Newton Energy Corporation Announces Letter of Intent for a Proposed Reverse Takeover Transaction

Calgary, Alberta--(Newsfile Corp. - June 7, 2019) - Newton Energy Corporation (TSXV: NTN.H) (the "Company" or "Newton") announces that it has entered into an arm's length non-binding letter of intent ("LOI") accepted June 7, 2019 with Franchise Cannabis Corp. ("Franchise"), a global, fully integrated, seed-to-sale medical cannabis company. The LOI outlines the proposed terms and conditions pursuant to which the Company and Franchise will effect a business combination that will result in a reverse takeover of the Company by the securityholders of Franchise (the "Proposed Transaction") and the listing for trading of the securities of the resulting issuer on the Canadian Securities Exchange.

Franchise believes it is well positioned to become a dominant player in the European medical cannabis market as well as other international jurisdictions with legal medical cannabis regimes. Further details concerning Franchise, including its operations, management and financial status will be provided following completion of due diligence investigations and the negotiation of a definitive agreement in respect of the Proposed Transaction (the "Definitive Agreement"). Until then, confidentiality provisions preclude the disclosure of certain information concerning Franchise.

A more comprehensive news release will be issued by Newton disclosing details of the Proposed Transaction, including financial information respecting Franchise, the expected number and exchange ratios of common shares of the resulting issuer to be issued to the holders of Franchise and Newton shares (and the deemed value thereof), and the names and backgrounds of all persons who will constitute insiders of the resulting issuer once the Definitive Agreement has been finalized.

The Proposed Transaction

The Proposed Transaction will be structured as an amalgamation, arrangement, takeover bid, share purchase or other similar form of transaction or a series of transactions determined by the legal and tax advisors to each of Newton and Franchise. The final structure for the Proposed Transaction will be determined after Newton and Franchise have considered all applicable tax, securities law and accounting considerations. It is anticipated that Franchise, or a company established for the purpose, will conduct a private placement of subscription receipts in conjunction with the Proposed Transaction for an amount to be determined. Franchise has engaged Canaccord Genuity Corp. to act as lead agent in relation to the private placement of subscription receipts.

Completion of the Proposed Transaction is subject to a number of conditions, including the negotiation and signing of a Definitive Agreement, receipt of all necessary securityholder and regulatory approvals, approval from the NEX board of the TSX Venture Exchange (the "NEX") for the delisting of the common shares of Newton from the NEX and conditional approval of the Canadian Securities Exchange for the listing of the common shares of Newton following completion of the Proposed Transaction.

In connection with the Proposed Transaction, the Company will be required to, among other things:

  1. change its name to a name requested by Franchise and acceptable to applicable regulatory authorities; and

  2. replace the directors and officers of the Company on closing of the Proposed Transaction with nominees of Franchise.

Upon successful completion of the Proposed Transaction, the resulting issuer will carry on the business currently carried on by Franchise. There can be no guarantees that the Proposed Transaction will be completed as proposed or at all.

The common shares of Newton will remain halted until all necessary filings have been accepted by applicable regulatory authorities. Unless the Proposed Transaction fails to close, the Company does not expect the common shares of Newton to resume trading again until the listing has been accepted by the Canadian Securities Exchange.

Further comprehensive information regarding the Proposed Transaction will be provided in a future press release at such time the parties execute a Definitive Agreement.

For further information, please contact:
Newton Energy Corporation
Gino DeMichele, President & CEO
1600, 333 - 7th Avenue S.W.
Calgary, Alberta T2P 2Z1
Phone: 403-680-7898

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

DISCLAIMER FOR FORWARD-LOOKING INFORMATION

Certain statements in this press release are forward-looking statements and are prospective in nature. Forward-looking statements are not based on historical facts, but rather on current expectations and projections about future events, and are therefore subject to risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements, including: the receipt of all necessary regulatory approvals, the ability to conclude the Proposed Transaction, capital expenditures and other costs, and financing and additional capital requirements. These statements generally can be identified by the use of forward-looking words such as "may", "should", "will", "could", "intend", "estimate", "plan", "anticipate", "expect", "believe'' or "continue", or the negative thereof or similar variations. Forward-looking statements in this news release include statements regarding the completion of the Proposed Transaction, the listing of the shares of the resulting issuer on the Canadian Securities Exchange and the anticipated business plan of the Company subsequent to completion of the Proposed Transaction. 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. The Company assumed no obligation to update any forward-looking statements or forward-looking information that are incorporated by reference herein, except as required by applicable securities laws.

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