Nov 24, 2020

Announces Its Qualifying Transaction Share /NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/ KELOWNA, BC, Nov. 23, 2020 /CNW/ – Spartan Acquisition Corp. (TSXV: VDKA ) (the “Company” or “Spartan“), a capital pool company (“CPC“), is pleased to announce it has entered into a binding non-arm’s length amalgamation agreement dated November 20, 2020 (the “Agreement“) with Forbidden Distillery Inc. (“Forbidden“). Forbidden is a private company engaged in the production and distribution of alcoholic spirits which includes such brands as REBEL Vodka, Forbidden Spirits Vodka, Adam’s Apple Brandy, and Eve’s Original Gin. Pursuant to the Agreement, Spartan and Forbidden have agreed to amalgamate (the “Amalgamation“) under the Business Corporations Act (British Columbia) (the “BCBCA“). Spartan intends that the Amalgamation will constitute its Qualifying Transaction, as such term is defined in the policies of the TSX Venture Exchange (the “Exchange“). Upon completion of the Amalgamation, the Company expects that the Resulting Issuer (as defined herein) will be named “Forbidden Spirits Distilling Corp.” and will be listed as a Tier 2 Industrial issuer on the Exchange. Summary of the Qualifying Transaction The Agreement contemplates Spartan and Forbidden amalgamating pursuant to the BCBCA to continue as a new company, Forbidden Spirits Distilling Corp. (the “Resulting Issuer“). As a result of the Amalgamation, the current shareholders of Forbidden would own a majority of the issued and outstanding Resulting Issuer Shares (as defined herein). Each common share in the capital of Spartan (the “Spartan Shares“) that is outstanding immediately prior to the Amalgamation (other than Spartan Shares held by shareholders (the “Spartan Shareholders“) who exercise their dissent rights) shall be converted into one (1) common share in the capital of the Resulting Issuer (the “Resulting Issuer Shares“), representing a deemed price of $0.30 per Resulting Issuer Share. Each class “A” voting common share in the capital of Forbidden (the “Forbidden Voting Shares“) that is outstanding immediately prior to the Amalgamation (other than Forbidden Voting Shares held by shareholders (the “Forbidden Shareholders“) who exercise their dissent rights) shall be converted into twenty-four (24) Resulting Issuer Shares at a deemed price of $0.30 per Resulting Issuer Share. Each class “B” non-voting common share in the capital of Forbidden (the “Forbidden Non-Voting Shares“) that is outstanding immediately prior to the Amalgamation (other than the Forbidden Non-Voting Shares held by Forbidden Shareholders who exercise their dissent rights) shall be converted into four (4) Resulting Issuer Shares at a deemed price of $0.30 per Resulting Issuer Share. Each class “C” non-voting preferred share in the capital of Forbidden (the “Forbidden Preferred Shares“) that is outstanding immediately prior to the Amalgamation (other than the Forbidden Preferred Shares held by Forbidden Shareholders who exercise their dissent rights) shall be converted into four (4) Resulting Issuer Shares at a deemed price of $0.30 per Resulting Issuer Share. Each class “D” non-voting common share in the capital of Forbidden (the “Concurrent Financing Shares” and together with the Forbidden Voting Shares, the Forbidden Non-Voting Shares and the Forbidden Preferred Shares, the “Forbidden Shares“) that is outstanding immediately prior to the Amalgamation shall be converted into one (1) Resulting Issuer Share at a deemed price of $0.30 per Resulting Issuer Share. Upon completion of the Amalgamation, assuming there are no dissenting shareholders and assuming the Minimum Financing (as defined herein) is completed, former holders of Spartan Shares will hold an aggregate of 4,788,500 Resulting Issuer Shares representing approximately 8.39% of the outstanding Resulting Issuer Shares (7.97% assuming the Maximum Financing is fully subscribed) and the former holders of Forbidden Shares will hold an aggregate of 40,296,000 Resulting Issuer Shares representing approximately 70.59% of the outstanding Resulting Issuer Shares (67.07% assuming the Maximum Financing is fully subscribed). In addition, each share purchase warrant and option of Spartan and Forbidden outstanding immediately prior to the effective date of the Amalgamation is expected to be converted into securities of the Resulting Issuer on the same ratio as the Spartan Shares and Forbidden Shares, respectively. As a result of the Amalgamation Spartan will essentially acquire Forbidden through the issuance of 40,296,000 Resulting Issuer Shares at a deemed price of $0.30 per Resulting Issuer Share for aggregate deemed consideration of $12,088,800, exclusive of the Resulting Issuer Shares issuable to the Concurrent Financing. The Resulting Issuer Shares to be issued pursuant to the Amalgamation will be issued pursuant to exemptions from the prospectus requirements of applicable securities legislation and certain of the Resulting Issuer Shares issued to insiders of Forbidden will be subject to escrow conditions, as required by the Exchange. Spartan expects that the Amalgamation will result in the Resulting Issuer being a Tier 2 Industrial Issuer on the Exchange. Blair Wilson, an officer and director of Spartan, is the sole director and president of Forbidden. In addition, other directors and officers of Spartan also own securities of Forbidden. As a result, the Amalgamation is a Non-Arm’s Length Qualifying Transaction (as defined by the policies of the Exchange). The Amalgamation must be approved by not less than 662/3% of the votes cast at the meeting of Spartan Shareholders (the “Spartan Meeting“). In addition, the “Majority of the Minority” approval will be required from disinterested Spartan Shareholders. It is expected that the Spartan Meeting will be held in the first quarter of 2021 and a management information circular will be provided to Spartan Shareholders in due course. The completion of the Amalgamation is subject to the satisfaction of various conditions as are standard for a transaction of this nature, including but not limited to (i) the completion of the Concurrent Financing (ii) the approval by the shareholders of Spartan to complete the Amalgamation; (iii) the approval by the shareholders of Forbidden to complete the Amalgamation; (iv) the absence of any material adverse change, material litigation, claims, investigations or other matters affecting Spartan and Forbidden; and (v) receipt of all requisite regulatory, stock exchange, court, or governmental authorizations and consents, including the Exchange. There can be no assurance that the Amalgamation will be completed on the terms proposed above or at all. Each of Spartan and Forbidden will bear their own costs in respect of the Proposed Transaction. In accordance with Exchange Policy 2.4, Spartan has advanced a $25,000 non-refundable unsecured deposit to Forbidden in connection with the Amalgamation. Concurrent Financing It is a condition to the completion of the Amalgamation that Forbidden complete a concurrent financing (the “Concurrent Financing“) for aggregate gross proceeds of a minimum of $3,600,000 (the “Minimum Financing“) and up to maximum gross proceeds of $4,500,000 (the “Maximum Financing“). It is anticipated that this Concurrent Financing will be undertaken on a non-brokered private placement of subscription receipts of Forbidden (the “Subscription Receipts“) at a price of $0.30 per Subscription Receipt. It is anticipated that each Subscription Receipt shall entitle the holder thereof to receive, without payment of any additional consideration and subject to adjustment, one unit of Forbidden (a “Unit“) in accordance with the terms of the subscription receipt agreement which will govern the Subscription Receipts (the “Subscription Receipt Agreement“), including the satisfaction or waiver of the escrow release conditions which will be described in the Subscription Receipt Agreement (the “Escrow Release Conditions“). Immediately prior to closing of the Proposed Transaction, the Units issued pursuant to the Subscription Receipts will be automatically exchanged for one Concurrent Financing Share and one-half of one Concurrent Financing Share purchase warrant of Forbidden (each whole warrant, a “Warrant“) and subsequently converted into securities of the Resulting Issuer pursuant to the Amalgamation. Each Warrant will entitle the holder to acquire one (1) Resulting Issuer Share at a price of $0.50 for a period of two years following the date of issuance. If, at any time following the issuance of the Warrants, the daily volume weighted average trading price of the Resulting Issuer Shares on the Exchange, or such other stock exchange on which the Resulting Issuer Shares are listed, is greater than $0.75 for the preceding 10 consecutive trading days, the Resulting Issuer may, upon providing written notice to the holders of Warrants, accelerate the expiry date of the …