EDMONTON, AB and CALGARY, AB, Feb. 10,
2021 /CNW/ - Alcanna Inc. ("Alcanna") (TSX:
CLIQ) and YSS Corp. ("YSS") (TSX-V: YSS; WCN: A2PMAX; and
OTCQB: YSSCF) are pleased to announce that Alcanna Cannabis Stores
Finance Ltd. ("ACS FinCo"), a wholly-owned subsidiary of
Alcanna Cannabis Stores Limited Partnership ("ACS LP"), has
closed the previously-announced private placement, which Alcanna
and YSS announced on January 19, 2021
had been upsized from $25 million to
$40 million as a result of excess
demand. ACS FinCo closed the sale of 12,994,000 subscription
receipts of ACS FinCo at a price of $3.00 each (the "Subscription Receipts"),
for aggregate gross proceeds to ACS FinCo of $38,982,000 (the "First Tranche"),
pursuant to an agency agreement (the "Agency Agreement")
dated February 10, 2021 between Eight
Capital and Cormark Securities Inc., as co-lead agents, and
Hyperion Capital Inc. (collectively, the "Agents"), Alcanna
and ACS FinCo. ACS FinCo is scheduled to close an additional
subscription for 340,000 Subscription Receipts for gross proceeds
of $1,020,000 on or about
February 12, 2020 (the "Second
Tranche" and together with the First Tranche, the "Private
Placement"), resulting in aggregate gross proceeds of the
Private Placement of $40,002,000, as
previously announced.
As previously announced, on January 18,
2021, Alcanna and YSS entered into a business combination
agreement (the "Agreement") pursuant to which Alcanna
will spin-out its retail cannabis business and combine with YSS to
launch a new discount-focused cannabis retailer in an all-stock
transaction that will result in the reverse take-over of YSS by
Alcanna (the "Transaction"). Pursuant to the Agreement, YSS
will consolidate (the "Consolidation") all of the issued and
outstanding common shares of YSS ("YSS Shares") on the basis
of a ratio of approximately 0.05449-to-one. On closing, the
resulting company is expected to be renamed Nova Cannabis Inc.
("New Nova").
The gross proceeds from the sale of the Subscription Receipts,
less the Agents' expenses paid at the closing of the Private
Placement, are being held in escrow by AST Trust Company
(Canada) ("AST") in
accordance with a Subscription Receipt Agreement dated February 10, 2021 among Alcanna, ACS FinCo, YSS,
AST and the Agents, and will remain in escrow pending delivery to
AST of a certificate to the effect that: (i) all conditions
necessary to complete the Transaction have been satisfied or waived
(with the consent of the Agents) in accordance with the Agreement;
(ii) the New Nova Shares (as defined below) shall have been
conditionally approved for listing on the TSX Venture Exchange (the
"TSXV"), including the New Nova Shares to be issued to
holders of ACS FinCo Shares (defined below) in connection with the
previously announced amalgamation of ACS FinCo and a wholly-owned
subsidiary of YSS following the completion of the Transaction,; and
(iii) all necessary regulatory and other approvals regarding the
Transaction and the Private Placement have been obtained (the
"Escrow Release Conditions"). Upon satisfaction of the
Escrow Release Conditions, the escrowed funds and any interest
earned thereon, less the commission and any additional fees payable
to the Agents, will be released to ACS FinCo.
If: (a) the Escrow Release Conditions are not satisfied by
5:00 p.m. (Calgary time) on March
31, 2021, or such later date as Alcanna, YSS, ACS FinCo and
the Agents may elect; (b) the Agreement is terminated; or (c)
Alcanna has advised the Agents or announced to the public that it
does not intend to proceed with the Transaction, holders of
Subscription Receipts shall receive an amount equal to the full
subscription price attributable to the Subscription Receipts and
their pro rata entitlement to the interest accrued on such amount.
The completion of the Transaction is subject to acceptance of the
TSXV.
Upon satisfaction of the Escrow Release Conditions, each
Subscription Receipt will be automatically exchanged, without any
further action by its holder, and for no additional consideration,
for one Class A common share of ACS FinCo (each, an "ACS FinCo
Share"). Upon completion of the Transaction, each underlying
ACS FinCo Share issued pursuant to the exchange of the Subscription
Receipts will be exchanged for one post-Consolidation share of YSS
(a "New Nova Share"). The net
proceeds of the Private Placement will be used to fund the business
plan of New Nova and for working capital and general corporate
purposes. Although it is expected that New Nova will use the net
proceeds from the Private Placement as described herein, it is
possible that the actual allocation of proceeds may vary, depending
on future operations, economic conditions or unforeseen events,
circumstances or opportunities.
Pursuant to the Agency Agreement, the Agents will receive cash
compensation equal to 6% of the aggregate gross proceeds from the
Private Placement. Additionally, ACS FinCo will issue a number of
warrants to the Agents (the "Agents' Warrants") equal
to 4% of the Subscription Receipts sold by the Agents pursuant to
the Private Placement. Each whole Agents' Warrant will be
exercisable at a price of $3.00 per
warrant into one ACS FinCo Share for a period of 24 months from
closing of the Private Placement. The Agents' cash compensation has
been deposited in escrow with AST and will be released to the
Agents upon satisfaction and/or waiver of the Escrow Release
Conditions.
Following the completion of the Transaction and after giving
effect to the Consolidation, it is anticipated that an aggregate of
56,667,333 New Nova Shares will be issued and outstanding, of
which: (a) Alcanna will hold 35,750,000 New Nova Shares,
representing approximately 63% of the outstanding New Nova Shares;
(b) current YSS shareholders will hold 7,583,333 New Nova Shares,
representing approximately 13% of the outstanding New Nova Shares;
and (c) holders of Subscription Receipts will hold 13,334,000 New
Nova Shares, representing approximately 24% of the outstanding New
Nova Shares, each on an undiluted basis.
Additional details in respect of the Transaction are disclosed
in the joint press releases of Alcanna and YSS dated January 18, 2021 and January 19, 2021.
YSS also announces the resignation of James Miller from the YSS board of directors in
order to pursue other business interests. "On behalf of the YSS
management team, board of directors and shareholders, I would like
to thank Mr. Miller for his contribution and guidance since
inception of the company and wish him the best on his future
endeavors," commented Theo Zunich,
President & CEO of YSS.
Mr. Miller remains supportive of the Transaction and has entered
into a support agreement with Alcanna to irrevocably vote his YSS
Shares in favour of the matters to be considered at the special
meeting of YSS shareholders.
About Alcanna
Alcanna is one of the largest private sector retailers of
alcohol and cannabis in North
America and the largest in Canada by number of stores – operating 231
locations in Alberta, British Columbia and Ontario. Alcanna is incorporated under the
laws of Canada, and its common
shares and convertible subordinated debentures trade on the Toronto
Stock Exchange under the symbols "CLIQ" and "CLIQ.DB",
respectively. Additional information about Alcanna is available at
www.sedar.com and www.alcanna.com.
Alcanna Cannabis Stores GP Inc. ("ACS GP") and ACS LP
(together with ACS GP, the "ACS Entities") were formed in
2018 to leverage Alcanna's retail experience and expertise to
become an industry leader in the Canadian retail cannabis industry
with a strategy to independently open and develop its stores to
increase its presence in the recreational retail cannabis market.
The ACS Entities are operated primarily from Alcanna's head office
in Edmonton, Alberta. Alcanna,
through ACS LP, opened 5 of the first 17 recreational retail
cannabis locations in Alberta on
October 17, 2018. By December 31, 2019, ACS LP had opened an
additional 16 recreational retail cannabis stores in Alberta and 1 in Ontario. These stores range in size from 1,200
to 5,600 square feet. ACS LP now operates a total of 34 cannabis
retail stores: 18 under the "Nova Cannabis" brand; 12 under
the "Value Buds" brand; and 4 under the "Deep Discount Cannabis"
brand, with 33 locations in Alberta, one in Ontario and another 12 stores under
development in 2021.
About YSS
With retail operations under the YSS™ and Sweet Tree™ brands,
YSS Corp. has developed a retail cannabis business across
Alberta and in Saskatchewan by operating 19 licensed retail
stores in Alberta and Saskatchewan. It has 5 stores in development
for 2021. YSS was continued under the laws of Alberta and has a head office in Calgary, Alberta. The YSS Shares trade on the
TSXV under the symbol "YSS", on the Frankfurt Stock Exchange under
the symbol "WKN: A2PMAX", and over the facilities of the OTCQB
Venture Market under the symbol "YSSCF". Additional information
about YSS is available at www.sedar.com and
www.ysscorp.ca.
NEITHER TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES
PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX
VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR
ACCURACY OF THIS NEWS RELEASE.
Completion of the Transaction is subject to a number of
conditions, including but not limited to, acceptance of the TSXV
and approval of the YSS shareholders. The Transaction cannot close
until the required shareholder approval is obtained. There can be
no assurance that the Transaction will be completed as proposed or
at all. Investors are cautioned that, except as disclosed in
the management information circular to be prepared in connection
with the Transaction, any information released or received with
respect to the Transaction may not be accurate or complete and
should not be relied upon. Trading in the securities of YSS should
be considered highly speculative. The TSX Venture Exchange Inc. has
in no way passed upon the merits of the proposed transaction and
has neither approved nor disapproved the contents of this news
release.
NOTE REGARDING FORWARD-LOOKING INFORMATION
This press release contains certain "forward-looking
information" and certain "forward-looking statements" within the
meaning of applicable securities laws, such as statements and
information concerning anticipated future events, results,
circumstances, performance or expectations that are not historical
facts or information or current condition, but instead represent
only the parties beliefs regarding future events, plans or
objectives, many of which, by their nature, are inherently
uncertain and outside of Alcanna or YSS' control. Use of words such
as "may", "will", "expect", "plans", "could", "would", "might",
"believe", "intends", "likely", or other words of similar effect
may indicate a "forward-looking" statement. The forward-looking
information and forward-looking statements contained herein may
include, but are not limited to, information concerning the
Transaction and the Private Placement; expectations regarding the
closing of the Second Tranche, expectations regarding whether
Transaction will be consummated, including satisfaction of the
Escrow Release Conditions and other conditions precedent to the
consummation of the Transaction; the timing for completing the
Transaction; expectations on the completion of the Consolidation of
YSS Shares; expectations for the effects of the Transaction or the
ability of New Nova to successfully achieve business objectives;
expectations regarding the pro forma business plan of New
Nova and use of proceeds from the Private Placement; and
expectations regarding the development of new stores of New Nova.
These statements are not guarantees of future performance and are
subject to numerous risks and uncertainties, including those
described in the publicly filed documents of Alcanna or YSS
(available on SEDAR at www.sedar.com).
Among the key risks and uncertainties that could cause actual
results to differ materially from those projected in the
forward-looking information and statements include, but not are
limited to, the following: the timing and closing of the Second
Tranche and the gross proceeds raised under such tranche; the
ability to complete the Transaction; the timing of the closing of
the Transaction; the ability to obtain the requisite regulatory
approvals and the satisfaction of other conditions to the closing
of the Transaction on the proposed terms and schedule, including
obtaining approval of the TSXV for the Transaction (including the
New Nova Shares issuable in connection with the Private Placement
and on the exercise of the Agents' Warrants); the ability to
satisfy the conditions to the conversion of the Subscription
Receipts; the potential impact of the consummation of the
Transaction on relationships, including with regulatory bodies,
employees, suppliers, customers and competitors; changes in general
economic, business and political conditions, including changes in
the financial markets; changes in applicable laws; compliance with
extensive government regulation; and the diversion of management
time on the Transaction; risks relating to the COVID-19 pandemic,
governmental responses thereto, measures taken by Alcanna or YSS in
response thereto and the impact thereof on the global economy,
capital markets, the cannabis retail industry and Alcanna, YSS and
New Nova.
These statements are made as of the date of this press release
and, except as required by applicable law, neither Alcanna nor YSS
undertake any obligation to publicly update or revise any
forward-looking statement, whether as a result of new information,
future events or otherwise, other than as required by applicable
securities laws. Additionally, neither Alcanna nor YSS undertake
any obligation to comment on analyses, expectations or statements
made by third parties in respect of Alcanna or YSS, or their
respective financial or operating results or their securities.
Readers cannot be assured that the Transaction will be completed on
the terms described above, or at all.
Readers are cautioned that the foregoing lists of factors are
not exhaustive. Additional information on these and other factors
that could affect operations or financial results of Alcanna and
YSS are included in reports on file with applicable securities
regulatory authorities and may be accessed through the SEDAR
website (www.sedar.com).
SOURCE Alcanna Inc.
