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Norwick Capital Corp. and Converge Technology Partners Inc. Enter into Acquisition Agreement

Norwick Capital Corp. And Converge Technology Partners Inc. Enter Into Acquisition Agreement

Vancouver, British Columbia--(Newsfile Corp. - August 29, 2018) - Norwick Capital Corp. (TSX: NWK.P) ("Norwick") and Converge Technology Partners Inc. ("Converge") are pleased to announce that Norwick, Converge and Norwick Acquisition Corp., a wholly-owned subsidiary of Norwick, have entered into an acquisition agreement (the "Acquisition Agreement"), dated August 28, 2018, pursuant to which Norwick will acquire all of the issued and outstanding Class A common shares of Converge (each, a "Converge Share") and Converge will amalgamate with Norwick Acquisition Corp. (the "Amalgamation"). The Amalgamation will be structured as a three-cornered amalgamation and, as a result, the amalgamated corporation ("Amalco") will become a wholly-owned subsidiary of Norwick at the time of the completion of the Amalgamation.

Prior to the completion of the Amalgamation and subject to applicable regulatory approval, Norwick will complete a consolidation (the "Consolidation") of its outstanding common shares and, upon completion of the Amalgamation, Norwick will complete a name change (the "Name Change") to "Converge Technology Solutions Corp." (the "Resulting Issuer"). Norwick is a capital pool company listed on the TSX Venture Exchange (the "TSXV"). The Amalgamation will complete the previously announced qualifying transaction of Norwick in accordance with the rules and policies of the TSXV (the "Qualifying Transaction").

Norwick has made an initial filing submission to the TSXV regarding the Qualifying Transaction. A filing statement of Norwick containing further details with respect to the Qualifying Transaction (the "Filing Statement") will be prepared and filed by Norwick on SEDAR at upon acceptance by the TSXV.

About Converge

Converge was incorporated pursuant to the provisions of the Business Corporations Act (Ontario) on November 29, 2016. The head office and registered office address of Converge is located in Toronto, Ontario.

Converge's primary mission is to identify and acquire North American IT Solutions Providers ("ITSPs") that are regionally focused, but undercapitalized and lack scale. Ideal ITSP targets have strong relationships with leading IT vendors and distributors (IBM, Cisco, Dell EMC, Pure Storage, Microsoft, Amazon Web Services, HP, etc.) and a sub-scale managed services business that provides a base of recurring revenue. Together with its subsidiaries, Converge is able to bring together the combined company's Managed Services capabilities into a single provider with a meaningful national footprint. Converge is also able to capitalize on the rapidly growing cloud computing spending through its cloud solutions businesses.

Led by a seasoned management team that has extensive acquisition and management experience in both the private and public markets, Converge's goal is to become one of the largest independent ITSPs platforms in North America. Converge's competitive business model, blue chip client base, and broad service offering positions it well to capitalize on numerous growth opportunities and further enhance its profitability.

To date, Converge has acquired five businesses in North America (four ITSPs and one software developer). This has allowed Converge to immediately consolidate sales capabilities, expand geographic presence from coast to coast, and facilitate network integration and data centre capabilities. Converge acquired its first company, Corus Group, LLC, in October 2017, followed by Northern Micro Inc. in November 2017, which helped to diversify Converge's client mix and expand into the government and education sector. In January 2018, Converge acquired Becker-Carroll, providing Converge with capabilities to build enterprise blockchain solutions for customers. Most recently, Converge acquired Key Information Systems, Inc. and BlueChipTek, Inc. which increased data centre capabilities and expanded Converge's footprint.

A complete description of Converge's business will be contained in the Filing Statement.

Summary Financial Information for Converge

The following tables set forth selected audited consolidated financial information for Converge as at December 31, 2017 and for the year ended December 31, 2017, as well as selected unaudited condensed interim financial information for Converge as at March 31, 2018, and for the three-month period ended March 31, 2018.

Three-Months Ended March 31, 2018Year Ended December 31, 2017
Statements of operations and comprehensive loss (in 000's of Canadian dollars)

Cost of sales101,26142,136
Gross profit18,52410,652
Selling, general and administrative expenses13,32910,859
Depreciation and amortization990783
Operating income (loss)4,205(990)
Finance expense, net1,2481,144
Change in fair value of contingent consideration3,0131,472
Transaction costs — acquisitions-315
Other expenses/(income)(78)109
Loss before income taxes22(4,030)
Income tax expense/(recovery)1,490(111)
Net loss(1,468)(3,919)
Total other comprehensive loss(47)24
Comprehensive loss(1,515)(3,943)
Net loss per share - basic and diluted(0.03)(0.21)
Weighted average number of shares outstanding - basic and diluted (in 000's)56,25918,895
(in 000's of Canadian dollars)Three months ended March 31, 2018Year ended December 31, 2017
Net comprehensive loss as reported (1,515)(3,943)

          Finance expense1,2481,144
          Income tax expense [recovery]1,490(111)
          Depreciation and amortization990783

         Change in fair value of contingent consideration3,0131,472
         Exchange loss on translation of foreign operations47315
         Transaction cost — acquisition2324
Adjusted EBITDA15,296(316)


1. EBITDA is comprised of net income (loss) before finance expense, income tax expense (recovery), depreciation and amortization. Adjusted EBITDA is comprised of EBITDA before change in fair value of contingent consideration, exchange translation gain or loss on foreign operations and acquisition transaction cost.

*Please refer to "Non-IFRS Measures" below

As at March 31, 2018As at December 31, 2017
Statements of financial position (in 000's of Canadian dollars)


Total current assets121,88167,086
Property and equipment, net 3,3863,187
Intangible assets, net23,69324,027


Total current liabilities152,052100,654
Other financial liabilities6,7705,127
Deferred tax liability3,6603,751
Finance lease payable396525

Shareholders' equity (deficiency)

Common shares3,4251
Foreign exchange translation reserve (71)(24)



About the Qualifying Transaction and Concurrent Financing

Immediately prior to the Amalgamation, and subject to regulatory approval, Norwick will consolidate its share capital on the basis of one post-consolidation common share of Norwick for every 3.2 common shares of Norwick existing immediately before the consolidation (the "Consolidation").

Shareholders of Converge will be asked to approve the Amalgamation at a special meeting of Converge shareholders to be held on or about September 21, 2018. The foregoing approval is required prior to the completion of the Qualifying Transaction.


In connection with the Qualifying Transaction, Converge completed a best efforts private placement of subscription receipts ("Converge Subscription Receipts") at a price of $0.80 (the "Issue Price") per Converge Subscription Receipt (the "Concurrent Financing") for aggregate gross proceeds of $5,535,004.80. An aggregate of 2,667,000 Converge Subscription Receipts were sold pursuant to the brokered portion of the Concurrent Financing lead by Paradigm Capital Inc. on behalf of a syndicate of agents that included Haywood Securities Inc., Hampton Securities Limited and Echelon Wealth Partners Inc. (collectively the "Agents"). An additional 4,251,756 Converge Subscription Receipts were sold on a non-brokered basis.

As consideration for the services of the Agents in connection with the Concurrent Financing, Converge agreed to pay the Agents an aggregate cash fee equal to 7% of the gross proceeds of the brokered portion of the Concurrent Financing (the "Commission"), and issued compensation options (the "Converge Compensation Options") entitling the Agents to subscribe for that number of common shares of the Resulting Issuer (the "Resulting Issuer Shares"), as is equal to 7% of the total number of Converge Subscription Receipts sold pursuant to the brokered portion of the Concurrent Financing. Each Converge Compensation Option is exercisable for one Converge Share (if exercised before the Amalgamation) or one Resulting Issuer Share (if exercised following the Amalgamation) for a period of two years following the date of listing at an exercise price equal to the Issue Price.

The net proceeds from the Concurrent Financing (which is an amount equal to the gross proceeds less the Commission and expenses of the Agents pursuant to the Concurrent Financing) will be used primarily for working capital and general corporate purposes.

The gross proceeds of the Concurrent Financing, less the expenses of the Agents pursuant to the Concurrent Financing, together with all interest and other income earned thereon (the "Escrowed Funds") are being held in escrow by the Computershare Trust Company of Canada (the "Escrow Agent") pending satisfaction of certain escrow release conditions (the "Escrow Release Conditions"). Provided that the Escrow Release Conditions are satisfied on or prior to November 28, 2018 (the "Escrow Release Deadline"), the Escrowed Funds will be released from escrow by the Escrow Agent to: (a) the Agents, an amount equal to 100% of the Commission; and (b) Converge, an amount equal to the Escrowed Funds less the foregoing deductions.

If the Escrow Release Conditions have not been satisfied on or prior to the Escrow Release Deadline, the Escrowed Funds shall be used by Converge to repurchase the Converge Subscription Receipts for cancellation at a repayment price per Converge Subscription Receipt equal to the Issue Price. To the extent that the Escrowed Funds are not sufficient to purchase all of the Converge Subscription Receipts at the Issue Price, Converge will contribute such amounts as are necessary to cover any shortfall.

In addition, Converge provided an incentive to holders of warrants of Converge to exercise their warrants at a price of $0.50 per warrant, provided such warrants were exercised in July 2018. As a result, 3,331,000 warrants were exercised and Converge received gross proceeds of $1,665,500.

Acquisition Agreement

Under the terms of the Acquisition Agreement, among other things, on the effective date of the Amalgamation:

  1. each outstanding Converge Share will be exchanged for one Resulting Issuer Share;

  2. each outstanding common share of Norwick Subco shall be exchanged for one fully paid and non-assessable share of Amalco;

  3. all issued and outstanding options of Norwick shall automatically expire on the date which is 12 months following the effective date of the Amalgamation;

  4. all issued and outstanding Converge Share purchase warrants and Converge Compensation Options shall remain outstanding and exercisable into Resulting Issuer Shares in accordance with their terms; and

  5. all issued and outstanding Norwick common share purchase warrants and Norwick options shall remain outstanding and exercisable into Resulting Issuer Shares in accordance with their terms.

Pursuant to the Acquisition Agreement, as a result of the Amalgamation (and assuming no exercise of any convertible securities of Converge or Norwick), approximately 74,355,034 Resulting Issuer Shares will be issued in exchange for the Converge Shares (including the Converge Shares issued to holders of the Converge Subscription Receipts). Amalco will be a wholly-owned subsidiary of the Resulting Issuer and known as "Converge Technology Partners Inc." and the Resulting Issuer will carry on Converge's business. The closing of the Qualifying Transaction is conditional upon, among other things, receipt of conditional approval for the listing of the Resulting Issuer Shares on the TSXV or the Toronto Stock Exchange.

Proposed Management and Board of Directors and Insiders of the Resulting Issuer

The board of directors of the Resulting Issuer will be comprised of four directors. Subject to approval of the TSXV, it is planned that the directors and executive officers of the Resulting Issuer will include the following:

Shaun Maine Director, President and Chief Executive Officer

Mr. Maine is the President and Chief Executive Officer of Converge. Prior to Converge, Mr. Maine was the Chief Operating Officer of Pivot Technology Solutions ("Pivot"), a U$1.5 billion revenue value-added reseller listed on the Toronto Stock Exchange, and was part of the founding group that acquired and integrated five value-added resellers. In 2015 and 2016, Mr. Maine ran ProSys Information Systems, Pivot's largest operating subsidiary, which grew to nearly $800 million in revenue. Mr. Maine was an early Java pioneer and has extensive experience in the software industry. Mr. Maine has an Electrical Engineering degree and a Computer Science degree from Queen's University.

Gordon McMillan Proposed Director (Proposed Chairman of the Board of Directors)

Mr. McMillan has been an entrepreneur in the Canadian financial services industry since 1994. He was the co-founder and Chief Executive Officer of Triax Capital Corporation and Skylon Capital Corporation, both of which were sold to large industry consolidators. Mr. McMillan has served on the boards of numerous companies and publicly listed investment funds. Mr. McMillan was also a co-founder of Pivot and served on the Pivot board of directors from February 2013 until June 2016. Currently, Mr. McMillan serves as a director of Flow Capital Corp. and Quisitive Technology Solutions Inc., both of which are listed on the TSXV. Mr. McMillan holds a Bachelor of Laws degree from Queen's University in Kingston, Ontario and is a non-practicing member of the Law Society of Upper Canada.

Brian Philips Proposed Director

Brian Phillips had a 30 year career in the Canadian financial services industry, the last 19 of which, until his retirement in 2011, as a partner at Phillips, Hager & North Investment Management ("PHN"), which was acquired by RBC in 2008. Prior to PHN he was a Vice President with various security dealers, including Pemberton Securities, until acquired by RBC Dominion Securities in 1989. Mr. Phillips holds an MBA from the Ivey School of Business.

Mary Anne Palangio — Chief Financial Officer

Ms. Palangio, CPA, CA, CFA was the Chief Financial Officer of LOGiQ Asset Management Inc. until June 2018. Ms. Palangio served as the Chief Financial Officer at the Ontario Pension Plan Administration Corporation in 2016, where she was responsible for strategic financial planning and analysis, financial reporting, internal controls management, and related corporate service functions. In 2015 she served as Senior Vice-President of Global Head of Operations and Data Management for the Investment Division and prior to that Senior-Vice President and Chief Information Officer for Group Functions at Manulife Financial. Ms. Palangio holds Certified Public Accountant designation, Chartered Accountant designation since 1989 and Chartered Financial Analyst designation since 1998. She is also a Chartered Professional Accountant. She received a BA in Commerce and Economics from the University of Toronto.

Don Cuthbertson Chief Operating Officer

Mr. Cuthbertson is the Chief Operating Officer and EVP Blockchain at Converge. Prior to Converge, Don was Chief Data Officer at Pivot and led the diligence team on acquisitions and implementation of the 100 day plan. Formerly, Mr. Cuthbertson was Chief Executive Officer at IntelligentWorks, a custom software development company that was based in Ottawa. Mr. Cuthbertson has a degree in Chemical Engineering from Queen's University in Kingston, Ontario.

Cory Reid Chief Information Officer

Mr. Reid is the Chief Information Officer at Converge. He has global responsibilities for delivering oversight and overall post acquisition integration of the acquired businesses. This integration includes communication, synergies, technology, sales operations and back office. The integration outcomes are critical to deliver overall stability, communication and growth to Converge.

Prior to joining Converge, Mr. Reid served for seven years as Chief Information Officer of Pivot and was the chairman of Pivot Europe. Mr. Reid has more than 25 years of experience in both the software and infrastructure sides of the technology sector as well as sales and warehouse operations. He has served in many large and small company leadership positions at Oracle, AT&T, and various startups. He has been engaged with many top European telephony firms, banking firms and hardware manufacturers over the course of his career. Mr. Reid holds a BSc Computer Science from the Technical University of Nova Scotia, now part of Dalhousie University.

Mr. Reid has spent a significant amount of time over the past decade delivering compliance for businesses, particularly focused around data and information security.

It is anticipated that, in addition to the directors listed above, an additional director will be appointed to the board of directors of the Resulting Issuer.

Arm's Length Qualifying Transaction

The Qualifying Transaction is an arm's length transaction as none of the directors, officers or insiders of Norwick own any interest in Converge.

Sponsorship and Trading

Norwick has applied to the TSXV for an exemption from or waiver of the sponsorship requirements in connection with the Qualifying Transaction. There is no assurance that such exemption or waiver will be granted. If such exemption or waiver is not granted, it will be necessary to engage a sponsor for the Qualifying Transaction. Trading of the common shares of Norwick will be halted at least until the reception, to the satisfaction of the TSXV and according to its applicable policies, of the documents necessary to resume trading. A further news release will be issued when the trading of the common shares of Norwick is to resume.

The closing of the Qualifying Transaction is expected to occur as soon as practicable after the receipt of all required shareholder and regulatory approvals and is subject to a number of conditions, including but not limited to, acceptance and regulatory approval by the TSX Venture Exchange and shareholders of Converge approving, among other things, the Amalgamation. There can be no assurance that the Qualifying Transaction will be completed as proposed or at all.

Norwick will provide further details in respect of the Qualifying Transaction in due course by way of press release. All information contained in this press release with respect to Converge and Norwick was supplied by the parties respectively, for inclusion herein, without independent review by the other party, and each party and its directors and officers have relied on the other party for any information concerning the other party. Investors are cautioned that, except as disclosed in the Filing Statement prepared in connection with the Qualifying Transaction, any information released or received with respect to the Qualifying 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. The TSX Venture Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

For further information:

Richard A. Graham
President, Chief Executive Officer, and Chief Financial Officer
Norwick Capital Corp.
(604) 689-1428

Shaun Maine
Chief Executive Officer
Converge Technology Partners Inc.
(416) 360-1495

Non-IFRS Measures

This press release makes reference to certain non-IFRS measures. EBITDA and Adjusted EBITDA as defined above, are measures that are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement IFRS measures by providing further understanding of Converge's results of operations from management's perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of Converge's financial information reported under IFRS. Converge uses non-IFRS measures to provide investors with supplemental measures of its operating performance and thus highlight trends in its core business that may not otherwise be apparent when relying solely on IFRS financial measures. Converge also believes that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of issuers. Converge's management also uses non-IFRS measures in order to facilitate operating performance comparisons from period to period, prepare annual operating budgets and assess Converge's ability to meet its future debt service, capital expenditure and working capital requirements. Management uses EBITDA and Adjusted EBITDA as a measure of Converge's performance.

Forward-Looking Information

This press release contains certain "forward-looking information" and "forward-looking statements" (collectively, "forward-looking statements") within the meaning of applicable Canadian securities legislation regarding Norwick, Converge, and their respective businesses. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this press release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as "expects", or "does not expect", "is expected" "anticipates" or "does not anticipate", "plans", "budget", "scheduled", "forecasts". "estimates", "believes" or intends" or variations of such words and phrases or stating that certain actions, events or results "may" or "could, "would", "might" or "will" be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements. In this press release, forward-looking statements relate, among other things, to: the completion of the Qualifying Transaction; the business of Converge; the Consolidation; shareholder, director and regulatory approvals; and future press releases and disclosure. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general business, economic, competitive, political and social uncertainties; and the delay or failure to receive shareholder, director or regulatory approvals. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this press release. Except as required by law, Norwick and Converge assume no obligation to update the forward-looking statements of beliefs, opinions, projections, or other factors, should they change, except as required by law.

Completion of the transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and if applicable pursuant to TSXV 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 filing statement to be prepared in connection with the Qualifying 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.

The TSXV has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

This press release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States unless registered under the U.S. Securities Act and applicable state securities laws, unless an exemption from such registration is available.


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Norwick Capital Corp. and Converge Technology Partners Inc. Enter into Acquisition Agreement


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