AH.DB Aleafia Health Inc

Aleafia Health Inc. (“Aleafia” or the “Corporation”) announces that Red White & Bloom Brands Inc. (“RWB”) has been selected as the successful bidder pursuant to the Court-approved sale and investment solicitation process (the “SISP”) in connection with the previously announced proceedings of Aleafia and certain of its subsidiaries under the Companies’ Creditors Arrangement Act (the “CCAA”).

On August 22, 2023, the Ontario Superior Court of Justice (Commercial List) (the “Court”) approved, among other matters, the terms of a SISP which included a stalking horse asset purchase and share subscription agreement (the “Stalking Horse Agreement”) pursuant to which RWB would acquire certain assets from Aleafia and subscribe for shares of certain subsidiaries of Aleafia if RWB were to become the successful bidder pursuant to the SISP (the “RWB Transaction”). The Stalking Horse Agreement was approved by the Court in the context of the SISP, in order to establish the baseline consideration for the Corporation’s business and assets.

In addition, Aleafia has entered into a definitive purchase agreement pursuant to which it has agreed to sell its Grimsby facility to a third-party purchaser (the “Property Sale” and, together with the RWB Transaction, the “Sale Transactions”), which asset was excluded from the RWB Transaction and marketed separately under the SISP.

In accordance with the terms of the SISP, Aleafia will be seeking Court approval of the Sale Transactions in connection with the SISP and authority to consummate the transactions provided for therein at the approval hearing which will be held on October 27, 2023. If approved by the Court, closing of the RWB Transaction is expected to occur prior to November 22, 2023, and closing of the Property Sale is expected to occur prior to November 1, 2023.

Additional information regarding the CCAA proceedings – including all of the Court materials filed in the CCAA proceedings and a copy of the Stalking Horse Agreement – may be found at the website of KSV Restructuring Inc., Aleafia’s Court-appointed Monitor: https://www.ksvadvisory.com/insolvency-cases/case/aleafia

About Aleafia:

The Corporation is a federally licensed Canadian cannabis company offering cannabis products in Canadian adult-use and medical markets and in select international markets. The Corporation operates a virtual medical cannabis clinic staffed by physicians and nurse practitioners which provide health and wellness services across Canada.

The Corporation operates two licensed cannabis production facilities and operates a strategically located distribution centre all in the province of Ontario, including the largest, outdoor cannabis cultivation facility in Canada. The Corporation produces a diverse portfolio of cannabis and cannabis derivative products including dried flower, pre-roll, milled, vapes, oils, capsules, edibles, sublingual strips and topicals.  

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 outcome of the approval hearing which will be held on October 27, 2023 and the estimated closing dates of the RWB Transaction and the Sale Transaction. 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; future cannabis pricing; cannabis cultivation yields; costs of inputs; its ability to market products successfully to its anticipated clients; reliance on key personnel and contracted relationships with third parties; the ability to complete any future potential transactions in connection with the SISP in CCAA proceedings and the terms and conditions thereof; the application of federal, state, provincial, county and municipal laws; the impact of increasing competition; those additional risks set out in Aleafia’s public documents filed on SEDAR+ at www.sedarplus.ca, including its annual information form for the financial year ended March 31, 2023; and other matters discussed in this news release related to the CCAA proceedings and the SISP. Although Aleafia 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, Aleafia disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

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