Focus on Core Organic Foods
Platform
VANCOUVER, June 27, 2019 /CNW/ - Organto Foods Inc.
(TSX-V: OGO, OTC: OGOFF) ('Organto"). Organto today
announced that is has entered into a Share Purchase Agreement
("Agreement") to sell its shares of Medicannabis S.A.S.,
("Medicannabis") to Xebra Brands Ltd. ("Xebra") for a
combination of shares of Xebra, cash and forgiveness of debt.
Prior to this Agreement, Organto owned 100% of the outstanding
shares of Medicannabis, a privately held Colombian company focused
on the development of medicinal cannabis. Xebra is an
emerging, privately held Canadian cannabis company developing
high-margin cannabis-based consumer products, with a major focus on
cannabis infused beverages. Xebra intends to seek a public
listing on the TSX Venture Exchange.
Under the terms of the Agreement, Organto and former
shareholders and certain advisors of Medicannabis will receive a
total of 10,000,000 common shares of Xebra, representing
approximately 9.9% of the outstanding shares of Xebra, with Organto
receiving 7,124,630 common shares and the former shareholders and
advisors of Medicannabis receiving 2,875,370 common shares.
As a result of the Xebra shares being issued directly
by Xebra to the former shareholders and certain advisors of
Medicannabis, 7,461,538 common shares of Organto previously issued
as part of the acquisition of Medicannabis will be cancelled.
Organto will receive cash proceeds of CDN$500,000 with $290,000 paid on closing and $210,000 to be paid based upon certain financing
objectives of Xebra, but in any event no later than September 30, 2019. Organto currently has
outstanding payables of approximately CDN$150,000 related to Medicannabis that will be
paid from the cash proceeds received, and as a result will
ultimately realize net cash proceeds of $350,000 from this sale.
In addition to the cash proceeds, promissory notes of
approximately $600,000 due by Organto
to Xebra will be also be forgiven and Xebra will assume all
outstanding debts and obligations of Medicannabis.
As part of the agreement Organto has been granted a ROFR
(right-of-first refusal) to distribute Xebra's cannabis products
throughout Europe.
The transaction is subject to shareholder and TSX-V
approval.
"We are very pleased to enter into this agreement to sell our
medicinal cannabis assets to Xebra Brands Ltd. We believe the
combination of our Colombian cannabis assets with the assets of
Xebra, position the combined business for long-term success in the
ever changing and rapidly growing global cannabis market."
commented Steve Bromley, Chair and
Interim Chief Executive Officer of Organto Foods Inc. "With this
transaction we will continue to have an investment in this exciting
and fast-growing sector while we focus operationally on our core
organic fruit and vegetables platform. We believe the
opportunity in organic fruits and vegetables is significant as
global healthy eating and wellness trends continue to drive strong
growth on a global basis, and with our recent repositioning and
diverse customer base and supply chain capabilities, we are
well-positioned to capture this market opportunity."
ON BEHALF OF THE BOARD
Steve Bromley
Chair and
Interim Chief Executive Officer
Neither the 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.
ABOUT ORGANTO
Organto's business model is rooted in its commitment to
sustainable business practices focused on environmental
responsibility and a commitment to the communities where it
operates, its people and its shareholders. The Organto Foods
Group is an integrated provider of year-round value-added branded
organic vegetables and seasonal organic and non-GMO fruit and
vegetable products using an asset-light business model to serve a
growing socially responsible and health conscious consumer around
the globe.
FORWARD LOOKING STATEMENTS
This news release may include certain forward-looking
information and statements, as defined by law including without
limitation Canadian securities laws and the "safe harbor"
provisions of the US Private Securities Litigation Reform Act of
1995 ("forward-looking statements"). In particular, and without
limitation, this news release contains forward-looking statements
respecting Organto's current business model and related expertise;
Organto's belief that the combination of its Colombian cannabis
assets with the assets of Xebra, position the combined business for
long-term success in the ever changing and rapidly growing global
cannabis market; Organto's belief that the opportunity in organic
fruits and vegetables is significant as global healthy eating and
wellness trends continue to drive strong growth on a global basis;
Organto's belief that with its recent repositioning and
diverse customer base and supply chain capabilities, the business
is well-positioned to capture the opportunity in organic foods;
management's beliefs, assumptions and expectations; and
general business and economic conditions. Forward-looking
statements are based on a number of assumptions that may prove to
be incorrect, including without limitation assumptions about the
following: the ability and time frame within which Organto's
organic foods business model will be implemented; dependence on
suppliers, partners and contractual counter-parties; changes in the
business or prospects of Organto; unforeseen circumstances; risks
associated with the organic produce business generally, including
inclement weather, unfavorable growing conditions, low crop yields,
variations in crop quality, spoilage, import and export laws,
unforeseen costs increases and similar risks; transportation costs
and risks; general business and economic conditions; and ongoing
relations with distributors, customers, employees, suppliers,
consultants, contractors and partners. The foregoing list is not
exhaustive and Organto undertakes no obligation to update any of
the foregoing except as required by law.
SOURCE Organto Foods Inc.