TORONTO – Blockchain Foundry Inc. (CSE:BCFN), a North American blockchain development firm, announced today that it has entered into a definitive agreement with WonderFi Technologies Inc. (TSX: WNDR) whereby WonderFi will acquire all of the issued and outstanding shares of BCF.

Dan Wasyluk, CEO of BCF commented, “We are thrilled to be joining the WonderFi team, which has deep expertise in Web3 and a complementary product mix to BCF’s current products and development initiatives. There are numerous operational and consumer synergies which we can capitalize on to enhance opportunities across a range of Web3 experiences”.

In January 2022, BCF launched LastKnown, a non-fungible token minting platform and marketplace for unique NFT drops from artists and collections. BCF has deployed three collections through the platform to date from a range of award-winning artists. Also, in May 2022 BCF launched a beta version of Metacademy, a learn-to-earn educational platform focused on hands-on learning in an easy-to-use environment, teaching users how to set up a crypto wallet, how to mint, buy and sell NFTs, the differences between Web2 and Web3, and how to better understand the metaverse, amongst others.

“This acquisition further solidifies WonderFi as the Canadian leader in the digital asset space” commented Ben Samaroo, CEO of WonderFi. “BCF is on a great trajectory with a diverse set of intellectual property, brand partnerships, and a revenue generating track-record. The current economic conditions in the crypto market have made it attractive for WonderFi to be able to acquire companies like BCF which carry the potential to compliment our core operating crypto asset trading platforms Bitbuy and Coinberry, while also adding cash, liquid digital assets and a portfolio of private emerging crypto investments to WonderFi’s balance sheet”.

Key Transaction Benefits

  • Adds immediate scale to BCF’s product offering through WonderFi’s user base across its Bitbuy and Coinberry platforms.
  • Accelerates growth of full service Web3 initiatives through improved consumer channels and larger development ecosystem.
  • Provides material consumer and operational synergies across BCF’s complete product suite and development initiatives.

Transaction Details

Pursuant to the terms of the Agreement, WonderFi will acquire all of the 121,975,844 issued and outstanding common shares of BCF on the basis of 0.2155 common shares of WonderFi for each share of BCF held (the “Exchange Ratio”). Warrants and options of BCF will be adjusted or exchanged to become warrants and options, respectively, of WonderFi based on the Exchange Ratio. As of the date hereof, WonderFi has 193,875,490 issued and outstanding common shares, and it is anticipated approximately 26,285,794 common shares of WonderFi will be issued to shareholders of BCF as consideration (the “Consideration Shares”), representing approximately 13.4% of the issued and outstanding shares of the Company, which will be subject to a customary working capital adjustment. It is anticipated that approximately 6,544,840 Consideration Shares (the “Holdback Shares”) will be subject to holdback for the working capital adjustment and the Holdback Shares will be issued, if at all, once the closing working capital is determined between the parties. If the closing working capital is below the target closing working capital amount, WonderFi shall be entitled to reduce the consideration payable to shareholders of BCF by an amount equal to working capital shortfall multiplied by 1.5, which will be satisfied by WonderFi not issuing an equivalent number of Holdback Shares. If the closing working capital is above the target closing working capital amount, all of the Holdback Shares shall be issued to shareholders of BCF and the aggregate consideration payable to shareholders of BCF shall be increased by an amount equal to excess working capital, subject to a maximum amount of $3 million, which will be satisfied by WonderFi issuing additional common shares to BCF shareholders. An aggregate of 5,260,039 shares of WonderFi will be issuable to the principals of BCF (the “Principal Shares”), which Principal Shares will be subject to a contractual escrow arrangement pursuant to which the Principal Shares will be released from escrow 1/5th on closing and in subsequent tranches of 1/5th every 3 months thereafter.

The Transaction was negotiated at arm’s length, will be carried out by way of a court-approved plan of arrangement under the Business Corporations Act (British Columbia). The Transaction is subject to a number of conditions being satisfied or waived by one or both of WonderFi and BCF at or prior to closing of the Transaction, including approval of BCF shareholders, receipt of all necessary regulatory, stock exchange and court approvals, and the satisfaction of certain other closing conditions customary for a transaction of this nature.

The Agreement includes customary provisions, including non-solicitation, right-to-match and fiduciary out provisions, as well as certain representations, covenants and conditions that are customary for a transaction of this nature. A termination fee of $350,000 may be payable by BCF to WonderFi in the case of certain terminating events. Further information regarding the Transaction will be contained in management information circular to be prepared by BCF and mailed to its shareholders in connection with a special meeting of shareholders to consider and approve the Transaction and related matters. The special meeting of shareholders is expected to be held on or before October 31, 2022. All shareholders of BCF are urged to read the information circular once available, as it will contain important additional information concerning the Transaction.

Board Recommendations and Voting Support

The Transaction has been unanimously approved by the board of directors of both WonderFi and BCF. Directors and officers of BCF holding in aggregate 20.01% of its issued and outstanding common shares have entered into customary voting support agreements agreeing to vote in favour of the Transaction.

Sequeira Partners has provided a fairness opinion to the board of directors of BCF that, as of the date hereof, and based upon and subject to the assumptions, limitations and qualifications stated therein, the consideration to be paid by WonderFi to the shareholders of BCF under the Transaction is fair, from a financial point of view, to shareholders of BCF.

This announcement is for informational purposes only and does not constitute an offer to purchase, a solicitation of an offer to sell any shares or a solicitation of a proxy. Some of BCF’s anticipated products and services may be subject to regulatory review. The Transaction is expected to close in the fourth quarter of 2022. A copy of the Agreement will be available on BCF’s SEDAR profile at www.sedar.com.

Source: Blockchain Foundry Inc.