TORONTO, May 28, 2019 /CNW/ - Hill Street Beverage
Company Inc. ("Hill Street" or the "Company")
(TSX-V: BEER), is pleased to announce that it has signed a binding
Letter of Intent to acquire OneLeaf Holding Corp.
("OneLeaf"), the parent company of OneLeaf Cannabis Corp.,
an "evidence package" stage applicant to become a licensed
cannabis cultivator and processor, in an all share transaction. The
Company also announces a proposed non-brokered private placement of
units for gross proceeds of up to $5
million.
"Transaction Positions Hill Street to
become a Leading Producer of Infused Beverages"
Both Hill Street and OneLeaf believe that cannabis beverages
will expand consumption of cannabis beyond just the consumer base
willing to smoke or vape products. By combining Hill Street's
award-winning alcohol-free beverages with OneLeaf's access to an
award-winning and unique catalogue of cannabis genetics, the
combined company will have the ability to become a leader in the
infused beverages market, in addition to offering differentiated
traditional cannabis products.
"The OneLeaf team has built a world class, 48,200 square foot
facility, built to EU GMP standards, that will house growing,
extraction, and infusion. It will house the infusion, bottling, and
canning of our beverages under one roof. Their catalogue of
over 700 distinct cannabis cultivars, which have been collected and
cultivated by the founders, includes a collection of Cannabis Cup
award-winning cultivars and a diverse selection of landrace
varietals. We anticipate that OneLeaf's elite genetics, which
include many cultivars not legally available anywhere else, will
pair perfectly with our beverages to provide unique attributes and
experiences for our consumers," said Terry
Donnelly, Hill Street's Chairman and CEO. "We believe
the integration of OneLeaf and Hill Street will make for a powerful
force in the market, and positions Hill Street to become a leading
producer of infused beverages and other cannabis products."
"Hill Street's beverages have already set themselves apart on
the world stage," said Trevor Green,
CEO of OneLeaf. "No other alcohol-free beer and wine producer has
won as many major world championship competitions as Hill Street.
With a complete portfolio of beverages ready for infusion, plus
their demonstrated expertise in private label and branded
beverages, we believe the OneLeaf facility will become a landmark
in the industry, and the source of the finest cannabis infused
beverages and other cannabis products in the market. With our world
class cultivation and extraction capabilities, we will be able to
produce unique cannabis cultivars to match both beverage and
cannabis consumption occasions and experiences, whether they are
adult format, nutraceutical, sport-recovery, wellness, or even
prescription drug products."
Cannabis beverages are the fastest growing segment of the market
in US states where they are legal, according to Headset/Nielsen,
growing at up to 61% in the past year. Each of Hill Street and
OneLeaf believe there is a significant opportunity to grow their
brands, as well as provide co-packing services to many companies
wishing to enter the cannabis beverage market but who do not wish
to operate their own packaging and production facilities. This
includes major multinational beverage companies, international
cannabis companies looking to enter the highly regulated Canadian
market, and licensed producers looking to produce beverages using
their own cannabis extracts.
The parties believe beverage-format products can also be a new,
differentiated delivery system for cannabis-derived precision
medicines and therapies, allowing consumers and patients the
ability to consume cannabis-derived products in public and social
settings. The addition of Hill Street's demonstrated beverage
expertise will help differentiate OneLeaf's existing product
roadmap, which includes traditional cannabis products such as dried
flower products, oils, edibles, and extracts.
Operations to Be Housed at the OneLeaf Facility
Hill
Street anticipates that the entire OneLeaf team, including
regulatory lawyers, a plant geneticist and biochemist, and
experienced cultivation, extraction and quality assurance
personnel, will join the Hill Street organization. Hill
Street's production lines will be installed at OneLeaf's 48,200
square foot facility which is strategically located near the Global
Transportation Hub in Regina,
Saskatchewan, a tax advantageous location providing easy
access to both North American and foreign markets.
The beverage production lines will have a projected output
capacity capable of producing over 300,000 cases of infused wine
and beer with expansion to be added as additional planned
facilities become licensed under Health Canada. OneLeaf has output
capacity in its existing and planned flowering rooms for 1800kgs of
cannabis annually, plus up to 6.5 acres available for expansion on
surrounding lands including outdoor growing capabilities.
Terms of the Acquisition
Pursuant to a Letter of
Intent, dated May 27, 2019, Hill
Street will acquire all of the issued and outstanding shares of
OneLeaf for a purchase price of $16,000,000 to be paid and satisfied as
follows:
- $8 million in common shares in
the capital of Hill Street ("Hill Street Common Shares") on
the closing date at a price per share of $0.23. The vendors have agreed to escrow 50% of
the shares issued on closing for a period of four months from the
date of closing.
- $8 million in Hill Street Common
Shares, in three quarterly instalments over the eighteen months
following the closing date, at a price per share equal to
$0.43 per share or the volume
weighted average price ten days prior to issuance, with a price
maximum of $0.66, $0.75 and $0.85 per
share for each installment respectively.
- 26,693,630 warrants purchase Hill Street Common Shares, which
will be issued on closing, with each warrant entitling the holder
thereof to acquire one Hill Street Common Share at a price per
share equal to $0.66, for a period of
five years from the date of closing. The warrants shall be subject
to vesting conditions related to OneLeaf achieving certain
performance-based milestones following closing, including minimum
cultivation targets, revenue thresholds, receipt of a federal
medical sales license, and the successful completion of an EU-GMP
audit of the OneLeaf facility.
- Hill Street will also assume up to $5.5
million in debt related to the construction of the OneLeaf
facility.
The transaction is an "arm's length transaction", and is subject
to the parties entering into a definitive share purchase agreement,
customary due diligence, and regulatory approvals, including Health
Canada and the TSX Venture Exchange. It is slated to close
upon the issuance of a cultivation and standard processing license
to OneLeaf by Health Canada, which is anticipated to occur within
the next four months. The parties do not anticipate the closing of
the acquisition will create a new control person in the
Company. No finders fees are payable in connection with the
transaction.
Proposed Non-Brokered Financing
In addition to the
acquisition of OneLeaf, Hill Street announces a proposed
non-brokered private placement of units ("Units") for
aggregate gross proceeds of up to $5
Million, at a price of $0.20
per Unit. Each Unit will be comprised of one (1) Hill Street
Common Share and one-half of one (1/2) warrant (each whole warrant
a "Warrant"), with each Warrant entitling the holder thereof
to acquire one (1) Hill Street Common Share at a price of
$0.40 per share for a period of two
(2) years from the date of Closing. The private placement is
slated to close in tranches, with the first tranche to close on or
before June 15, 2019, and is subject
to the approval of the TSX Venture Exchange. The proceeds of the
financing will be used to fund day to day operations, and general
working capital purposes.
About OneLeaf Cannabis Corp.
OneLeaf Cannabis
Corp. is a privately-owned craft-inspired cannabis cultivation
and processing company based in Regina,
Saskatchewan. OneLeaf has constructed a 48,200 square foot
facility purpose built to EU GMP standards that incorporates
vertical farming, LED lighting and advanced HVAC and automation
systems. Phase 1 of OneLeaf's facility, which is substantially
complete and in preparation to complete its evidence package, is
comprised of approximately 17,000 square feet. Upon
licensing, OneLeaf will own a vast collection of unique cannabis
genetics with differentiated attributes and properties, and intend
to research and develop consumer, medical, and therapeutic products
based on the diverse cannabinoid content found within its
collection. OneLeaf's cultivation team has won multiple Cannabis
Cups and is focused on producing exceptional quality product for
the premium consumer and medical marketplaces.
About Hill Street Beverage Company Inc.
(TSX-V:BEER)
Hill Street Beverage Company is the
world's most award-winning company exclusively focused on
alcohol-free beer, wine, and adult-format beverages. Hill Street's
great-tasting products include Hill Street Craft Brewed Lager,
Designated Draft alcohol-free beer, Vin(Zero) wines, and Vintense
wines, and have won numerous medals and accolades including three
Gold, two Silver, and two Bronze Medals at the U.S. Open Beer
Championships, the Retail Council of Canada's Grand Prix award, and a prestigious
Double Gold Medal at the San Francisco International Wine
Challenge. Hill Street will also produce and sell cannabis-infused
adult beverages as soon as the sale of cannabis edibles becomes
legal in Canada, expected to occur
by October 17, 2019. Check out Hill
Street's award-winning line-up and order product to be delivered
straight to your home at www.hillstreetbeverages.com.
Follow Hill Street on Facebook
(http://facebook.com/hillstreetbevco), Instagram
(https://www.instagram.com/hillstreetbevco/), and Twitter
(https://twitter.com/hillstreetbevco)
FORWARD-LOOKING STATEMENTS
Statements in this press
release may contain forward-looking information. Any
statements in this press release that are not statements of
historical fact may be deemed to be forward-looking statements.
Forward-looking statements are often identified by terms such as
"may", "should", "anticipate", "expects" and similar
expressions. The reader is cautioned that assumptions used in
the preparation of any forward-looking information may prove to be
incorrect. Events or circumstances, such as future availability of
capital on favourable terms, 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 the Company. The reader is cautioned
not to place undue reliance on any forward-looking
information. Such information, although considered reasonable
by management at the time of preparation, 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. The
Company 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.
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.
SOURCE Hill Street Beverage Co.
