Reef Announces Proposed Transaction with CBD Acres Manufacturer Inc.

Calgary, Alberta--(Newsfile Corp. - February 6, 2019) - Reef Resources Ltd. ("Reef") is pleased to announce that it has signed a binding letter of intent (the "LOI") with CBD Acres Manufacturer Inc., a corporation incorporated under the laws of the Canada Business Corporations Act ("CBD"). The LOI outlines the general terms and conditions pursuant to which Reef and CBD would be willing to complete a transaction that will result in a reverse take-over of Reef by the securityholders of CBD (the "Transaction"). The Transaction, if approved, will constitute a Reverse Takeover transaction and a Change of Business under the policies of the TSX Venture Exchange (the "TSXV").

The Transaction is an arm's length transaction.

The LOI provides that pursuant to the Transaction, Reef will complete a 12:1 consolidation of its common shares and that Reef will acquire all of the issued and outstanding shares of CBD from the existing shareholders of CBD on the basis of one post-consolidation share of Reef for each share of CBD.

The Transaction is expected to require the security holders of CBD to exchange all securities of CBD for common shares of Reef. The transaction will be structured by way of a plan of arrangement, amalgamation, takeover bid, reorganization or other similar form of transaction, as determined following a review of all relevant legal, regulatory and tax matters. The LOI contemplates Reef and CBD entering into a definitive agreement with respect to the Transaction.

In connection with the Transaction, it is contemplated that Reef will change its name to "CBD Acres Manufacturer Inc." or such other name as may be requested by CBD and accepted by Alberta Registries and the TSXV. It is also contemplated that the then current directors of Reef will resign to be replaced by nominees to CBD.

CBD has agreed to loan Reef up to $150,000 to cover certain expenses of Reef to be repaid by Reef to CBD upon Reef's disposition of certain legacy assets.

The LOI provides that completion of the Transaction is subject to a number of conditions including the approval from the Reef shareholders of the proposed consolidation and name change, approval from the CBD shareholders of the Transaction and approvals from the TSXV, securities regulators and third parties as may be required.

The LOI may be terminated by either party if the conditions set out in the LOI (other than the requirement for TSXV and regulatory approval) are not met by April 30, 2019, or such other date as may be agreed upon by the parties.

About Reef

Reef is incorporated under the provisions of the Business Corporations Act (Alberta) with its registered and head office in Calgary, Alberta. Reef is a natural resources issuer with non-producing oil and gas assets located in Huron County, Ontario. The Transaction, if approved, will constitute a reverse takeover transaction and a change of business as defined in Policy 5.2 of the TSXV. Reef is a reporting issuer in the provinces of Alberta, British Columbia and Ontario.

About CBD

CBD Acres is positioning to be Canada's leading innovator in cannabinoid therapy. CBD is a vertically-integrated health and wellness company with market-ready products to be introduced in Q2 2019 across a wide category range. The company will, in 2019, begin its first hemp growing season on in excess of 180 million square feet (4,200 Acres). As a result, CBD will be the largest producer of hemp-based CBD in Canada. CBD's proprietary advanced cultivation technology provides it with a meaningful strategic production advantage.

Further information relating to CBD, including the proposed board nominees of CBD, will be included in a subsequent press release in connection with the Transaction.

Sponsorship

Sponsorship may be required by the TSXV unless exempt in accordance with TSXV policies. Reef is currently reviewing the requirements for sponsorship. Reef intends to include any additional information regarding sponsorship in a subsequent press release.

All information contained in this news release with respect to Reef and CBD was supplied by the parties respectively, for inclusion herein, and each party and its directors and officers have relied on the other party for any information concerning the other party.

FOR FURTHER INFORMATION, PLEASE CONTACT:
Larry Olson
Chief Financial Officer and Director
(250) 460-2640

Completion of the transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable, disinterested 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 management information circular or filing statement to be prepared in connection with the 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 [insert name of Issuer] should be considered highly speculative.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this news release.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Forward Looking Statements

This press release contains forward-looking statements which reflect management's expectations regarding future growth, results of operations, performance and business prospects of Reef and CBD Acres. These forward-looking statements may relate to, among other things, forecasts or expectations regarding business outlook for Reef and CBD Acres, and may also include other statements that are predictive in nature, or that depend upon or refer to future events or conditions, and can generally be identified by words such as "may", "will", "expects", "anticipates", "intends", "plans", "believes", "estimates", "guidance" or similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements.

Events or circumstances may cause actual results to differ materially from those predicted as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of Reef and CBD Acres. The reader is cautioned not to place undue reliance on any forward-looking information. Although such information is considered reasonable by management at the time of preparation, it may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this press release are expressly qualified by this cautionary statement. The forward-looking statements contained in this press release are made as of the date of this press release, and Reef and CBD Acres does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as required by securities law.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/42697

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