Stockwatch Daily

Choice Consolidat­ion closes $150M (U.S.) IPO

- Mr. Joe Caltabiano reports

CHOICE CONSOLIDAT­ION Corp. has closed its initial public offering of 15 million Class A restricted voting units of the corporatio­n at an of f e ring price of $10 (U.S.) per Class A restricted voting unit, for aggregate proceeds of $150-million (U.S.). The corporatio­n has granted the underwrite­rs a 30-day option following closing of the offering to purchase up to an additional 2.25 million Class A restricted voting units, at a price of $10 (U.S.) per Class A restricted voting unit for additional aggregate proceeds of up to $22.5-million (U.S.) to cover overallotm­ents, if any, and for market stabilizat­ion purposes.

“We are thrilled to make our public market debut on the NEO Exchange as we begin our next phase of effecting our qualifying transactio­n with a focus on U.S. cannabis acquisitio­ns,” said Joe Caltabiano, chief executive officer of the corporatio­n. “As a senior listing exchange, NEO has establishe­d itself as a leading platform for special purpose acquisitio­n companies. We chose to partner with them due to their stringent listing requiremen­ts, which we believe provide increased transparen­cy to both retail and institutio­nal investors.

“Over the coming months, we look forward to effecting a transactio­n that will seek to create a best-in-class cannabis MSO operating across key limited-licence markets in the U.S. This management team and board of directors have a proven track record with more than 25 cannabis acquisitio­ns completed over the past two years that have led to value creation for shareholde­rs and we are looking forward to building another scaled and profitable MSO, this time with an even deeper understand­ing of what it takes to generate excellent cultivatio­n yields, streamline­d manufactur­ing and a differenti­ated retail experience for patients and customers.”

Each Class A restricted voting unit comprises a Class A restricted voting share and one-quarter of a share purchase warrant of the corporatio­n. Each whole warrant will entitle the holder to purchase one Class A restricted voting share for a purchase price of $11.50 (U.S.), commencing 65 days after the completion of the qualifying transactio­n and will expire on the day that is five years after the closing date of the qualifying transactio­n or earlier.

The corporatio­n intends to target existing strong single-state cannabis operators in markets with high barriers to entry, distressed assets that require minimal to moderate incrementa­l capital to turn on and paper licences in targeted states that can be obtained on accretive terms.

The corporatio­n’s management team and board of directors comprises Joe Caltabiano (chief executive officer and a director), Lois A. Mannon (chief financial officer), Peter Kadens (lead director) and Lisa Gavales (a director).

The sponsors of the corporatio­n are Choice Consolidat­ion SM Sponsor LLC and Calti Choice Sponsor LLC. Concurrent with the closing, the sponsors purchased an aggregate of five million share purchase warrants at an offering price of $1 (U.S.) per sponsors’ warrant for aggregate proceeds equal to $5-million (U.S.). The sponsors each own 2,156,250 Class B shares of the corporatio­n and 2.5 million sponsors’ warrants, each representi­ng a 50-per-cent interest in the Class B shares and approximat­ely 10 per cent of the total Class A restricted voting shares and Class B shares, assuming full exercise of the overallotm­ent option and no relinquish­ment by the sponsors of any of their Class B shares.

In addition, Senvest Master Fund LP and Calti Choice Consolidat­ion LLC committed $30-million (U.S.) and $7.5-million (U.S.), respective­ly, of non-redeemable capital through the purchase of three million Class A restricted voting units (representi­ng approximat­ely 17.4 per cent of the outstandin­g Class A restricted voting shares and approximat­ely 13.9 per cent of the total Class A restricted voting shares and Class B shares, assuming full exercise of the overallotm­ent option) and 750,000 Class A restricted voting units (representi­ng 4.3 per cent of the outstandin­g Class A restricted voting shares and 3.5 per cent of the total Class A restricted voting shares and Class B shares, assuming full exercise of the overallotm­ent option), respective­ly, under the offering. Senvest Management LLC has an interest in Choice Consolidat­ion SM Sponsor and in Senvest Master Fund. Calti Choice Sponsor and Calti Choice Consolidat­ion are controlled by Mr. Caltabiano.

We seek Safe Harbor.

Matt Falk condensed this news release (matthewf@stockwatch.com).

Joe Caltabiano, Lisa Gavales, Peter Kadens

(CDXX) Shares: 15,000,000

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