StillCanna Signs Definitive Agreement for the Acquisition of a Leading European Hemp Cultivator Olimax
Vancouver, British Columbia--(Newsfile Corp. - March 18, 2019) - StillCanna Inc. (CSE: STIL) ("StillCanna" or the "Company") is pleased to announce that today, March 18th, 2019, the Company signed of a definitive agreement to complete the acquisition of Olimax NT SP. Z .O.O ("Olimax"), a fully-licensed, privately-owned, vertically-integrated cultivator and producer of cannabidiol ("CBD") in Poland, for total consideration consisting of 24 million common shares of StillCanna at a deemed per share price of C$1.15 and a cash payment of C$2 million (the "Olimax Transaction").
StillCanna, a European-focused CBD producer with operations in Romania will acquire Olimax as a means to further its strategy of providing large quantities of high-quality CBD extracts to the European and global markets. The Olimax Transaction provides StillCanna with a vertically-integrated and licensed cultivator, extractor and formulator of CBD. Olimax's core strength is in agriculture, with over 20-years of experience in farming hemp, in addition to having a fully-developed product line and a proprietary, European Union ("EU") certified, high-CBD content hemp varietal. Olimax successfully cultivated and harvested hemp from over 600 hectares in 2018.
Jason Dussault, Chief Executive Officer of StillCanna, commented, "It is rare when the core competencies of two companies complement each other so well. Olimax's agricultural experience matched with our extraction expertise creates the perfect storm. The combined company will have the capacity to produce 16 million grams of high-potency CBD for the European and global market in 2019. We estimate that with a further investment of C$10 million for land lease, planting and harvesting we expect to expand to over 60 million grams by 2021."
- The transaction bolsters StillCanna's pro-forma production profile to 16 million grams of CBD in 2019, with potential to grow to 32 million grams in 2020 and over 60 million grams in 2021.
- The addition of Olimax's two founders, with their extensive 20-year history and academic background, provides StillCanna with significant internal cultivation expertise.
- Improves alignment of management as Olimax's founders would hold 29% of the pro-forma company (20 million shares subject to a 36-month escrow).
TERMS OF THE TRANSACTION
Under the terms of the Olimax Transaction, StillCanna will acquire all the issued and outstanding shares of Olimax from the arm's length shareholders of Olimax for total consideration consisting of 24 million common shares of StillCanna and a cash payment of C$2.0 million. Following the acquisition, Olimax will become a wholly-owned subsidiary of StillCanna. Subject to completion of the Olimax Transaction and the Brokered Financing, StillCanna plans to invest up to C$12.0 million to expand Olimax's capacity in agriculture, associated infrastructure, and working capital. Additionally, StillCanna has secured the services of the Olimax founders for a period of a minimum of three years to aid with the anticipated expansion of the business in Poland and throughout the EU. The Olimax Transaction is subject to customary conditions, including regulatory and exchange approval, due diligence, and StillCanna closing the Brokered Financing. The Olimax Transaction is expected to close shortly after satisfaction of all outstanding conditions under the Definitive Agreement, which closing date is expected to occur in the second quarter of 2019.
PRIVATE PLACEMENT FINANCING
StillCanna is also pleased to announce that it has entered into an agreement with Canaccord Genuity Corp. (the "Agent") to raise, on a commercially reasonable efforts private placement basis up to 17,400,000 subscription receipts (the "Subscription Receipts") at a price of C$1.15 per Subscription Receipt (the "Issue Price") for aggregate gross proceeds of up to C$20,010,000 (the "Brokered Financing"). In addition, the Company has granted the Agent an option to increase the size of the Brokered Financing by up to 4,350,000 Subscription Receipts for additional gross proceeds of C$5,002,500, exercisable in whole or in part at any time prior to the closing of the Brokered Financing, for aggregate gross proceeds of up to C$25,012,500.
Each Subscription Receipt shall entitle the holder thereof to receive, upon satisfaction of certain escrow release conditions (including the completion of the Olimax Transaction) and without payment of any additional consideration or any further action on the part of each holder thereof, one unit of StillCanna (a "Unit"). Each Unit will consist of one common share of the Company (a "Common Share") and one-half of one common share purchase warrant (each whole warrant, a "Warrant"). Each Warrant will be exercisable to acquire one Common Share for a period of 12-months from the date the escrow release conditions are satisfied at an exercise price of C$1.73. If the escrow release conditions are not satisfied by June 30, 2019, the Subscription Receipts will be cancelled and all proceeds from the Brokered Financing will be returned to subscribers.
The Company intends to use the net proceeds of the Brokered Financing to expand CBD processing capacity at the Company's facility in Romania, to build out Olimax's CBD extraction facility and agricultural capabilities, along with working capital and general corporate expenditures.
The Agent will be paid a cash commission equal to 7.0% of the gross proceeds of the Brokered Financing and will also receive warrants (the "Compensation Warrants") to acquire that number of Units which is equal to 7.0% of the aggregate number of Subscription Receipts sold under the Brokered Financing. Each Compensation Warrant will be exercisable at the Issue Price for a period of 12-months following the date the Escrow Release Conditions are satisfied.
The Brokered Financing is expected to be completed on April 11th, 2019 (the "Closing Date"), or such other date as mutually agreed to by the Company and the Agent, subject to the receipt of all necessary regulatory approvals, including the approval of the Canadian Securities Exchange. All securities issued pursuant to the Brokered Financing will be subject to a four month and one day hold period from the Closing Date, in accordance with applicable Canadian securities laws.
This news release does not constitute an offer to sell or a solicitation of an offer to sell any 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 "US Securities Act") or any state securities laws and may not be offered or sold in the United States or to or for the account or benefit of US persons unless registered under the US Securities Act and applicable state securities laws or an pursuant to an exemption from such registration as available.
For more information, please visit www.StillCanna.com
On Behalf of the Board,
Chief Financial Officer and Director
Olimax is a fully integrated and licensed cultivator, extractor and formulator of CBD in Poland with operations spanning over 20 years. Having recently successfully cultivated and harvested over 600 hectares of hemp, they intend to expand their agricultural footprint to over 5,000 hectares by 2021. Olimax has registered a high-potency CBD hemp varietal with the EU and holds rights to proprietary harvesting and processing equipment and techniques. In addition to being experienced in agriculture, Olimax has also formulated a large number of CBD and hemp-based products which span from CBD oils and hemp protein to cosmetics and beverages. Through significant experience and industry connections, Olimax has established itself as a leader in hemp cultivation and processing throughout Europe. The company has more recently focused on cultivating an extensive bank of seeds from their proprietary and registered Glyana strain. This seed bank gives the company the freedom to significantly and independently expand its cultivation holdings. Olimax's founders have over 20 years of experience in growing and formulating CBD products, are widely considered agricultural experts in their field and hold degrees in chemistry and physics. The combination of education, practical experience and a true passion for the hemp plant has propelled them to be true leaders in their field and widely respected throughout the European hemp industry.
ABOUT STILLCANNA INC.
StillCanna Inc. (CSE: STIL) (www.stillcanna.com) is a Canadian early-stage life sciences company focused on large-scale CBD extraction in Europe. Based on a proprietary process and intellectual property, the Company is forecasted to be one of the lowest-cost CBD extractors operating in Europe. The company has signed an extraction contract to be the exclusive extractor for Dragonfly BioSciences LLC, a United Kingdom-based supplier of CBD. Upon the completion of the Olimax Transaction, StillCanna will be one of the leading processors and providers of market-ready CBD in Europe.
The CSE has not in any way passed upon the merits of and has neither approved nor disapproved the contents of this news release.
Cautionary Note Regarding Forward Looking Statements: This release includes certain statements and information that constitute forward-looking information within the meaning of applicable Canadian securities laws, including statements regarding the Company and Olimax's future Hemp and CBD production capacity, the successful completion of the acquisition of Olimax and the anticipated closing date of the acquisition of Olimax, the successful completion of the Brokered Financing and the anticipated closing date of the Brokered Financing and use of proceeds of the Brokered Financing Generally, forward-looking statements and information can be identified by the use of forward-looking terminology such as "intends" or "anticipates", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "should" or "would" occur. Forward-looking statements are based on certain material assumptions and analysis made by the Company and the opinions and estimates of management as of the date of this press release, including that the Company and Olimax as a combined company will be successful in reaching the Hemp and CBD production capacity as currently anticipated, the Company's forecasted growth of the CBD market in the EU by the year 2021 will be accurate, the completion of the acquisition of Olimax by the Company will be successful as anticipated, the Company will be successful in completing all necessary conditions to complete the Olimax Transaction and the closing date of the acquisition of Olimax by the Company will be in Q2 of 2019, and the Company will be successful in completing the Brokered Financing including obtaining all required regulatory and stock exchange approvals. Although the Company considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect, and the forward-looking statements in this release are subject to numerous risks, uncertainties and other factors that may cause future results to differ materially from those expressed or implied in such forward-looking statements. Such risk factors may include, among others, that the Company will not be successful in completing the Olimax Transaction in the second quarter of 2019 or at all, the Company will be unable to satisfy the conditions necessary to complete the Olimax Transaction, , the Company and Olimax's anticipated level of Hemp and CBD production capacity in the EU will not be achieved due to such factors as changing market conditions or changes in the laws and regulations in respect of CBD extraction or the forecasted growth of the CBD market in the EU by the year 2021 will not be accurate, and the Company will not be successful in completing the Brokered Financing on the terms as announced or at all. Readers are cautioned not to place undue reliance on forward-looking statements. Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements or forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. 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 forward-looking statements and forward-looking information. Readers are cautioned that reliance on such information may not be appropriate for other purposes. The Company does not intend, and expressly disclaims any intention or obligation to, update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by law.
NOT FOR DISSEMINATION TO UNITED STATES NEWSWIRE SERVICES
OR FOR DISSEMINATION IN THE UNITED STATES
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