WeedMD Enters into Binding Term Sheet for $30 Million Credit Facility with LiUNA Pension Fund and Changes Filing Date of Second Quarter 2020 Financials to September 30, 2020
Non-dilutive financing to fund continued growth including accelerating sales of Color Cannabis adult-use products and Starseed’s unique medical service offerings to payor groups and patients
Company financials will now be filed on September 30, 2020 with management-hosted earnings call on October 1, 2020 at 10 a.m. EST
Toronto, Canada, September 23, 2020 – WeedMD Inc. (TSX-V:WMD) (OTC:WDDMF) (FSE:4WE) (“WeedMD” or the “Company”), a federally-licensed producer and distributor of cannabis, is pleased to announce that it has entered into a binding term sheet for a credit facility (“Credit Facility”) with an affiliate of the LiUNA Pension Fund of Central and Eastern Canada (“LPF”). The $30 million Credit Facility, maturing in August 2022, will be used for general working capital purposes, capital expenditures and general corporate requirements, and will provide the Company with significant financial capacity to drive commercial initiatives during its next stage of growth. The Credit Facility is expected to close and fund before the end of the current fiscal quarter which ends September 30, 2020.
“Over the past few months, we have successfully streamlined our operations, enhanced our cultivation platform with production upgrades, executed our product strategy and expanded our distribution networks – all with the ongoing support from our partner and strategic investor LiUNA Pension Fund,” said Angelo Tsebelis, CEO of WeedMD. “This $30 million of non-dilutive financing will enhance our liquidity position and provide additional working capital at this inflection point to drive our adult-use brands, add distribution points and expand our sales and marketing team. This proposed investment by our cornerstone shareholder reiterates their support of our strategic plan and provides significant growth capital to execute on key commercial initiatives to drive sales and generate sustainable profitability.”
“As we progress into the next stage of growth, WeedMD is implementing consumer-centric decisions by diversifying our product pipeline with new offerings that we believe will have exceptional consumer appeal in both retail and direct-to-consumer markets," said Stephen Ng, Chief Commercial Officer of WeedMD. "We are also investing in the expansion of a commercial team that will broaden distribution, enhance the customer experience, and work to increase sales on a national level. We look forward to executing on our plan with this financing and delivering value to all of our stakeholders.”
WeedMD further outlined its commercial plans for the adult-use market, read here and recently announced it is optimizing its direct-to-patient medical sales channels under one unified Starseed marketplace, read here.
The interest rate for the Credit Facility is set at 15% with the option, at the Company’s discretion, to capitalize interest in lieu of cash payments of interest. The Credit Facility is secured by the assets of the Company and its subsidiaries, including the Company’s production facilities, and contains customary financial and other covenants, as well as typical conditions precedent for a transaction of this nature. LPF’s security under the Credit Facility is in second position to the Company’s senior creditor. Additional details about the Credit Facility will be available in the Company’s filings which are available under its profile on SEDAR at www.sedar.com following the closing.
Related Party Transaction
LPF is an insider of the Company as it owns greater than 10% of the common shares of the Company. Accordingly, the above mentioned financing represents a “related party transaction” under Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions (“MI 61-101”). The Company is relying on an exemption from the formal valuation requirements of MI 61-101 available on the basis of the securities of the Company not being listed on specified markets, including the Toronto Stock Exchange, the New York Stock Exchange, the American Stock Exchange, the NASDAQ or certain overseas stock exchanges. The Company is also relying on the exemption from minority shareholder approval requirements under MI 61-101 as the Credit Facility is considered a non-equity loan as described under Section 5.7(f) of 61-101. The Company did not file a material change report more than 21 days before the expected closing of the Credit Facility as the details of this transaction will not be settled until shortly prior to closing. The Company formed a special committee of independent members of the board of directors of the Company (the "Special Committee") to set, review, negotiate and approve the terms of the Credit Facility. The Special Committee engaged INFOR Financial Inc. to provide an opinion that subject to the analyses referred to, and assumptions, qualifications and limitations set forth therein, the financing is fair, from a financial point of view, to the Company.
Second Quarter 2020 Financials
WeedMD also announced that it will file its financial statements for the second quarter ended June 30, 2020 after market on September 30, 2020, which is within the blanket 45-day exemption window provided by the regulators*. As a result, WeedMD will host a conference call with management on October 1, 2020 at 10 a.m. Eastern Time to report the financial results for the period.
The call will be hosted by Angelo Tsebelis, CEO of WeedMD and CFO Lincoln Greenidge. Management will be available for analyst and media questions following opening remarks.
Conference Call Details:
Date:
October 1, 2020
Time:
10 a.m. Eastern Time
Dial-in Number:
Canada/USA: 1-800-319-4610. International Toll: 1-604-638-5340
Participants, please dial in and ask to join the WeedMD call
Replay Dial-in:
Canada/USA: 1-800-319-6413. International Toll: 1-604-638-9010
Replay Access Code: 5146
Available after 12:00 p.m. Eastern Time, until November 1, 2020
*The Company is relying on the exemption provided in Ontario Instrument 51-505 - Temporary Exemption from Certain Corporate Finance Requirements with Deadlines during the Period from June 2 to August 31, 2020 of the Ontario Securities Commission (and similar exemptions provided by other Canadian securities regulators). BMO also consented to the extension, in accordance with the credit agreement dated March 29, 2019. WeedMD confirms that all insiders are subject to a blackout period reflecting the principles contained in section 9 of National Policy 11-207 – Failure to File Cease Trade Orders and Revocations in Multiple Jurisdictions until the filings during this extension.The Company confirms that, other than as disclosed in prior press releases, there have been no additional material business developments since the filing on July 14, 2020 of the Company's interim financial report for the three months ended March 31, 2020.
About WeedMD Inc.
WeedMD Inc. is the publicly traded parent company of WeedMD RX Inc. and Starseed Medicinal Inc., licence holders producing and distributing cannabis products for both the medical and adult-use markets. The Company owns and operates a 158-acre state-of-the-art greenhouse, outdoor and processing facility located in Strathroy, ON as well as a fully-licensed 26,000 sq. ft. Aylmer, ON processing facility, specializing in cannabis extraction. With the addition of Starseed, a medical-centric operator, WeedMD has expanded its multi-channeled distribution strategy. Starseed’s industry-first, exclusive partnership with LiUNA, the largest construction union in Canada, along with employers and union groups complements WeedMD’s direct sales to medical patients. The Company maintains strategic relationships in the seniors’ market and supply agreements with Shoppers Drug Mart as well, as seven provincial distribution agencies where adult-use brands Color Cannabis and Saturday are sold.
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For further information, please contact:
For Investor Enquiries:
Valter Pinto
Managing Director
KCSA Strategic Communications
1-212-896-1254
weedmd@kcsa.com
For Media Enquiries:
Marianella delaBarrera
VP, Communications & Corporate Affairs
416-897-6644
marianella@weedmd.com
All product images and labels are provided for information and illustrative purposes only, and do not represent the actual cannabis product, product label, or its appearance.
Forward Looking Information
This press release contains "forward-looking information" within the meaning of applicable Canadian securities legislation which are based upon WeedMD's current internal expectations, estimates, projections, assumptions and beliefs and views of future events. Forward-looking information can be identified by the use of forward-looking terminology such as "expect", "likely", "may", "will", "should", "intend", "anticipate", "potential", "proposed", "estimate" and other similar words, including negative and grammatical variations thereof, or statements that certain events or conditions "may", "would" or "will" happen, or by discussions of strategy.
The forward-looking information in this news release is based upon the expectations, estimates, projections, assumptions and views of future events which management believes to be reasonable in the circumstances. Forward-looking information includes estimates, plans, expectations, opinions, forecasts, projections, targets, guidance or other statements that are not statements of fact. Forward-looking information in this news release include, but are not limited to, statements with respect to internal expectations, expectations with respect to actual production volumes, expectations for future growing capacity and the completion of any capital project or expansions. Forward-looking information necessarily involve known and unknown risks, including, without limitation, risks associated with general economic conditions; adverse industry events; loss of markets; future legislative and regulatory developments; inability to access sufficient capital from internal and external sources, and/or inability to access sufficient capital on favourable terms; the cannabis industry in Canada generally; the ability of WeedMD to implement its business strategies; the COVID-19 pandemic; competition; crop failure; and other risks.
Any forward-looking information speaks only as of the date on which it is made, and, except as required by law, WeedMD does not undertake any obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise. New factors emerge from time to time, and it is not possible for WeedMD to predict all such factors. When considering this forward-looking information, readers should keep in mind the risk factors and other cautionary statements in WeedMD's disclosure documents filed with the applicable Canadian securities regulatory authorities on SEDAR a www.sedar.com. The risk factors and other factors noted in the disclosure documents could cause actual events or results to differ materially from those described in any forward-looking information.
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