- Acquisition will add extensive on-shelf product portfolio
available in multiple regions
- Expands PharmaCielo's global sales reach and market presence
in Canada, Switzerland, Europe, Australia, New
Zealand, Israel, and
Brazil
TORONTO, June 6, 2019 /CNW/ - PharmaCielo
Ltd. ("PharmaCielo" or the "Company")
(TSXV:PCLO), the Canadian parent of Colombia's premier cultivator and producer of
medicinal-grade cannabis oil, PharmaCielo Colombia Holdings S.A.S.,
today announced that it has entered into a scheme implementation
agreement (the "Implementation Agreement") pursuant to which
PharmaCielo has agreed to acquire all of the issued and outstanding
shares and listed options of Creso Pharma Ltd. ("Creso Pharma")
(ASX:CPH), for an aggregate purchase price of approximately
A$122 million (the
"Acquisition"). Creso Pharma is a global medicinal cannabis
company that specializes in research, development and production of
therapeutic, nutraceutical and animal health products. PharmaCielo
will pay A$0.63 per Creso Pharma
share, representing a premium of 50% over the closing trading price
of the Creso Pharma shares on May
31, 2019. The purchase price for the Creso
Pharma shares will be satisfied by the issuance of PharmaCielo
common shares ("PharmaCielo Shares") priced at C$7.6166 per PharmaCielo Share being the
3-day volume weighted average trading price for the PharmaCielo
Shares representing an exchange ratio of a 0.0775 PharmaCielo
Shares per each Creso Pharma share.
The Implementation Agreement and related transactions have been
unanimously approved by the board of directors of each of
PharmaCielo and Creso Pharma. The board of directors of
PharmaCielo received an opinion from its financial advisor that the
consideration being offered by PharmaCielo under the Acquisition is
fair, from a financial point of view, to PharmaCielo.
Deal Highlights
Upon closing of the
Acquisition, the combined company is expected to benefit from
the complementary assets and synergies between PharmaCielo and
Creso Pharma including:
- Creso Pharma's world-class Swiss-led team, with over 150 years
of collective experience in the Pharma, Food and Cannabis
industries.
- Creso Pharma has commercialized four proprietary branded
products in less than two years, including both human and animal
health focused CBD-based nutraceuticals and complementary feed
products.
- A pipeline of four additional products to be commercialized in
2019 by Creso Pharma, adding both additional proprietary
formulations and delivery technologies to the "Swiss Made" GMP
compliant, pharma grade pipeline.
- Creso Pharma active sales in thirteen countries including
Australia, New Zealand, Brazil, Switzerland, Germany, France, the
Netherlands and the United
Kingdom complements PharmaCielo's networks in South America, Mexico, and Italy.
- Expand substantial range of proprietary strains currently
registered for commercial cultivation through combination of
industry leading Israeli R&D cultivation facility with Colombia
R&D cultivation facility.
- Establishment of dual-market licensed cultivation and
processing facilities (Canada and
Colombia) designed and constructed
to comply with EU GMP standards will expand capacity for import and
export of CBD material and products and medicinal grade cannabis
production and products to multiple global markets.
- Continued participation by Creso Pharma shareholders in a
global medicinal cannabis company with greater capitalization
enabling aggressive market and sales development.
- Creso Pharma supply offtake agreement in place with Canadian
distribution network establishes ongoing product revenue
stream.
Management Commentary
"PharmaCielo's acquisition of Creso Pharma, harnessing the
synergies between us, creates a combined company that is poised to
become a global powerhouse in the medicinal cannabis
industry. Upon closing of the transaction, the combined
company will quadruple our global footprint with presence in more
than a dozen countries spanning North and Latin America, Switzerland, Europe, the Middle
East, Australia and
New Zealand," said David Attard, CEO of PharmaCielo. "The
Acquisition affords us the opportunity to bring our high-quality
Colombian oil production to market immediately and expand into
higher-margin, branded product sales faster by harnessing the
expertise of a proven and highly engaged commercialization team
possessing both an immediately available product portfolio and
active international sales channels."
"The quality and scale of PharmaCielo's cultivation and oil
extraction operations in Colombia
complements our focus on meeting global demand for the highest
quality CBD and THC based therapeutic, nutraceutical and animal
health products through increased access to the necessary quality
and volume of oil production," said Dr. Miri Halperin Wernli, Co-Founder and CEO of Creso
Pharma. "This arrangement with PharmaCielo is an incredible
opportunity for Creso Pharma shareholders to benefit from being
part of a best in class and well-capitalized global medicinal
cannabis company."
For more details on the Creso Pharma transaction, please visit
Pharmacielo.com/investors.
Acquisition Terms
Pursuant to the Implementation
Agreement, PharmaCielo and Creso Pharma have agreed to implement a
share scheme (the "Share Scheme") and an option scheme (the
"Option Scheme") whereby:
- Creso Pharma shareholders will receive 0.0775 of a PharmaCielo
Share for each Creso Pharma share held, representing a price of
A$0.63 per Creso Pharma share.
- Each holder of listed Creso Pharma options will receive 0.0185
PharmaCielo Shares for each listed Creso Pharma option held,
reflecting a price of A$0.15 per
Creso Pharma listed option.
- Holders of vested unlisted Creso Pharma options with an
exercise price equal to A$0.80 will
receive 0.0185 PharmaCielo Shares for each unlisted Creso Pharma
option held, reflecting a price of A$0.15 per Creso Pharma unlisted option.
- Holders of vested unlisted Creso Pharma options with an
exercise price below A$0.63 will
receive an amount of PharmaCielo Shares with a value equal to the
difference between A$0.63 and the
exercise price of their respective unlisted Creso Pharma options
multiplied by the number of their respective unlisted Creso Pharma
Options.
- The Share Scheme will require approval by at least 75% of the
number of votes casts and 50% of the number of voting shareholders
at the meeting of Creso Pharma shareholders. The Option Scheme will
require approval by at least 75% of the number of votes cast at the
meeting of Creso Pharma option holders. The meeting of Creso Pharma
shareholders and meeting of Creso Pharma option holders will both
be held later this year.
- The Share Scheme and Option Scheme are further subject to
Australian Court approval and the approval of Australian Securities
and Investments Commission.
- The Acquisition and the issuance of PharmaCielo Shares are
subject to the approval of the TSX Venture Exchange. Approval of
PharmaCielo shareholders is not required.
- In connection with, and subject to entering into the
Implementation Agreement, PharmaCielo has agreed to advance Creso
Pharma a CAD$3,500,000 secured bridge
loan (the "Secured Bridge Loan") that may be increased by an
additional CAD$1,500,000 at
PharmaCielo's sole discretion, all pursuant to an amendment to
Creso Pharma's existing loan trust deed, originally entered into
with an arm's length party to Creso Pharma on April 26, 2019. The Secured Bridge Loan will be
secured by a general security agreement over the assets of Creso
Pharma and a pledge by Creso Pharma to PharmaCielo, of the shares
of Mernova Medicinal Inc., a subsidiary of Creso Pharma. The
Secured Bridge Loan will bear interest at a rate of 15% per annum
and will mature on November 30, 2019.
In the event that the Share Scheme is not approved by shareholders
of Creso Pharma, the Secured Bridge Loan will mature on the date
that is four (4) months after the date of the meeting of the Creso
Pharma Shareholders. The proceeds of the Secured Bridge Loan are
expected to be used by Creso Pharma for its general working capital
requirements. The Secured Bridge Loan is subject to the approval of
the TSX Venture Exchange and the completion of a definitive loan
amendment and security agreements.
- After closing, former holders of Creso Pharma securities will
own approximately 14,590,690 PharmaCielo Shares, approximately 13%
of the total PharmaCielo Shares outstanding.
The Implementation Agreement contains customary deal protections
including a non-solicitation provision of alternative transactions
by Creso Pharma and provides for, among other things, the Creso
Pharma board of directors being able to consider a superior
proposal in certain circumstances and a right for PharmaCielo to
match any such superior proposal. The Implementation Agreement also
provides for the payment by Creso Pharma of a termination fee of
A$1,200,000 to PharmaCielo in certain
circumstances. If the Share Scheme is not approved by Creso Pharma
shareholders, Creso Pharma must reimburse PharmaCielo A$450,000. In addition, the Implementation
Agreement provides that where the Acquisition is not completed
because of a failure to perform by PharmaCielo, PharmaCielo would
be required to pay a reverse break fee to Creso Pharma in the
amount of A$1,200,000.
It is currently expected that, subject to receipt of all
regulatory, court, shareholder and other approvals, and the
satisfaction or waiver of all conditions, the Acquisition will be
completed by the end of September
2019.
Further information regarding the Acquisition will be included
in the explanatory booklet to be prepared by Creso Pharma and
dispatched to Creso Pharma shareholders and listed option holders
in advance the meetings to be called to approve the Share Scheme
and Option Scheme.
A copy of the Implementation Agreement will be filed by
PharmaCielo under its profile on SEDAR at www.sedar.com at
the time when PharmaCielo files a material change report in respect
of the Acquisition.
For more information on Creso Pharma, including its most recent
financial statements, please visit the company's website
at: https://www.cresopharma.com/for-investors.
Financial and Legal Advisors
Cormark Securities Inc. ("Cormark") acted as financial advisor
and McMillan LLP and Minter Ellison LLP acted as legal counsel to
PharmaCielo.
Cormark will receive a combination of cash and PharmaCielo
Shares as compensation for acting as financial advisor to
PharmaCielo.
EverBlu Capital acted as financial advisor and Steinepreis
Paganin acted as legal counsel to Creso Pharma.
About PharmaCielo
PharmaCielo Ltd. (TSXV:PCLO) is a global company, headquartered in
Canada, with a focus on ethical
and sustainable processing and supplying of all natural,
medicinal-grade cannabis oil extracts and related products to large
channel distributors. PharmaCielo's principal (and wholly owned)
subsidiary is PharmaCielo Colombia Holdings S.A.S., headquartered
at its nursery and propagation centre located in Rionegro,
Colombia.
The boards of directors and executive teams of both PharmaCielo
and PharmaCielo Colombia Holdings are comprised of a diversely
talented group of international business executives and specialists
with relevant and varied expertise. PharmaCielo recognized the
significant role that Colombia's
ideal location will play in building a sustainable business in the
medical cannabis industry, and the Company, together with its
directors and executives, is executing on a business plan focused
on supplying the international marketplace.
Forward-Looking Statements
This press release contains forward-looking statements.
Forward-looking statements can be identified by the use of words
such as, "expects", "is expected", "intends", "believes", or
variations of such words and phrases or state that certain actions,
events or results "may" or "will" be taken, occur or be achieved.
Forward-looking statements include those relating to the
acquisition by PharmaCielo of all of the outstanding Creso Pharma
shares and listed options, the anticipated benefits of the combined
companies, the anticipated commercialization of the four additional
products in 2019 in the Creso Pharma pipeline, continued active
sales in the thirteen countries, the expansion of proprietary
strains registered for commercial cultivation, the mutual benefits
of expanded expertise, cultivation and production capacity through
additional fully licensed Colombian operations, the Acquisition
enabling PharmaCielo to bring its Colombian oil production to
market faster, the satisfaction of necessary terms to complete the
Acquisition, including: receipt of necessary Creso Pharma
shareholder approval of the Share Scheme and the Option Scheme, the
approval of the Share Scheme and the Option Scheme by the
Australian Court and the approval of the Australian Securities and
Investments Commission, the approval of the TSX Venture Exchange of
the Acquisition and the issuance of the PharmaCielo Shares
thereunder, the execution of the Secured Bridge Loan and the
related general security agreement and share pledge, the maturity
of the Bridge Loan, and expectations relating to the timing of
closing the Acquisition. Forward-looking statements are not
a guarantee of future performance and are based upon a number of
estimates and assumptions of management in light of
management's experience and perception of trends, current
conditions and expected developments, including assumptions related
to the ability to successfully integrate the operations of the two
companies, as well as other factors that management believes to be
relevant and reasonable in the circumstances, including assumptions
in respect of current and future market conditions, the current and
future regulatory environment and future approvals and permits.
Actual results, performance or achievement could differ materially
from that expressed in, or implied by, any forward-looking
statements in this press release, and, accordingly, you should not
place undue reliance on any such forward-looking statements and
they are not guarantees of future results. Forward-looking
statements involve significant risks, assumptions, uncertainties
and other factors that may cause actual future results or
anticipated events to differ materially from those expressed or
implied in any forward-looking statements.Except as required
by law, PharmaCielo undertakes no obligation to publicly update any
forward-looking statements, whether as a result of new information,
future events or otherwise.
Neither the TSXV nor its Regulation Services Provider (as
that term is defined in the policies of the TSXV) accepts
responsibility for the adequacy or accuracy of this press
release.
SOURCE PharmaCielo Ltd.