Panda Capital to acquire cannabis company ABcann as QT
Panda Capital Inc. has entered into an agreement to acquire medical cannabis company ABcann Medicinals Inc. as its qualifying transaction. Holders will receive one Panda share for each ABcann share held. Panda will also complete a $5-million financing.
PANDA CAPITAL Inc. has entered into a definitive amalgamation agreement dated with ABcann Medicinals Inc., an arm’s-length Ontario-based licensed producer of medical cannabis, pursuant to which Panda has agreed to acquire all of the securities of ABcann by way of a three-cornered amalgamation between Panda, ABcann and a wholly owned subsidiary of Panda formed for the purpose of completing the amalgamation (Newco). Pursuant to the terms of the amalgamation agreement, the shareholders of ABcann will receive one common share of Panda for each ABcann common share held. In connection, Panda intends to change its name to ABcann Global Corp.
The transaction will result in the reverse takeover of Panda by ABcann and will constitute Panda’s qualifying transaction.
ABcann was one of the first companies to obtain a production license under the marijuana for medical purposes regulations, which it received on March 21, 2014. It also obtained a sales licence on Dec. 31, 2015.
ABcann has invested $20.8-million in its current operations and international expansion plans, which include:
• A developed and skillfully managed 14,000-squarefoot facility in Napanee, Ont., where ABcann currently carries out its primary activities;
• The acquisition of approximately 50 acres on three adjoining parcels of land (all of which are wholly owned, directly or indirectly, by ABcann) and the anticipated acquisition of an additional parcel of approximately 16 acres, bringing its total additional acres to 66 acres;
• The plan to commence construction for phase 1 development of a new 952,000-square-foot facility on these new properties, with the initial build-out comprising approximately 70,000 square feet.
The current directors of ABcann are John Molloy, Ying (Jenny) Guan, Timothy Humberstone, Dennis Chadwick and Paul Lucas. Mr. Molloy and Ms. Guan are also officers of ABcann. The controlling shareholder of ABcann is the Linda Smith Family Trust, the trustee of which is Kenneth Clement.
Terms of the transaction
It is anticipated that the completion of the transaction will involve, among other things, the following steps:
• Certain outstanding convertible debt of ABcann will be converted into ABcann shares;
• ABcann and Newco will amalgamate, with the amalgamated company being a wholly owned subsidiary of Panda;
• Holders of ABcann shares will receive one Panda share for each ABcann share held;
• Outstanding ABcann warrants, options and other convertible securities will become exercisable into Panda shares;
• Panda will complete a financing to raise gross proceeds of at least $5-million, on terms to be determined.
As at the date hereof, there are 2,812,500 Panda shares and 65,264,681 ABcann shares issued and outstanding, on an undiluted basis. Certain of the Panda shares issuable pursuant to the transaction and the concurrent financing will be subject to escrow requirements or hold periods. It is not expected that shareholder approval will be required for the transaction.
Completion of the transaction will be subject to certain conditions, including but not limited to completion of the concurrent financing and other standard closing conditions.
Directors, officers and insiders
Upon completion of the transaction, it is expected that all directors and officers of Panda, other than Aaron Keay, who will remain as a director, will resign and be replaced by directors and officers agreed to by Panda and ABcann in accordance with the terms of the amalgamation agreement.
Panda has amended the terms of its previously announced private placement of debentures such that the debentures will only convert into units of Panda in the event that the transaction is completed. If the transaction is not completed, the debentures will convert only into Panda shares.
We seek Safe Harbor. Karen Baxter condensed this news release ([email protected]watch.com). Paul Barbeau, Michael Franks, Aaron Keay, Marc Brian Lavine, Kees Cornelius Van Winters (PDA) Shares: 2,812,500