GATINEAU, Quebec and OAKVILLE, Ontario -- May 24, 2019 --
InvestorsHub NewsWire -- HEXO Corp
("HEXO") (TSX: HEXO; NYSE-A: HEXO) and Newstrike
Brands Ltd. ("Newstrike") (TSX-V: HIP) are pleased to announce
that they have completed the previously announced arrangement (the
"Arrangement"), pursuant to which HEXO has
acquired all of the issued and outstanding common shares of
Newstrike (the “Newstrike Shares”) by way of a
plan of arrangement under the Business Corporations
Act (Ontario).
“Today, our company begins the next phase of its great adventure,”
said Sebastien St-Louis, CEO and co-founder of HEXO. “The
combination of these two talented teams, both pioneers in the
cannabis industry, will accelerate HEXO’s vision of creating the
best cannabis technology company. I would like to take this
opportunity to thank Jay Wilgar and the entire Newstrike team for
the trust they have given HEXO as we continue our journey
together,” added St-Louis.
Under the terms of the Arrangement, each former Newstrike
shareholder is now entitled to receive 0.06332 of a common share in
the capital of HEXO for each Newstrike Share held immediately prior
to the Arrangement (the "Consideration"). It is
anticipated that the Newstrike Shares will be delisted from the TSX
Venture Exchange ("TSXV") as of the close of
trading on or about May 28, 2019.
In order to receive the Consideration, registered shareholders of
Newstrike Shares will be required to deposit their share
certificate(s) representing Newstrike Shares, together with the
duly completed letter of transmittal, with TSX Trust Company, the
depositary under the Arrangement. Shareholders whose Newstrike
Shares are registered in the name of a broker, dealer, bank, trust
company or other nominee should contact their nominee regarding the
receipt of the Consideration.
Options
Holders of Newstrike options have received replacement options
under the Arrangement, exercisable for common shares in the capital
of HEXO at the same conversion ratio applicable to the Newstrike
Shares. All other terms and conditions of the replacement options,
including the term of expiry, vesting, conditions to and manner of
exercising, are the same as the Newstrike options for which they
were exchanged.
Warrants
Warrants to purchase Newstrike Shares, other than those that have
been exercised prior to May 24, 2019 (the “Effective
Time”), will continue to remain outstanding as warrants of
Newstrike which, upon exercise, will entitle the holder thereof to
receive, in lieu of the number of Newstrike Shares to which such
holder was theretofore entitled upon exercise of such Newstrike
warrants, the Consideration that such holder would have been
entitled to be issued and receive if, immediately prior to the
Effective Time, such holder had been the registered holder of the
number of Newstrike Shares to which such holder was theretofore
entitled upon exercise of such Newstrike warrants. All other terms
governing the warrants, including, but not limited to, the expiry
term, exercise price and the conditions to and the manner of
exercise, will be the same as the terms that were in effect
immediately prior to the Effective Time, and shall be governed by
the terms of the applicable warrant indenture.
Further information about the Arrangement is set forth in the
materials prepared by Newstrike in respect of the Meeting which
were mailed to Newstrike shareholders and filed under Newstrike’s
profile on the System for Electronic Document Analysis and
Retrieval (SEDAR) at www.sedar.com. Following the
completion of the Arrangement, HEXO continues to comply with all
applicable laws in each jurisdiction in which it
operates.
Listed Newstrike Warrants
Prior to the completion of the Arrangement, Newstrike had
outstanding two classes of warrants to purchase common shares of
Newstrike listed on the TSXV under the trading symbols HIP.WT and
HIP.WT.A, respectively (together the “Listed Newstrike
Warrants”).
The Listed Newstrike Warrants will continue trading on the TSXV as
Newstrike warrants, under their existing trading symbols, and will
remain listed on the TSXV until the earliest to occur of their
exercise, expiry or delisting.
As required by the warrant indentures in respect of the Listed
Newstrike Warrants, HEXO has entered into supplemental warrant
indentures in respect of such warrant indentures governing the
Listed Newstrike Warrants. Copies of each of the supplemental
warrant indentures will be available on Newstrike’s and HEXO’s
respective SEDAR profiles at www.sedar.com.
Other Matters
An application has been filed with the applicable securities
regulators of Newstrike for exemptive relief from certain
continuous disclosure and insider reporting requirements. In the
event Newstrike is granted such relief, holders of Listed Newstrike
Warrants will be directed to reference, and rely on, the public
disclosure filings of HEXO.
Immediately prior to the completion of the Arrangement, each of the
directors of the boards of directors of Newstrike and its
subsidiaries resigned.
HEXO’s and Newstrike’s operations are subject to a variety of laws,
regulations and guidelines relating to the marketing, acquisition,
manufacture, management, transportation, storage, sale and disposal
of cannabis but also including laws and regulations relating to
health and safety, the conduct of operations and the protection of
the environment. To the knowledge of HEXO’s management, HEXO and
Newstrike are and following the completion of the Arrangement
continue to be in compliance with all such laws. Changes to such
laws, regulations and guidelines due to matters beyond the control
of HEXO and Newstrike may cause adverse effects to HEXO’s and
Newstrike’s combined operations.
About HEXO
HEXO Corp is an award-winning consumer packaged goods cannabis
company that creates and distributes prize-winning products to
serve the global cannabis market. Through its hub and spoke
business strategy, HEXO Corp is partnering with Fortune 500
companies, bringing its brand value, cannabinoid isolation
technology, licensed infrastructure and regulatory expertise to
established companies, leveraging their distribution networks and
capacity. As one of the largest licensed cannabis companies in
Canada, HEXO Corp operates with 1.8 million sq. ft of facilities in
Ontario and Quebec and a foothold in Greece to establish a Eurozone
processing, production and distribution centre. HEXO serves the
Canadian adult-use and medical markets.
About Newstrike
Newstrike is the parent company of Up Cannabis Inc., a licensed
producer of cannabis that is licensed to both cultivate and sell
cannabis in all acceptable forms. Newstrike, through Up Cannabis
and together with select strategic partners, including Canada’s
iconic musicians The Tragically Hip, is developing a diverse
network of high quality cannabis brands.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS:
Certain information in this news release regarding
HEXO and Newstrike and their respective businesses
constitutes forward-looking statements under applicable
securities laws. Any statements that are contained in this news
release that are not statements of historical fact are
forward-looking statements. Forward looking statements are often
identified by terms such as "may", "should", "anticipate",
"expect", "potential", "believe", "intend", “estimate” or the
negative of these terms and similar expressions and
include statements in this press release concerning the expected
timing by which Newstrike shares will be de-listed from the TSXV
and the continued trading of the Listed Newstrike Warrants on the
TSXV and the granting of relief by applicable securities
regulators. Such forward-looking statements are based on
the current expectations of the management of HEXO and
Newstrike. While HEXO and Newstrike consider these
expectations to be reasonable, based on information currently
available, they may prove to be incorrect. Readers are cautioned
not to place undue reliance on forward-looking statements.
Such forward-looking events and circumstances may not occur
when anticipated or at all and could differ materially as a result
of known and unknown risk factors and uncertainties affecting HEXO
or Newstrike, including risks regarding the cannabis industry,
economic factors, the equity markets generally, risks associated
with growth and competition and those risk factors referred to in
the management information circular of Newstrike prepared in
connection with the Meeting. Although HEXO and Newstrike have
attempted to identify important factors that could cause actual
actions, events or results to differ materially from those
described in this news release, there may be other factors that
cause actions, events or results to differ from those anticipated,
estimated or intended. Forward-looking information cannot be
guaranteed. Readers are cautioned that the foregoing list
is not exhaustive. Readers are further cautioned not to place undue
reliance on forward-looking statements as there can be no assurance
that the plans, intentions or expectations upon which they are
placed will occur. Such information, although considered reasonable
by management at the time of preparation, may prove to be incorrect
and actual results may differ materially from those anticipated.
For more information on the risk, uncertainties and assumptions
that could cause anticipated opportunities and actual results to
differ materially, please refer to the public filings of HEXO and
Newstrike which are available on SEDAR at www.sedar.com, including the
“Risk Factors” section in HEXO’s Annual Information Form dated
October 25, 2018 and the most recent management’s discussion and
analysis filed by each of HEXO and Newstrike.
Except as required by applicable securities laws, statements in
this news release containing forward-looking information speak only
as of the date on which they are made and HEXO and Newstrike
undertake no obligation to publicly update or revise any
forward-looking information, whether as a result of new
information, future events, or otherwise, except as required by
applicable securities laws.
Notice to U.S. Holders. Both
HEXO and Newstrike have been formed outside of the United
States. The Arrangement is subject to disclosure requirements
of Canada that are different from those of the
United States. Financial statements included in the documents, if
any, are prepared in accordance with Canadian accounting standards
and may not be comparable to the financial statements
of United States companies. It may be difficult for a
securityholder in the United States to enforce
his/her/its rights and any claim a securityholder may have arising
under U.S. federal securities laws, since the companies are located
in Canada, and some or all of their officers or directors may
be residents of Canada or another country outside
of the United States. A securityholder may not be able to sue
a Canadian company or its officers or directors in a court
in Canada or elsewhere outside of the United
States for violations of U.S. securities laws. It may be
difficult to compel a Canadian company and its affiliates to
subject themselves to a U.S. court's judgment.
Neither the TSX Venture Exchange nor its Regulation Service
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release. The TSX Venture Exchange has in no way
passed upon the merits of the transaction and has neither approved
nor disapproved the content of this press release.
For further information, please contact:
HEXO:
Investor Relations:
Jennifer Smith
1-866-438-8429
invest@hexo.com
Media Relations:
Caroline Milliard
819-317-0526
media@hexo.com
Director:
Adam Miron
819-639-5498
Newstrike:
Investor Relations:
1-877-541-9151
ir@newstrike.ca
Director:
Jay Wilgar CEO, Newstrike
905-844-8866
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