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.

Stockwatch Daily - - FRONT PAGE - Mr. Aaron Keay re­ports

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.

About AB­cann

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.

Gen­eral

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

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