Creating a leading fully-integrated
international cannabis company with:
ABcann Global Corporation (TSX-V: ABCN) (OTCQB: ABCCF)
(“
ABcann” or the “
Company”) is
pleased to announce that it has entered into a definitive agreement
to acquire 100% of the issued and outstanding share capital of
Canna Farms Limited (“
Canna Farms”), a premium
cannabis company in British Columbia (the
“
Transaction”). Canna Farms was the first Licensed
Producer in B.C. and has many years of craft cultivation experience
and expertise, as well as a significant patient base and positive
cash flow. A conference call to discuss the Transaction will take
place on Tuesday July 31, 2018 at 9:00 a.m. ET (details below).
“This is a transformational acquisition, and key benefits
include increased production capacity, an expanded product
offering, operational efficiencies, and a more robust platform to
accelerate our growth,” commented Barry Fishman, CEO of ABcann. “We
will maximize operational and financial synergies, so that the
combined company will be greater than the sum of its parts.”
Transaction Highlights – Combining our
Strengths
- Increased Capacity and Scale: Annual fully
funded production capacity of 57,000 kilograms1, with multiple
provincial supply agreements already secured.
- Diverse Production Capability:
State-of-the-art indoor facilities in Ontario and British Columbia,
extraction capability and expected GMP certification in Ontario by
the end of 2018.
- Expanded Product Line: With over 15,000
medical cannabis patients, the combined company plans to leverage
strong anticipated adult-use demand for premium products, including
Canna Farms’ award-winning B.C. Bud and ABcann’s new Beacon,
FIRESIDE and Lumina product lines.
- Strengthened Leadership Team: A seasoned and
diverse leadership team with experience in all aspects of the
business, including cultivation, product development, branding,
capital markets, and demand creation.
- International Leverage: Canna Farms’ Dealers
License, combined with ABcann’s international partnerships and
expertise, are expected to expedite the combined company’s
expansion strategy in international markets, with a focus on
Germany and Australia.
- New Product Development: A strengthened
foundation will facilitate a continuous stream of novel product
offerings for both domestic and international markets.
- Enhanced Financial and Capital Markets
Profile: The enhanced market capitalization and strong
cash position of $110 million, combined with Canna Farms’ positive
operating cash flow and trailing adjusted EBITDA2 margins of
46% are expected to result in a more robust capital markets
profile.
- Immediately Accretive: The Transaction will be
immediately accretive to ABcann. For the twelve months ending June
30, 2018, Canna Farms generated unaudited revenue and adjusted
EBITDA2 of $9.4 million and $4.3 million, respectively. For
the fiscal year ending September 30, 2017, Canna Farms generated
audited revenue of $5.8 million and adjusted EBITDA2 of $2.8
million.
- Cost and Operational Synergies: Having
realized a positive return on invested capital since inception,
Canna Farms brings an industry-leading cost structure with strong
adjusted EBITDA margins. The combined company is expected to
benefit from anticipated yield improvements and cost and
operational synergies.
Transaction Summary
The value of the Transaction is approximately $133 million,
comprised of $22 million in cash and 92.5 million ABcann shares,
based on ABcann’s 20-day VWAP of $1.20 as of July 27, 2018. The
share consideration will be released from escrow in six month
increments over 30 months.
Upon completion of the Transaction, the two co-founders of Canna
Farms, Daniel Laflamme and Raymond Laflamme, will each own 16.1% of
ABcann’s outstanding shares. They will remain with the combined
company as President, Canna Farms and Senior Vice President,
Facilities and Engineering, respectively. Daniel Laflamme will be
appointed to the ABcann Board of Directors, increasing the total
number of ABcann directors to seven.
The Transaction is expected to close in August 2018 and allows
the two complementary businesses to leverage each other’s strengths
prior to the opening of the adult-use market in the fall. The
completion of the Transaction is subject to the satisfaction of
customary closing conditions, including the conditional approval of
the TSXV and applicable regulatory approvals.
“The ABcann team welcomes Raymond, Daniel and the rest of the
Canna Farms family. We are excited about the tremendous potential
that combining the strengths our two organizations will provide to
our shareholders, employees and customers,” Fishman says.
“I am thrilled to bring Canna Farms together with ABcann, a
respected organization that has great leadership and quality
products, and is well-capitalized for future growth,” commented
Daniel Laflamme, President of Canna Farms. “ABcann and Canna Farms
share the same mission to provide trusted cannabis products to our
valued patients and customers and are aligned on the corporate
values of integrity and strong entrepreneurial spirit.”
1 Current capacity: Napanee, ON 1,500 KG; Hope, BC 2,700
KG; End of 2018: Napanee, ON 5,500 KG; Hope, BC 6,900 KG; Estimated
mid-2020: Napanee, ON 32,500 KG, Hope, BC 24,500 KG 2 Adjusted
EBITDA is earnings before interest, taxes, depreciation and
amortization excluding any changes in fair value of biological
assets
Financial and Legal Advisors
Canaccord Genuity Corp. is acting as financial advisor and
Bennett Jones LLP is acting as legal advisor to ABcann. Stoic
Advisory Inc. is acting as financial advisor and Aydin Bird
Business Lawyers and Borden Ladner Gervais LLP are acting as legal
advisors to Canna Farms.
July 31, 2018 Conference Call Information:
ABcann will host a conference call, including a slide
presentation that will be posted on the Company’s website
(www.abcannglobal.com), to discuss the Transaction on Tuesday, July
31, 2018 at 9:00 a.m. ET. Participants may join the conference call
by dialing 1-855-353-9183 from Canada or the USA using the
participant passcode 45136#.
About ABcann
ABcann is recognized for high-quality, trusted products and
services. It holds production and sales licences from Health
Canada, and its world-class indoor cultivation 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.
About Canna Farms
Canna Farms, located in Hope, B.C. was the first LP in British
Columbia and the fifth in Canada to receive an ACMPR license. Canna
Farms prides itself on running a lean, efficient operation with a
dedicated and talented team and offering a large selection of
award-winning strains and hand-trimmed cannabis flower, as well as
a line of cannabis oils. Canna Farms currently has the
largest active medical patient base for a privately-held company in
the industry.
For More Information:
Barry Fishman,
CEO: |
barry.fishman@abcannglobal.com |
Michael Bumby,
CFO: |
michael.bumby@abcannglobal.com |
ON BEHALF OF THE BOARD OF
DIRECTORSBarry FishmanCEO and
Director
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Disclaimer for Forward-Looking Information
Certain statements in this news release may be considered
forward-looking statements, which are statements that are not
purely historical, including statements regarding the beliefs,
plans, expectations or intentions of ABcann and its management
regarding the future. Forward looking statements in this news
release include statements relating to the expected timing of
closing of the Transaction, future expected production capacity,
expected pro forma capitalization, and the expected benefits of the
Transaction. Such statements are based on management’s current
assumptions regarding the combined company, derived from due
diligence conducted in connection with the Transaction, and are
subject to risks and uncertainties that may cause actual results,
performance or developments to differ materially from those
contained in the forward-looking statements, including the
possibility that the Transaction will not be completed on the
expected terms or at all, that the combined company’s production
capacity, financial position or market performance may not be as
expected, or that ABcann may not derive the expected benefits from
the Transaction described in this news release. 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 the
Company will obtain from them. Readers are urged to consider these
factors, and the more extensive risk factors included in the
Company’s annual information form dated April 30, 2018, which is
available on SEDAR, 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. The
forward-looking statements in this news release are made as of the
date hereof and the Company disclaims any intent or obligation to
update publicly any such forward-looking statements, whether as a
result of new information, future events or results or otherwise,
except as required by applicable securities laws.
Abcann Global Corporation (TSXV:ABCN)
Historical Stock Chart
From Jun 2024 to Jul 2024
Abcann Global Corporation (TSXV:ABCN)
Historical Stock Chart
From Jul 2023 to Jul 2024