BTCS, Blockchain Global reach non-binding agreement on merger
BCG shareholders are poised to receive a combination of common stock, convertible preferred stock and warrants equal to 75% of the fully-diluted equity securities of the BTCS post-closing.
BTCS Inc (OTCMKTS:BTCS), formerly known as Bitcoin Shop, has just announced that it has entered into a non-binding letter of intent (LOI) with Australian Blockchain Global Limited (BCG) to merge the company with BCG.
Under the terms of the document, BCG shareholders will receive a combination of common stock, convertible preferred stock and warrants equal to 75% of the fully-diluted equity securities of the BTCS post-closing. Under the LOI, BTCS’ two current executive officers will receive 12% of the Fully Diluted Equity in the form of common stock, preferred stock or restricted stock units in a manner to be determined by BTCS.
A key condition of the LOI is that the existing holders of BTCS securities which have anti-dilution protection, redemption features and similar protections must be eliminated as determined solely by BCG. The LOI requires that BTCS implements an Equity Incentive Plan to acquire 20% of the Fully Diluted Equity which will be administered by an independent compensation committee. BTCS’ Chief Executive Officer, Charles Allen, shall be deemed an acceptable non-independent director.
As usual, the announcement ends with the disclaimer that there can be no assurance that the conditions to closing will be satisfied or the merger will be finalized.
BTCS has been saddled with heavy losses over the past couple of years. In January this year, BTCS admitted its failure to list its Common Stock on a national securities exchange on or before December 31, 2016 and its failure to consummate the merger with Spondoolies-Tech Ltd. on or before December 31, 2016.
A deal with BTCS would mark another strategic step for Blockchain Global, which in June this year agreed on strategic investment in DigitalX Ltd (ASX:DCC), an Australian company for Blockchain-enhanced software solutions. DigitalX said back then that it had secured investment of approximately $4.35 million from Blockchain Global and associated investors. Blockchain Global had agreed to invest the sum at 2.7 cents per share to acquire an interest of circa 40% of DigitalX.