/NOT FOR DISTRIBUTION TO
Annual General and Special Meeting of Canada House's Shareholders to Approve the Transaction will be Held on
The first stage of the Transaction closed on
The percentages of Common Shares noted above will be subject to anti-dilution adjustments in favour of the vendors of the MTL Cannabis shares wherein additional Common Shares will be issued up to 49.99% of the Common Shares prior to the Subsequent Closing and up to 80.0% following the Subsequent Closing in the event of the issuance of Common Shares upon the conversion of the principal and accrued interest of the Company's
The Tranche Two Closing is subject to a number of conditions customary for a transaction of this nature, including but not limited to (i) approval by the shareholders of Canada House of the acquisition at the Special Meeting and (ii) receipt of applicable third party and regulatory approvals including the approval of the Canadian Securities Exchange (the "CSE"). The Tranche Two Closing will occur as soon as possible following the satisfaction of all such closing conditions.
The Transaction constitutes a "reverse takeover" of the Company and, upon the Tranche Two Closing, the Company will change its legal name to and operate as
Approval for the Transaction will be sought from the Company's shareholders at the annual and special meeting of shareholders of Canada House to be held on July 28, 2023, at
The Transaction will require the approval of a majority of the votes cast by the Company's disinterested shareholders present in person or represented by proxy at the Shareholder Meeting. The Company has received voting support agreements from shareholders holding, in aggregate, approximately 22.22% of the Common Shares of the Company (representing approximately 40.89% of the Common Shares held by disinterested shareholders of the Company for purposes of the resolution to approve the Transaction), pursuant to which each has agreed to vote their Common Shares in favour of the Transaction.
Materials for the Shareholder Meeting, including the management information circular of the Company dated as of
Shareholders are encouraged to vote their Common Shares at their earliest convenience.
Since the completion of the first tranche of the Transaction, Canada House and MTL Cannabis have successfully integrated their business operations, leading to strong and continually improving financial performance for both companies as highlighted below:
- Stronger Financial Position. If the Tranche Two Closing is completed, the Company is expected to have significantly increased revenue, cash-flow from operations and, over time, a stronger balance sheet with lower leverage ratios and additional cash versus the Company's current stand-alone financial position. The Company has already benefited from Tranche One transaction with MTL Cannabis as can be seen in recent Q3 financial results – with second consecutive quarterly net profit while achieving record revenue, positive cash flow and operating profit for a third successive quarter.
- Strength of Brands and Recreational Sales Volume. The combined Company expects to continue benefitting from the strength of the MTL Cannabis' portfolio of brands in the recreational cannabis market, the high-quality production standards that MTL Cannabis brings to the Canadian recreational and medical markets (and which have been adopted with initial success by
IsoCanMed Inc. ), and the strength of the two entities' distribution channels to ensure that all production can be distributed into market. - Success of Medical Business.
Abba Medix Corp. ("Abba") andCanada House Clinics ("CHC") continue to grow their medical presence diligently and deliberately, driven by Abba's leading portfolio of medical cannabis products and CHC's provision of leading cannabinoid therapy services. Abba's monthly medical cannabis sales have doubled in each of the last three annual periods and now exceed$1.5M monthly. CHC continues to be a leader in helping veterans with medical cannabis and now supports over 4,600 veterans. - Leveraging the Strengths of MTL Cannabis. MTL Cannabis has demonstrated operational proficiency with respect to cultivation, processing, and distribution, in addition to the ability to commercialize products in recreational channels domestically as well as internationally. The Company's wholly-owned subsidiary,
IsoCanMed Inc. ("ICM"), has benefited greatly from this expertise after migrating its production facility to MTL Cannabis's cultivation methodologies through the extensive integration efforts taken on by the respective management and operating teams. ICM has been fully operational sinceSeptember 2022 and has reduced its dried flower production costs substantially, with 100% of the dried flower cultivated from this facility now being sold through MTL Cannabis's recreational sales channels.
Trading in the common shares of the Company will remain halted until the Tranche Two Closing and all requirements of the CSE have been met and it has issued its final approval for the Transaction and the listing of the Common Shares on the CSE. It is currently anticipated that the transaction will close shortly after the receipt of shareholder approval at the Shareholder Meeting. It is also currently anticipated that trading will resume during the third calendar quarter. A more specific date will be communicated to the market when known.
To facilitate the Tranche Two Closing and to facilitate the operating of the business of the Company following the Tranche Two Closing, the Company has entered into agreements to amend certain of the investment instruments the Company has with Archerwill (the "Archerwill Amendments"). The terms of the Archerwill Amendments are disclosed in the MIC.
The entering into of the Second Restated SEA may be considered a "related party transaction" under Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transaction ("MI 61-101"). Mr.
The agreements to amend the investment instruments with Archerwill may also be considered to be a "related party transaction" under MI 61-101. Archerwill is considered to be a
The entering into of the Second Restated SEA and the Archerwill Amendments each are exempt from the formal valuation requirement in MI 61-101 as no securities of the Company are listed on any of the stock exchanges and trading platforms listed in 5.5(b) of MI 61-101.
Please refer to the Company's MIC for more information regarding the related party transactions to be considered at the Shareholder Meeting.
MTL Cannabis is a privately owned licensed producer of Cannabis headquartered in
As a flower-first company built for the modern street, MTL Cannabis uses proprietary hydroponic growing methodologies supported by handcrafted techniques to produce products that are truly craft for the masses. MTL Cannabis focuses on craft quality cannabis products, including lines of dried flower, pre-rolls and hash marketed under the "MTL Cannabis", "Low Key by MTL" and "R'belle" brands for the Canadian market through nine distribution arrangements with various provincial cannabis distributors. MTL Cannabis has also developed export channels for bulk and unbranded GACP quality cannabis, including for
Cautionary Statement Regarding Forward-Looking Information. This press release contains forward- looking statements, including statements that relate to, among other things, the Company's clinic, production and technology businesses, its future plans, the Company's markets, objectives, goals, strategies, intentions, beliefs, expectations and estimates, and can generally be identified by the use of words such as "may", "will", "could", "should", "would", "likely", "possible", "expect", "intend", "estimate", "anticipate", "believe", "plan", "objective" and "continue" (or the negative thereof) and words and expressions of similar import. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties, and undue reliance should not be placed on such statements. Certain material factors or assumptions are applied in making forward-looking statements, and actual results may differ materially from those expressed or implied in such statements. Material assumptions used to develop forward-looking information in this news release include, among other things, the closing of the transaction with Montreal Cannabis and the receipt of all necessary regulatory and shareholder approvals associated therewith, the regulations related to cannabis use under the Access to Cannabis for Medical Purposes Regulations and the act respecting cannabis and to amend the Controlled Drugs and Substances Act, the Criminal Code and other Acts, passed by the Canadian Federal government, making cannabis and cannabis based edibles, vapes and oils legal for recreational use on
Neither the CSE nor its Regulation Services Provider (as that term is defined in the policies of the CSE) accepts responsibility for the adequacy or accuracy of this release.
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