Choom™ and ABcann Announce Strategic Investment and Supply Agreement
Choom™ (CSE: CHOO; OTCQB: CHOOF) (the “Company” or “Choom”) and ABcann Global Corporation (“ABcann”) (TSXV: ABCN, OTCQB: ABCCF) are pleased to announce that the Company has completed a financing of subscription receipts (each, a “Subscription Receipt”) for gross proceeds of $7.0 million including a $4.0 million lead order from ABcann.
Strategic Subscription Receipt Financing – $7.0 million
Further to Choom’s news release of March 19, 2018, the Company announces that it has completed a strategic private placement of Subscription Receipts concurrent with the execution of a definitive agreement relating to the acquisition of International Tungsten Inc. (“ITI”). In total 11,666,991 Subscription Receipts were issued for gross proceeds of $7.0 million (the “Offering”), including a strategic $4.0 million lead order from ABcann.
“ABcann remains committed to becoming a global leader in the cannabis sector. With our strategic investment in Choom, we are signaling a strong move into the recreational market with one of the premium recreation brands in Canada,” stated Barry Fishman, CEO of ABcann. “With our strong cash position of approximately $135,000,000, ABcann intends to pursue other accretive opportunities to diversify our industry presence. We look forward to working with and assisting the Choom team with the supply of our premium grown products.”
Supply Agreement
Additionally, Choom™ has entered into a binding agreement (the “Supply Agreement”) with ABcann whereby ABcann, one of Canada’s premier growers, will supply Choom™ with premium cannabis products, subject to regulatory approval.
“The Supply Agreement will demonstrate our commitment to becoming one of Canada’s leading retailers in the cannabis space. Working with ABcann will provide us with a premium line of products, with a strong focus on quality, in the roll-out of our retail store strategy, upon receipt of applicable regulatory approvals,” stated Chris Bogart, President and CEO of Choom™. “As we expand our efforts to strengthen our retail platform and brand position, a partnership with one of the market leaders in quality and production will be of great value to our organization. The investment and supply agreement with ABcann is a strong endorsement of our strategy and a pivotal step in developing Choom™ as the premium brand in Canada’s burgeoning recreational cannabis market.”
Subscription Receipt – Unit Offering
The proceeds from the Offering are being held in escrow until the completion of the acquisition of ITI (the “Transaction”). Upon closing of the Transaction and satisfaction of the other escrow release conditions, each Subscription Receipt will be automatically converted, for no additional consideration and without any further action by the holder of such Subscription Receipt, into one unit of the Company (each a “Unit”). If the escrow release conditions are not satisfied by June 11, 2018, the Subscription Receipts will be cancelled and the escrowed proceeds from the Offering will be returned to the holders of the Subscription Receipts pro rata. For further details with respect to the Transaction, please see Choom’s news release dated March 19, 2018, a copy of which is available under Choom’s profile on SEDAR at www.sedar.com.
Each Unit will consist of one common share of the Company (each, a “Common Share”) and one common share purchase warrant (each, a “Warrant”). Each Warrant will entitle the holder thereof to purchase one common share of the Company for a period of 18 months from the date of issuance at a price of $0.90 per Common Share. In the event that, following the conversion of the Subscription Receipts into Units, the 10-day volume weighted average trading price of the Common Shares on the Canadian Securities Exchange is above $1.35, the expiry date of the Warrants will be accelerated to a date that is 30 days after the Company disseminates a news release announcing the accelerated expiry date.
The Subscription Receipts, and any Common Shares and Warrants issued upon conversion thereof, will be subject to a hold period expiring four months and one day after the closing of the Offering. The proceeds from the Offering will be used to cover costs of the Transaction, production facility improvements and for general working capital purposes.
None of the securities issued in connection with the Offering will be registered under the United States Securities Act of 1933, as amended (the “1933 Act”), and none of them may be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the 1933 Act. This news release shall not constitute an offer to sell or a solicitation of an offer to buy nor shall there by any sale of the securities in any state where such offer, solicitation, or sale would be unlawful.
Choom™ Signs Definitive Amalgamation Agreement to Acquire Late Stage ACMPR Applicant with Affirmation of Readiness Evidence Package Submitted to Health Canada
Choom™ (CSE: CHOO; OTCQB: CHOOF) (the “Company” or “Choom”) is pleased to announce that the Company has entered into a definitive amalgamation agreement, effective March 16, 2018 (the “Definitive Agreement”), among itself, its wholly-owned subsidiary, Arbutus Brands Inc. (“Arbutus Brands”), and International Tungsten Inc. (“ITI”). Pursuant to the Definitive Agreement: (i) Arbutus Brands will amalgamate with ITI, with the amalgamated company remaining a wholly-owned subsidiary of the Company operating under the name of Arbutus Brands, and (ii) all of the issued and outstanding securities of ITI will be exchanged for securities of Choom (the “Transaction”). ITI has entered into an agreement to acquire all of the issued and outstanding securities of Specialty Medijuana Products Inc. (“SMP”), an applicant under the Access to Cannabis for Medical Purposes Regulations (the “ACMPR”), that has submitted its Affirmation of Readiness (“AOR”) evidence package to Health Canada and expects to receive a cultivation license from Health Canada within the next several weeks.
Transaction Highlights
The expected benefits of the Transaction for Choom™ include that it will:
- enable Choom™ to acquire a company in British Columbia that has submitted its AOR evidence package to Health Canada and expects to receive its cultivation license in the next few weeks;
- create significant synergies in operational infrastructure and expertise across multiple disciplines to drive strong growth potential;
- significantly improve and advance operational scale and production capacity; and
- strengthen and accelerate Choom’s strategic direction as a fully-integrated cannabis company, representing a premiere lifestyle brand in Canada.
Specialty Medijuana Products Inc.
SMP, based in Canada’s beautiful Sooke, B.C., is committed to becoming a Licensed Producer of cannabis under the ACMPR. SMP was founded by a seasoned business team with extensive experience in growing cannabis, the operation of pharmacies, medical clinics, land development and construction. The SMP team, in conjunction with Choom’s™ management team, plan to build upon their collective past business successes and leverage their expertise to create Canada’s premiere lifestyle brand in adult-use cannabis.
Facility Overview
SMP’s marijuana production growth strategy is expected to be executed in three phases:
- Phase I – First Facilities: AOR evidence package submitted to Health Canada: Buildings are at operational readiness with state-of-the-art-facilities, consistent with ACMPR standards, and SMP expects to receive its cultivation license from Health Canada within the next several weeks. A sales license is expected to be granted by Health Canada in the third quarter of 2018.
- Phase II – Second Facility: Expand existing production by constructing an approximately 19,600 sq. ft. facility that will bring total production capacity to over 29,000 sq. ft. in the combined facility footprint.
- Phase III – New Facility: Expand existing production by constructing two additional buildings that will increase the total building gross square footage to just over 700,000 sq. ft. This new facility, a hybrid model of indoor and greenhouse production, is expected to bring Choom’s total production capacity to over 750,000 sq. ft. The Municipality of Sooke has already approved cannabis production zoning for the site. The building expansion fits within the zoning regulations and final planning for this expansion is currently underway.
The SMP Team
SMP’s team has the experience to ensure that they successfully navigate the ACMPR licensing process and deliver on their vision. The SMP team includes:
Michael Forbes
Named one of 2017’s Top Entrepreneurs by Quantum Shift, Michael has a long history of creating and operating successful companies in the pharmaceutical and health care industries. Over the course of 14 years in business, he has created and operated a chain of nine pharmacies and eight medical clinics, including three methadone clinics, employing over 160 people.
This expertise led to him being nominated to help create the procedures for the College of Pharmacists of British Columbia in 2010. His expertise in creating standard operating procedures in the pharmaceutical space is vital in ensuring proper drug dispensing to the public. This experience is crucial in creating trust with the consumer and the industry at large. He holds an Honorary Degree in Business from the Ivey School of Business and a Bachelor of Science, Pharmacy. Mr. Forbes will be joining the Choom™ Board of Directors upon the completion of the Transaction.
Ian Laing
Ian has over 20 years of experience in real estate, development and construction in a range of areas, including apartment buildings, custom home construction, land development, rezoning, condominiums, commercial and industrial buildings.
Since 1998, Ian has consistently proven his ability to build and grow multi-million dollar projects from the ground up. He has a background in Urban Land Economics from the University of British Columbia and a commitment to building with integrity. Ian is currently running four companies, and has experience in the recreational space with Salt Spring Island Brewery. This experience is expected to benefit the development of SMP’s business practices and the anticipated build out and scaling of facilities. SMP will rely on this expertise as it grows its facilities and expands operations.
Neil Michael MacLean
Neil MacLean has over 20 years of experience with the Department of National Defence (“DND”), primarily dealing with electronics, and previously was an environmental officer for HMCS Huron. His safety and WHMIS training, combined with his understanding of security procedures, are expected to assist SMP with compliance with the highest level of government regulations. He has effectively managed the integration of new equipment and systems, and has extensive personnel training experience, which, together with his training in environmental issues, electronics and operations of complex systems, will support the operational side of SMP.
Transaction Summary
In accordance with the terms of the Definitive Agreement, ITI will amalgamate with Arbutus Brands following which the resulting amalgamated entity will continue as a wholly-owned subsidiary of the Company. In consideration for the completion of the Transaction, the holders of ITI common shares will be issued one common share of the Company (each, a “Common Share”) in exchange for every share of ITI held, up to a combined maximum of 92,000,000 Common Shares. Existing convertible securities of ITI will be exchanged for convertible securities of the Company on substantially the same terms, and applying the same exchange ratio. In connection with the closing of the Transaction, Choom will pay finder’s fees of 4,000,000 Common Shares to eligible parties.
In connection with the Transaction, Choom has completed an offering of subscription receipts, at a price of $0.60 per subscription receipt, for aggregate gross proceeds of $7.0 million (the “Offering”). The proceeds of the Offering are being held in escrow until the completion of the Transaction, after which each subscription receipt will be automatically converted, for no additional consideration and without any further action by the holder, into one unit of Choom, with each unit being comprised of one Common Share and one common share purchase warrant, each of which will be exercisable into one Common Share at a price of $0.90 per Common Share for 18 months following the date of issuance (subject to acceleration in certain circumstances in accordance with the terms thereof).
The closing of the Transaction remains subject to a number of conditions, including the completion of satisfactory due diligence, receipt of any required shareholder, regulatory and third-party consents, the acquisition by ITI of SMP, and the satisfaction of other customary closing conditions. Additional information regarding the Transaction will be made available under the Company’s profile on SEDAR (www.sedar.com) as such information becomes available.
There can be no assurance that the Transaction will be completed as proposed, or at all.
The Canadian Securities Exchange has not in any way passed upon the merits of the proposed Transaction and has neither approved nor disapproved the contents of this press release.
None of the securities issued in connection with the Transaction or the Offering will be registered under the United States Securities Act of 1933, as amended (the “1933 Act”), and none of them may be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the 1933 Act. This news release shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there by any sale of the securities, in any state where such offer, solicitation, or sale would be unlawful.
SAY HELLO TO CHOOMTM
Choom™ was created for and inspired by the Choom Gang; a group of buddies in Honolulu during the 1970’s who loved to smoke weed—or as the locals called it, “Choom“. Now, after four decades, Choom™ is bringing the spirit of Hawaii to Canada. We’re planting our flag in the rapidly growing legal cannabis industry in Canada with our own brand of high-grade handcrafted herb. Choom™ will provide an amazing experience for customers, and bring style, sophistication and fun to the cannabis market through our Choom™ stores.
“Chris Bogart”
President & CEO
About ABcann:
ABcann holds production and sales licenses from Health Canada. Its flagship facility in Napanee, Ontario contains proprietary plant-growing technology, centred on its specially designed, environmentally-controlled growing chambers. This approach results in the production of pharmaceutical-grade cannabis products. ABcann is expanding its production capacity and pursuing partnership and product development opportunities domestically, as well as in select international markets, such as Germany, Australia and Israel.
“Barry Fishman”
CEO and Director
Cautionary Statement:
NEITHER OF THE TSX VENTURE EXCHANGE, THE CANADIAN SECURITIES EXCHANGE NOR THEIR REGULATIONS SERVICES PROVIDERS, HAVE REVIEWED OR ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
Forward-looking information
Certain statements in this release are forward-looking statements, which reflect the expectations of management regarding the proposed Transaction and Choom’s or ABcann’s future business plans. Forward-looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations or intentions regarding the future. Forward looking statements in this news release include statements relating to the terms of the Transaction and the Offering; the expected benefits of, and impact on, the cannabis industry; and other statements regarding the business of Choom or ABcann. Such statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the statements, including the risk that the CSE may not approve the Transaction, the Offering or the Supply Agreement; that the Transaction, the Offering or the Supply Agreement may not be completed for any other reason; or that factors may occur which impede or prevent Choom’s future business and development plans. No assurance can be given that any of the events anticipated by the forward-looking statements will occur or, if they do occur, what benefits Choom or ABcann will obtain from them. Readers are urged to consider these factors carefully in evaluating the forward-looking statements contained in this news release and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by these cautionary statements. These forward-looking statements are made as of the date hereof and Choom and ABcann disclaim any intent or obligation to update publicly any forward looking statements, whether as a result of new information, future events or results or otherwise, except as required by applicable securities laws.
SOURCE Choom Holdings Inc.
