Directors of a local capital pool company plan to de-list from the TSX Venture Exchange after failing to find a suitable business to invest in before the TSX's two-year time limit.
LW Capital Pool Inc. (TSX-V:LWI.P) still intends to pursue a qualifying transaction upon the likely transfer to the NEX stock exchange. In the meantime, it has ceased trading on the TSX.
The firm is now asking shareholders to approve the stock exchange transfer and to cancel half of the seed shares issued to directors and officers of the firm "at prices below the IPO price", should LW Capital Pool fail to close a transaction before Sept. 10.
LW Capital Pool initially listed on the stock exchange in June 2010 with an IPO of $500,000. Proceeds were intended to help the company "identify and evaluate businesses or assets" for the qualifying transaction.
"Over the last two years, the board of directors of the company has closely examined a number of possible candidates for qualifying transactions, but was unable to complete any transaction meeting its criteria for enhancing shareholder value within the timeframe permitted," LW Capital Pool stated on Wednesday.
The board of directors for the company is comprised of individuals with a background in founding and leading companies, including:
- Larry Poirier (founder/CEO of Nitro Microsystems);
- Richard Boadway (founder/CEO of River Ventures Inc.);
- David Banks (managing partner of Carlyle Banks & Co.);
- Andrew Moffat (co-founder/CEO of Keshet Technologies Inc.);
- Danny Oscada (former CEO of Med-Eng Systems);
- Deborah Weinstein (founding partner of LaBarge Weinstein).
According to the TSX, a capital pool company can be formed when three to six people "with an appropriate combination of business and public company experience" agree to put up a minimum of either $100,000 or five per cent of the total funds raised for an IPO, whichever is greater.
A minimum of three of these founders must then incorporate a shell company and issue shares in exchange for seed capital.
The firm must also issue a prospectus with aims to raise between $200,000 and $4.75 million by selling shares of the firm at twice the price of the seed shares. Money raised should be used "to identify and evaluate" acquisitions.
Once this is finished, a company is listed on the TSX Venture Exchange and has 24 months to complete a qualifying transaction to remain.