CHOOM HOLDINGS INC. /NOT FOR DISTRIBUTION IN
Restructures
Highlights:
- Recapitalization transaction significantly reduces debt obligations, allowing the Company to focus on growth and expansion
- Launch of a marketed unit offering to raise up to
$5.0 million - Restructuring of Choom's debt held by Aurora including portion converted to equity, subject to completion of minimum equity capital raise
- Debt terms include maturity extensions and payment-in-kind interest to allow Choom to allocate all resources to growth strategy
Debt Restructuring
As part of the Debt Restructuring, immediately following the closing of the Offering (the "Effective Date") Aurora and Choom have agreed that the Aurora Debenture will be satisfied by: (i) Aurora converting into common shares of the Company (the "Common Shares") such portion of the indebtedness represented by the Aurora Debenture as will result in Aurora holding 19.9% of the Company's issued and outstanding Common Shares on a post-Offering basis, (ii) the Company issuing to Aurora a new convertible debenture in the aggregate principal amount of
In connection with the Debt Restructuring, Choom and Aurora have also agreed, as of the Effective Date, to amend and restate the investor rights agreement originally entered into on
Choom and Aurora have also agreed to enter into a services agreement (the "Services Agreement") pursuant to which Choom would operate retail cannabis stores on behalf of Aurora. It is anticipated that the Services Agreement will be negotiated and entered into within 90 days of the Effective Date. In the event the Services Agreement is not entered into within 90 days of the Effective Date, the percentage used in the calculation of the Restructuring Fee will increase up to a maximum percentage of 5.0%.
The Company is also pleased to announce it has entered an amending agreement with the holders of its convertible debentures issued in
The completion of the Debt Restructuring is conditional upon, among other things, the receipt of all requisite regulatory approvals and the completion of the Minimum Offering.
Prospectus Offering
In accordance with the terms of the Engagement Letter, the Offering will consist of the issuance of Units for minimum aggregate gross proceeds of
The Company has agreed to pay the Agent a cash fee equal to 7.0% of the aggregate gross proceeds raised from the Offering (other than with respect to president's list sales, for which such fee will be reduced to 3.5%) and issue compensation options (the "Compensation Options") exercisable at any time up to thirty-six (36) months following Closing to purchase compensation option units (the "Compensation Option Units") of the Company in an amount equal to up to 7.0% of the number of Units sold in connection with the Offering (other than with respect to president's list sales, for which the Company will issue Compensation Options exercisable to purchase Compensation Option Units in an amount equal to up to 3.5% of the number of Units sold in connection with such sales). Each Compensation Option Unit will be comprised of one Common Share and one-half of one Common Share purchase warrant (each whole such warrant, a "Compensation Option Warrant"). Each Compensation Option Warrant will be exercisable into one Common Share for thirty-six (36) months from the Closing In addition, the Company will pay the Agent a corporate finance fee in an amount equal to 3.0% of the number of Units issued pursuant to the Offering (including Units sold pursuant to the exercise of the Agent's Option), payable through the issuance of Units.
The Offering will be made by way of a short form prospectus (the "Prospectus"), which will be filed with the relevant securities regulatory authorities in
Two related parties of the Company beneficially own, control or exercise direction over, directly or indirectly, the 2019 Debentures. As a result, the amendments to the 2019 Debentures and 2019 Warrants constitute a "related party transaction" within the meaning of Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The transaction is exempt from the formal valuation and minority shareholder approval requirements of MI 61-101 in respect of related party participation as neither the fair market value (as determined under MI 61-101) of the subject matter of, nor the fair market value of the consideration for, the transaction, insofar as it involves interested parties, exceeds 25% of the Company's market capitalization.
The securities being offered have not been and will not be registered under the United States Securities Act of 1933 (the "1933 Act"), as amended, and may not offered or sold in
About Choom™
Choom™ is a fast-expanding Canadian retail cannabis company, inspired by
Cautionary Statement on Forward-looking information
This news release contains certain "forward-looking information" and "forward-looking statements" within the meaning of applicable securities laws. Such forward-looking information and forward-looking statements are not representative of historical facts or information or current condition, but instead represent only the Company's beliefs regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of the Company's control. Generally, such forward-looking information or forward-looking statements can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or may contain statements that certain actions, events or results "may", "could", "would", "might" or "will result", "will continue", "will occur", "will bear", or "will consist". The forward-looking events and circumstances discussed in this release may not occur and could differ materially as a result of known and unknown risk factors and uncertainties affecting the Company, including and not limited to, risks and uncertainties associated with or arising as a result of delays in obtaining or an inability to obtain required regulatory approvals, access to sufficient quantities of cannabis, the results of diligence investigations, the actions of third parties, the results of negotiations with third parties, developments in the cannabis industry, the ability to access sufficient capital from internal and external sources, reliance on key personnel risks regarding the COVID-19 pandemic, regulatory risks and delays and other risks and uncertainties discussed in the management discussion and analysis section of the Company's interim and most recent annual financial statement or other reports and filings, including those made with the CSE and applicable Canadian securities regulators. The forward-looking information contained in this press release is made as of the date hereof, and the Company is not obligated to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable securities laws.
By identifying such information and statements in this manner, the Company is alerting the reader that such information and statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such information and statements.
NEITHER THE CANADIAN SECURITIES EXCHANGE NOR ITS REGULATION SERVICES PROVIDER HAS REVIEWED OR ACCEPTED RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
SOURCE
© Canada Newswire, source
