirms that it will be seeking shareholder approval under the policies of the TSXV.

Proposed Concurrent Financing

Concurrently with closing of the Transaction, Rumbu and the Lockyers will use their “commercially reasonable efforts” to cause Rumbu to complete a private placement of Subscription Receipts (the “Subscription Receipts”) at a price per Subscription Receipt to be determined in the context of the market (the “Offering Price”) for gross proceeds of a minimum of $300,000 and a maximum of $500,000 (the “Private Placement”). Each Subscription Receipt will be automatically converted into one Common Share of Rumbu concurrent with the completion of the Transaction at no additional cost to the holder. Rumbu has not yet engaged agents with respect to the Private Placement. The net proceeds of the Private Placement will be used to fund the business activities of the Funeral Business and for working capital and general corporate purposes, as will be more specifically described in a subsequent news release that will be used to describe the Transaction in more detail and include audited financial statements. The parties agree that the net proceeds of the Private Placement will be held in escrow by an escrow agent acceptable to both parties and released concurrently with the completion of the Transaction.

Directors, Officers and Other Insiders

On the closing of the Transaction, it is anticipated that the board of the Resulting Issuer will consist of five Directors and Shelina Hirji will resign as a Director and be replaced by Jamie Lockyer. Ross Drysdale, Shane Wylie, J. Michael Sullivan and Daryl Lockyer will remain as Directors. Daryl Lockyer will be appointed as the new President, Chief Executive Officer and Treasurer of the Resulting Issuer, Jamie Lockyer will be appointed as Secretary and Shelina Hirji will be appointed as the Chief Financial Officer. Daryl Lockyer has been involved in the Funeral Home Business for more than 40 years as a mortuary, funeral home manager, executive and director. For the past 20 years, Mr. Lockyer has been the President of The Caring Group Corp. (“TCG”), a funeral home business headquartered in Lethbridge, Alberta with funeral homes in Alberta and British Columbia. Jamie Lockyer has been employed by TCG for 25 years in various positions of responsibility. Ross Drysdale has been an officer and director of a number of private and public companies for more than 50 years, specializing in companies listed on the TSXV. Shelina Hirji as the Chief Financial Officer of the Resulting Issuer has many years of experience as the CFO of private and public companies, including West High Yield (W.H.Y.) Resources Ltd. The Company will provide additional information about its proposed new directors, officers and insiders in a subsequent news release.

Additional Information and Description of Significant Closing Conditions

The closing of the Transaction will be subject to several conditions, including, but not limited to the following:

1. The receipt of all regulatory, corporate and third party approvals, including the approval of the TSXV and compliance with all applicable regulatory requirements and conditions necessary to complete the Transaction;

2. The completion of the Private Placement (unless waived by the Lockyers and Rumbu);

3. The maintenance of Rumbu’s listing on the TSXV;

4. The confirmation of the representations and warranties of each party to the Definitive Agreement as set out in such Agreement;

5. The absence of any material adverse effect on the financial and operational condition of the business or the assets of each of the parties to the Definitive Agreement;

6. The delivery of standard completion documentation including, but not limited to, legal opinions, officers’ certificates and certificates of good standing or compliance of the parties; and

other mutual conditions precedent customary for a transaction such as the Transaction.

Information Circular

In connection with the Transaction and pursuant to the requirements of the TSXV, Rumbu will draft and send to the Shareholders an Information Circular with respect to the approval of the QT. The Information Circular will contain details regarding the Transaction, the Funeral Business, the Private Placement and the Resulting Issuer. The Resulting Issuer intends to list as a Tier 2 Industrial Issuer in the Funeral Services sector, subject to meeting the requirements of the TSXV.

Sponsorship of Qualifying Transaction

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Sponsorship of a Qualifying Transaction of a capital pool company is required by the TSXV unless exempt in accordance with TSXV policies. Rumbu intends to apply for an exemption from the sponsorship requirements and there is no assurance that Rumbu will ultimately obtain an exemption from sponsorship.

General

In accordance with the policies of the TSXV, Rumbu’s Common Shares have been halted from trading and will remain so until the documentation required by the TSXV for the Transaction can be provided to the TSXV. Rumbu’s Common Shares will remain halted until completion of the Transaction.

For further information concerning this press release, please contact:

Ross O. Drysdale
President and Chief Executive Officer
Rumbu Holdings Ltd.
Telephone: (403) 585-3737
Email: ross@drysdalelaw.com

Neither the TSX Venture Exchange (“TSXV”) nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility of the adequacy or accuracy of this release. The TSXV has in no way passed upon the merits of the proposed Transaction and has neither approved nor disapproved of the contents of this Press Release.

Cautionary and Forward-Looking Statements

Completion of the Transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange Requirements, majority of the minority shareholder approval. Where applicable, the Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

Except for statements of historical fact, this news release contains certain “forward-looking information” within the meaning of applicable securities law. Forward-looking information is frequently characterized by words such as “plan”, “expect”, “project”, “intend”, “believe”, “anticipate”, “estimate” and other similar words, or statements that certain events or conditions “may” or “will” occur. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those anticipated in the forward-looking statements. The Company undertakes no obligation to update forward-looking information if circumstances or management’s estimates or opinions should change except as required by law. The reader is cautioned not to place undue reliance on forward- looking statements. More detailed information about potential factors that could affect financial results is included in the documents filed from time to time with the Canadian securities regulatory authorities by the Company.

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The Securities of Rumbu being offered have not been, nor will be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons absent, U.S. registration or an applicable exemption from U.S. registration requirements. This release does not constitute an offer for sale of securities in the United States.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/164236