The Canadian Bioceutical Corporation (the
“Company” or “BCC”) (CSE:BCC) (Pink Sheets:CBICF) today announced
that the Company has arranged a US$25 million revolving credit
facility with Hi-Med, LLC of Florida. With the funds now
available through the credit facility, Management has decided,
despite considerable expression of interest, to cap gross proceeds
of the private placement, originally announced on March 30, 2017,
at an aggregate of US$11,229,350.
Background & use of
funds
BCC has embarked upon an aggressive growth strategy
that combines organic growth with transactional expansion to become
a branded multi-state cannabis operator. The Company’s first
acquisition in Arizona has provided BCC with a profitable platform
for growth. The Company subsequently acquired an additional
dispensary license in Arizona, which it currently is developing. As
well, as originally announced on April 4, 2017, it is in the
process of acquiring cannabis assets in Massachusetts, a state
implementing legalization of adult use, and BCC continues to target
further acquisitions in additional states.
Funds drawn down against the line of credit will be
earmarked specifically for making further acquisitions, as well as,
where needed, the development of assets obtained in any
transaction. The first such approved use of funds regards the
Massachusetts acquisition. Upon completion of the
transaction, the Company will be investing in the completion of a
2.5 million grams per annum cultivation and processing facility and
a retail dispensary, as well the creation of two additional
dispensaries in Massachusetts. BCC anticipates further
expanding its footprint in the U.S. cannabis sector during the
coming weeks and months.
Management commentary
“Cash flow from our operations is more than
sufficient to carry operating expenses, so funds available through
the credit facility will provide us with considerable firepower, on
excellent terms, to exclusively fuel our expansion strategy,”
stated Scott Boyes, CEO of BCC. “We have a strong pipeline of
potential transactions, comprised of both established, accretive
operations, and high-potential early-stage assets.”
Beth Stavola, President of U.S. operations, stated,
“The funds available to us through the credit facility and the
private placement will not only help to expand our geographic
reach, but also fuel considerable organic growth. Our
existing Arizona operations and the Massachusetts cultivation and
production assets, when fully-operational, will have a combined
capacity of approximately 5.7 million grams of flower and
approximately one million grams of high-margin concentrate.
This will substantially increase our potential to grow revenues and
cash flow, especially considering our expanding retail
presence.”
Line of Credit
The amount available from the credit facility with
Hi-Med, LCC of Florida, is for a total of up to US$25
million. The principal amount remaining from time to time
unpaid and outstanding shall bear interest at seven percent (7.0%)
per annum. The principal remaining, and any interest accrued,
shall be repayable, in full, 36 months from the date of
closing. In connection with the facility, BCC shall pay a
2.0% arrangement fee on each advance made to the Company by the
lender.
Conversion
The lender shall have the following rights to
convert outstanding principal amounts into common shares of the
Company, as follows:
1. Up to an initial US$10 million of the
principal outstanding, shall be convertible into Common Shares at a
conversion price of CAD$0.50 per common share.
2. Any principal drawn down in excess of the
initial US$10 million, and less than US$20 million, shall be
convertible into Common Shares at a conversion price of CAD$1.00
per common share.
3. Any principal drawn down in excess of US$20
million, and less than US$25 million plus outstanding interest
payable on the outstanding loan amount shall be convertible into
Common Shares at a conversion price of CAD$1.50 per common
share.
Further details with regards to the credit
facility can be found in the Company’s materials filed on
www.sedar.com.
Private placement
Concurrently with the arrangement of the credit
facility, the Company has closed the book on the second and final
tranche of its private placement of common shares (the
“Offering”) as originally announced on March 30,
2017, and following the closing of the first tranche of the
Offering on April 4, 2017. The Company will proceed to close the
second and final tranche of the Offering on Friday, May 5, 2017
pursuant to the rules of the Canadian Securities Exchange.
Once closed, the Company will have received
aggregate gross proceeds of US$11,173,700 and issued 29,851,533
common shares at a price of CAD$0.50 per common share. The
Company paid US$3,000 cash and issued 40,786 common shares as a
finder’s fee for the second tranche of the Offering.
Following the closing of the Offering, the Company will have a
total of 257,310,473 common shares issued and outstanding.
The Company determined the number of common
shares issuable pursuant to the Offering based upon the prevailing
Bank of Canada United States dollar / Canadian dollar currency
conversion rate prior to the closing of the second tranche of the
Offering.
About The Canadian Bioceutical
Corporation
BCC, an Ontario corporation, through its wholly
owned subsidiaries in the U.S., provides substantial management,
staffing, procurement, advisory, financial, real estate rental,
logistics and administrative services to medicinal cannabis
enterprises in Arizona.
The Company supports two dispensaries in Arizona
under the Health for Life (“H4L”) brand, with a third under
development. Additionally, the Company supports Melting Point
Extracts (“MPX”), an award-winning concentrates brand carried by
over 40% of Nevada dispensaries. The Company is also
acquiring these additional cannabis assets in Massachusetts, that
will allow BCC to develop a 2.5 million grams per annum cultivation
and production facility, as well as to build out and operate three
retail dispensaries. Further acquisitions in other
geographies are being targeted.
The Company also leases a property in Owen Sound,
Ontario, for which an application to Health Canada has been made
for a cannabis production and sales license. In addition, the
Company will continue its efforts related to its legacy
nutraceuticals business.
Cautionary Statement Regarding
Forward-Looking Information
This news release includes certain
"forward-looking statements" under applicable Canadian securities
legislation that are not historical facts. Forward-looking
statements involve risks, uncertainties, and other factors that
could cause actual results, performance, prospects, and
opportunities to differ materially from those expressed or implied
by such forward-looking statements. Forward-looking statements in
this news release include, but are not limited to, the Transaction
and BCC's objectives and intentions. Forward-looking
statements are necessarily based on a number of estimates and
assumptions that, while considered reasonable, are subject to known
and unknown risks, uncertainties and other factors which may cause
actual results and future events to differ materially from those
expressed or implied by such forward-looking statements. Such
factors include, but are not limited to: general business, economic
and social uncertainties; litigation, legislative, environmental
and other judicial, regulatory, political and competitive
developments; delay or failure to receive board, shareholder or
regulatory approvals; those additional risks set out in BCC's
public documents filed on SEDAR at www.sedar.com; and other matters
discussed in this news release. Although BCC believes that the
assumptions and factors used in preparing the forward-looking
statements are reasonable, undue reliance should not be placed on
these statements, which only apply as of the date of this news
release, and no assurance can be given that such events will occur
in the disclosed time frames or at all. Except where required by
law, BCC disclaims any intention or obligation to update or revise
any forward-looking statement, whether as a result of new
information, future events, or otherwise.
On behalf of the Board of Directors
The Canadian Bioceutical Corporation
Scott Boyes, CEO
For further information please contact:
Scott Boyes, President and CEO
The Canadian Bioceutical Corporation
info@canadianbioceutical.com
www.canadianbioceutocal.com
Marc Lakmaaker
NATIONAL Equicom
T: +1 416 848 1397
mlakmaaker@national.ca
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