Proposed Transaction Highly Dilutive and
Wholly Inadequate for CanniMed Shareholders
Aurora Appoints PI Financial as Advisor in
Relation to CanniMed-Newstrike Proposal
TSX: ACB
VANCOUVER, Dec. 18, 2017
/CNW/ - Aurora Cannabis Inc. ("Aurora") (TSX: ACB) (OTCQB: ACBFF)
(Frankfurt: 21P; WKN: A1C4WM)
announced that the Company will be filing a dissident circular, and
will be soliciting votes against the resolution of CanniMed
Therapeutics Inc. ("CanniMed") to issue shares in connection with
the proposed acquisition of Newstrike Resources Ltd.
("Newstrike").
Aurora has analyzed all public disclosure on Newstrike and the
proposed acquisition of Newstrike by CanniMed, and has concluded
that the proposed transaction offers significantly inferior value
to CanniMed shareholders in comparison to Aurora's own offer to
acquire CanniMed. A detailed discussion of why the proposed
CanniMed-Newstrike transaction would be unfavourable to CanniMed's
shareholders will be provided in the Aurora dissident circular, to
be filed on www.sedar.com:
- Newstrike has no revenues, no sales license and no
patients, with a significant portion of its capacity unfunded.
Based on that, it is hard to fathom the proposed purchase price of
$273 million (before additional
capital requirements).
- CanniMed is Newstrike's Last Lifeline. Newstrike's
Management's Discussion & Analysis for the period ended
September 30, 2017 states that, "At
this time [Newstrike] does not have sufficient cash on hand to meet
its current financial obligations as they come due...". CanniMed is
bailing out Newstrike, paying a significant premium for this, and
is asking its shareholders to approve the issuance of additional
shares, representing 56.6% of the current outstanding CanniMed
Shares, resulting in shareholders being diluted by approximately
34.6%.
- Newstrike will need significant capital to fund its stated
expansion plans. These funds would have to be provided by the
combined CanniMed-Newstrike company, likely resulting in further
cash drain and/or dilution for CanniMed Shareholders.
- Newstrike's Business Model Faces Significant Challenges.
Based on Aurora's operating experience, the Company expects the
yield efficiencies required by Newstrike to meet its claimed
production targets to be highly challenging for a company with no
operational track record and Aurora therefore anticipates further
dilution for CanniMed shareholders will be required to fund
Newstrike's ongoing operations.
- Unrealistic Perception of Newstrike's Brand Value.
Newstrike has no operational or execution track record, and has
never sold a gram of product. It is ridiculous for CanniMed
management to claim that Newstrike has a "premier recreational
brand".
- CanniMed management has provided no clarity of what the
"near-term opportunities for significant synergies" or "significant
financial returns" of their proposed transaction could be. CanniMed
shareholders have every right to expect that details of these
supposed benefits would be available – if, as claimed by CanniMed
management, negotiations with Newstrike have been ongoing for five
months.
- Newstrike has no operations outside of Ontario, nor does it have any future
international growth plans. CanniMed shareholders should wonder how
paying a 26% premium to acquire Newstrike makes them the owner of a
"premier global cannabis company".
- Aurora has appointed PI Financial as its financial
advisor specifically to assist in the assessment of the proposed
CanniMed-Newstrike transaction.
Transaction Evaluation by PI Financial
The opinion provided by PI Financial on the proposed
CanniMed-Newstrike transaction, which will be appended to the
Aurora dissident circular, unambiguously states that this
transaction would be "wholly inadequate" to CanniMed
shareholders.
Management Commentary
"We reviewed all disclosed and public information on Newstrike
and on CanniMed management's proposed acquisition, and in our
opinion it's a terrible deal for CanniMed shareholders," said
Terry Booth, CEO of Aurora. "It
doesn't take a genius to see that a company with no revenues, no
sales license, no patients, no intellectual property of significant
value, no track record, and not enough funds to continue operating
and funding its own expansion, should not be worth giving 35% of
CanniMed away to Newstrike shareholders. We therefore ask CanniMed
shareholders to vote against the issuance proposal, and accept our
offer, which not only pays a very significant premium, but also
offers the opportunity to continue participating in the growth of
the cannabis industry as part of Aurora, the most dynamic company
in the sector."
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health
Canada's Access to Cannabis for Medical Purposes Regulations
("ACMPR"). The Company operates a 55,200 square foot,
state-of-the-art production facility in Mountain View County,
Alberta, known as "Aurora
Mountain", a second 40,000 square foot high-technology production
facility known as "Aurora Vie" in Pointe-Claire, Quebec on Montreal's West Island, and is currently
constructing an 800,000 square foot production facility, known as
"Aurora Sky", at the Edmonton
International Airport, as well as is completing a fourth facility
in Lachute, Quebec through its
wholly owned subsidiary Aurora Larssen Projects Ltd.
In addition, the Company holds approximately 17.23% of the
issued shares in leading extraction technology company Radient
Technologies Inc., based in Edmonton, and is in the process of completing
an investment in Edmonton-based
Hempco Food and Fiber for an ownership stake of up to 50.1%.
Furthermore, Aurora is the cornerstone investor with a 22.9% stake
in Cann Group Limited, the first Australian company licensed to
conduct research on and cultivate medical cannabis. Aurora also
owns Pedanios, a leading wholesale importer, exporter, and
distributor of medical cannabis in the European Union, based in
Germany. The Company offers
further differentiation through its acquisition of BC Northern
Lights Ltd. and Urban Cultivator Inc., industry leaders,
respectively, in the production and sale of proprietary systems for
the safe, efficient and high-yield indoor cultivation of cannabis,
and in state-of-the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home
and professional kitchens. Aurora's common shares trade on the TSX
under the symbol "ACB".
On behalf of the Boards of
Directors,
AURORA CANNABIS
INC.
Terry
Booth
CEO
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable
securities law ("forward-looking statements"). Forward-looking
statements are frequently characterized by words such as "plan",
"continue", "expect", "project", "intend", "believe", "anticipate",
"estimate", "may", "will", "potential", "proposed" and other
similar words, or statements that certain events or conditions
"may" or "will" occur. These statements are only predictions.
Various assumptions were used in drawing the conclusions or making
the projections contained in the forward-looking statements
throughout this news release. Forward-looking statements are based
on the opinions and estimates of management at the date the
statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the
forward-looking statements. The Company is under no obligation, and
expressly disclaims any intention or obligation, to update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this
release.
SOURCE Aurora Cannabis Inc.