Trakopolis Granted Approval and Vesting Order

CALGARY, Alberta, Jan. 10, 2020 (GLOBE NEWSWIRE) -- Trakopolis IoT Corp. (TSXV: TRAK) ("Trakopolis" or the "Company") announced today that on January 9, 2020 the Company and its subsidiary Trakopolis SaaS Corp. (“SaaS”) obtained a sale approval and vesting order (the “Approval and Vesting Order”) from the Court of Queen’s Bench of Alberta issued in connection with proceedings under the Bankruptcy and Insolvency Act (Canada) (the “Act”). 

The Approval and Vesting Order approved the transactions contemplated in the asset purchase agreement (the “Acquisition Agreement”) entered into as of December 20, 2019, among the Company, SaaS and a subsidiary of Geoforce, Inc. (“Geoforce”, and its subsidiary party to the Acquisition Agreement, the “Purchaser”).  Under the terms of the Acquisition Agreement, the Purchaser will acquire substantially all of the assets of SaaS.  On January 8, 2020, the Acquisition Agreement was amended to provide that Trakopolis and SaaS would continue to co-operate with the Purchaser in getting required customer consents until March 31, 2020.

The receipt of the Approval and Vesting Order represents an important milestone in a process that commenced approximately 18 months ago with the formation of a Special Committee of the Board of Directors of the Company (the " Special Committee") on June 28, 2018. The mandate of the Special Committee was to look at a variety of strategic options that might be available to the Company including a sale, strategic combination, refinancing and analogous transactions. Later in the process the Special Committee would be asked to take the lead in negotiations with the Company's secured lender. 

The Special Committee retained Canaccord Genuity Corp. ("Canaccord') as its financial advisor and with its assistance commenced the process of canvassing the market for parties potentially interested in a transaction. Over 50 parties were approached and six non-binding written proposals were received over the course of the Special Committee's process in Q1 2019. After discussions with the six parties, no viable transaction was able to be concluded. 

At the same time, the Board and Management pursued a strategy to achieve profitability as soon as possible. This initiative included significant headcount reductions and the implementation of other cost-saving measures and initiatives aimed at reducing operating expenses and cash burn. These measures achieved some level of success as evidenced by the Company's 2019 Q3 results.  Unfortunately, during this period, and as has been previously disclosed, the Company was not able to fully comply with all of the covenants under its secured credit facility and during the later part of the summer of 2019, the Company entered into negotiations with its secured lender in order to obtain covenant relief and an extension of the term of the facility. Canaccord advised that if the Company could demonstrate a sustained period of profitability it's chances of completing a successful transaction would be greatly enhanced.