World Class Extractions Inc. (“
World Class”) (CSE:
PUMP) and Quadron Cannatech Corporation
(“
Quadron”) (CSE: QCC) are pleased to announce
that they have entered into an arrangement agreement providing for
the merger of the companies (the “
Agreement”).
Summary of the Arrangement
Pursuant to the Agreement, World Class has
agreed to acquire, through a wholly-owned subsidiary, all of the
issued and outstanding common shares of Quadron (collectively, the
“Quadron Shares”) by way of a statutory plan of
arrangement under the Business Corporations Act (British Columbia)
(the “Arrangement”). Pursuant to the terms of the
Arrangement, shareholders of Quadron (the “Quadron
Shareholders”) will receive two (the “Exchange
Ratio”) common shares of World Class (each, a
“World Class Share”), for every Quadron Share
held.
The consideration values Quadron at
approximately $0.25 per Quadron Share, representing a premium of
approximately 19% to the price of Quadron Shares compared to the
closing price on April 12, 2019, and a premium of approximately
12.7% based on the trailing 15-day volume-weighted average price of
each company as of the close of trading on April 12, 2019. Upon
completion of the Arrangement, it is expected that Quadron
Shareholders will receive approximately 143,300,894 World Class
Shares, representing approximately 24.1% of the total issued and
outstanding World Class Shares on a post-Arrangement basis.
Benefits of the Arrangement
The proposed Arrangement offers a number of
benefits to the shareholders of both World Class and Quadron. The
combined entities will leverage Quadron’s technical expertise,
established customer base and seasoned management team with World
Class’ unique patent-pending technology and strong cash position
resulting from its recent $23,000,000 private placement. The
proposed Arrangement would produce the following
synergies:
- Quadron’s extraction and processing
systems, which are automated and have been simplified relative to
comparable technologies;
- A extensive roster of Quadron
executives and employees that have been operating in the extraction
and processing sector for over four years;
- An established and growing revenue
stream, as demonstrated by Quadron’s revenue increasing by 132.54%
for the nine months ended January 31, 2019 when compared to the
same period in 2017;
- World Class’ unique patent-pending
technology, which World Class anticipates will provide higher
yields of full spectrum cannabis oil at faster rates and larger
volumes than current extraction technologies; and
- A strong cash position resulting
from World Class’ recently-closed private placement for gross
proceeds of approximately $23,000,000.
Rosy Mondin, CEO of Quadron, stated, "There is
no doubt that the extraction and processing of cannabis oils will
become an incredibly important facet of the overall cannabis
industry. By bringing together Quadron and World Class, two
complementary businesses, we are creating a stronger enterprise to
achieve long-term growth and value creation for our shareholders.
Strengthing production and operations as key competitive factors
and enhancing our prospects to innovate and lead, we are tightly
aligned in our goal of becoming a global leader in the emerging,
and rapidly growing, cannabis oils market.”
Michael McCombie, Chief Executive Officer of
World Class, added, “The merger of Quadron and World Class
positions World Class to become a global leader in extraction,
processing, and large-scale processing of CBD from hemp. Quadron’s
team of seasoned executives and proven ability to generate revenue
in the extraction sector is exactly what World Class needs in order
to separate ourselves from the pack, and take a leadership position
in the nascent extraction sector.”
Management and Directors
Upon completion of the Arrangement, the board of
World Class will be reconstituted to comprise five directors,
including two directors nominated by World Class, two directors
nominated by Quadron and one independent director acceptable to
both World Class and Quadron. With respect to the management team
of World Class upon completion of the Arrangement, Rosy Mondin will
serve as the Chief Executive Officer and Leo Chamberland will serve
as President.
Advisors
M Partners Inc. has provided a fairness opinion
to the Board of Directors of Quadron that the Arrangement is fair,
from a financial point of view. First Republic Capital Corporation
(“First Republic”) is acting as financial advisor
to World Class. In addition to other fees and expenses payable to
First Republic, World Class is required to pay a success fee (the
“Success Fee”) to First Republic and Canaccord
Genuity Corp. upon closing of the Arrangement equal to,
respectively, approximately 2.73% and 0.77% of the aggregate fair
market value of the World Class Shares issuable by World Class to
Quadron’s shareholders, and payable in World Class Shares.
Boards of Directors’
Recommendations
The Board of Directors of World Class, and the
Board of Directors of Quadron have both unanimously approved the
proposed Arrangement.
Directors, management and certain key Quadron
Shareholders representing over 23% of the issued and outstanding
Quadron Shares have signed lockup agreements to vote their
respective Quadron Shares in favour of the Arrangement.
Further Details
The Arrangement will be implemented through a
triangular amalgamation under the Business Corporations Act
(British Columbia) in which a wholly-owned subsidiary of World
Class will amalgamate with Quadron to become a wholly-owned
subsidiary of World Class and Quadron Shareholders will receive
World Class Shares based on the Exchange Ratio.
Upon closing of the Arrangement: (i) all
outstanding stock options of Quadron will be adjusted in accordance
with the stock option plan of Quadron and will be exercisable for
World Class Shares on the basis of the Exchange Ratio; and (ii) all
unexercised Quadron Share purchase warrants will be adjusted in
accordance with the terms of the warrant certificates governing
such Quadron Share purchase warrants such that they shall be
exercisable to purchase World Class Shares on the basis of the
Exchange Ratio and will expire in accordance with their current
expiry dates.
The Agreement contains representations and
warranties for the benefit of each of World Class and Quadron,
conditions relating to shareholder, court and regulatory approvals,
material adverse changes and compliance with the Agreement as are
in each case customary in comparable transactions of this
nature.
Completion of the Arrangement is subject to a
number of conditions being satisfied or waived by one or both of
World Class and Quadron at or prior to closing of the Arrangement,
including: approval of the Quadron Securityholders, together with
any requisite minority approvals; and receipt of all necessary
regulatory and court approvals and the satisfaction of certain
other closing conditions customary for a transaction of this
nature.
The Agreement includes deal protection
provisions that are customary in Canadian board-supported
transactions on the part of both Quadron and World Class (subject
to customary fiduciary out provisions). There is a mutual break fee
commensurate with a transaction of this size being $1,500,000.
Details of the Arrangement, including a summary
of the terms and conditions of the Arrangement Agreement, will be
disclosed in a management information circular of Quadron, which
will be mailed to Quadron Shareholders and will also be available
on SEDAR at www.sedar.com. The Agreement will also be filed on the
SEDAR profiles of each of World Class and Quadron.
It is expected that the special meeting of
Quadron Shareholders (the “Meeting”) to approve
the proposed Arrangement will be held in early June 2019 and, if
approved at the Meeting, it is expected that the Arrangement would
close approximately a week thereafter.
This announcement is for informational purposes
only and does not constitute an offer to purchase, a solicitation
of an offer to sell any shares or a solicitation of a proxy.
About World Class
World Class is a Canadian based developer of an
innovative extraction process for both the hemp and cannabis
industry. The Company intends to provide single step continuous
flow extraction services to the hemp and cannabis industry. Using
patent pending technology, World Class’ results produce higher
yields and better quality crude hemp oil at faster rates. The
technology allows the extraction of CBD Oil and other related
extracts from wet or dried natural plants. World Class can save its
clients floor space, utility drying costs, equipment and processing
labour costs.
For more information, visit: www.wcextractions.com.
On behalf of the Board of Directors of WORLD CLASS
EXTRACTIONS INC.
Michael McCombie Chief Executive Officer
mike@wcextractions.com
About Quadron
Quadron, through its wholly owned subsidiaries,
provides turn-key extraction and processing solutions for the
cannabis industry including proprietary industrial grade equipment,
custom build processing facilities, ancillary products, and
scientific services. Quadron delivers streamlined, costeffective
and innovative solutions to help licensed growers, producers and
processors develop market ready products all to achieve quicker
ROI.
For more information, visit: www.quadroncannatech.com.
On behalf of the Board of Directors of QUADRON CANNATECH
CORPORATION
Rosy Mondin Chief Executive Officer
rosy@quadroncannatech.com
Investor Relations Contact:
KIN Communications Inc. Caleb Jeffries, VP, Investor Relations
1-866-684-6730 QCC@kincommunications.com
Neither the CSE nor its Market Regulator (as
that term is defined in the policies of the CSE) accepts
responsibility for the adequacy or accuracy of this release.
Cautionary Note Regarding
Forward-Looking Statements: Certain disclosures in this
release constitute forward-looking statements, including: obtaining
Quadron shareholder and final court approval of the Arrangement;
composition of the board of directors and management of World Class
upon completion of the Arrangement; and timing and completion of
the Arrangement. In making the forward-looking statements in this
release, the parties have applied certain factors and assumptions
that are based on the parties' current beliefs as well as
assumptions made by and information currently available to the
parties. Although the parties consider these assumptions to be
reasonable based on information currently available to them, they
may prove to be incorrect, and the forward-looking statements in
this release are subject to numerous risks, uncertainties and other
factors that may cause future results to differ materially from
those expressed or implied in such forward-looking statements.
Readers are cautioned not to place undue reliance on
forward-looking statements. The parties do not intend, 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 required by
law.
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