Sugarbud Craft Growers Corp. (TSXV: SUGR, SUGR.WT,
SUGR.WS, SUGR.WR, SUGR.DB) (OTCQB: SBUDF)
("
Sugarbud" or the "
Company")
announces that it has agreed to amend the terms of its previously
announced marketed public offering (the
“
Offering”) of convertible debenture units (each a
"
Debenture Unit") to: (i) lower the conversion
price at which the convertible debentures of the Company (each a
“
Convertible Debenture”) are convertible into
common shares of the Company (“
Common Shares”)
from $1.39 to $1.29 per Common Share, representing the closing
market price of the Common Shares on March 30, 2022; (ii) lower the
exercise price at which the Common Share purchase warrants of the
Company (each a “
Warrant”) will be exercisable
from $1.39 to $1.29 per Warrant, (iii) revise the number of
warrants per Debenture Unit from 719 Warrants to 775 Warrants, (iv)
provide the Company an option, at their sole discretion, to pay the
interest of the Convertible Debentures in Common Shares or cash,
and (v) increase the size of the Offering to up to $3,000,000 in
gross proceeds to the Company (which is expected to include
management and/or insider participation) and also grant the Agent
(as defined herein) the option to increase the size of the Offering
by an additional 15%. The Company has also agreed to use
commercially reasonable efforts to obtain the necessary approvals
to list the Convertible Debentures and the Warrants on the TSX
Venture Exchange (the "
TSXV"). The remainder of
the terms of the Offering continue without further amendment. The
Offering is being led by Research Capital Corporation as the sole
agent and sole bookrunner (the “
Agent”).
Each Debenture Unit will consist of: (i) one
12.0% secured Convertible Debenture; and (ii) 775 Warrants. Each
Warrant will entitle the holder to purchase one Common Share at an
exercise price of $1.29, for a period of 5 years following the
closing of the Offering.
The Debentures will bear interest at a rate of
12.0% per annum from the date of issue, payable on a quarterly
basis, and will be: (i) paid in-kind in Common Shares based on the
daily volume weighted average trading price for the 20 trading days
preceding the date of interest payment or (ii) in cash, at the
Company’s option. The Convertible Debentures will mature 5 years
from the closing of the Offering (the "Maturity
Date") and the principal amount of the Debenture will be
repaid in cash only.
The principal amount of each Convertible
Debenture will be convertible into Common Shares at the option of
the holder at a conversion price equal to $1.29. If the holder
elects to convert the Convertible Debentures, then the holder will
also receive an amount equal to the interest that the holder would
have received if the holder had held the Convertible Debentures
until the Maturity Date, payable in: (i) Common Shares based on the
daily volume weighted average trading price for the 20 trading days
preceding the date of such election; (ii) cash; or (iii) a
combination of cash and Common Shares, at the Company's option (the
“Make-Whole Provision”).
Each holder of Convertible Debentures may, at
their option, elect to exchange the aggregate principal amount of
such holder's Convertible Debentures for an equivalent aggregate
principal amount of 15.0% non-convertible secured notes expiring on
the Maturity Date (each, a "Secured Note") on a
one for one basis at any time prior to the Maturity Date (the
"Exchange Option"). Any accrued interest from the
date of exchanging the Convertible Debentures into Secured Notes
will be carried forward and be payable on the applicable interest
payment date, together with the interest accruing from the Secured
Notes beginning on the date of exchange.
The Convertible Debentures and Secured Notes
shall be secured by a security interest in the Company’s Stavely
facility (the “Stavely Facility”) and shall be
subordinate in priority and ranking to: (1) current senior
indebtedness ("Existing Indebtedness") of the
Company for amounts up to 70% Loan to Value against the Company’s
Stavely facility, including any additional credit extended pursuant
to Existing Indebtedness, or the assignment, assumption, transfer
or replacement of such Existing Indebtedness with any other form of
credit arrangement ("Alternative Indebtedness")
provided that: (A) the lender(s) in respect of such Alternative
Indebtedness is a chartered Canadian or U.S. bank or a credit union
formed under the Credit Union Act (Alberta) or similar legislation
in any other province of Canada; and (B) Existing Indebtedness is
paid out in full concurrent with the execution of a definitive
credit agreement in respect of Alternative Indebtedness under which
funds can be unconditionally drawn by the Company; and (2) any
capital equipment financing in respect of the HVAC, lighting and
other equipment at the Stavely Facility. The Convertible Debentures
and Secured Notes shall rank equally with the outstanding
convertible debentures of the Company issued in June 2020.
The Company has granted to the Agent an option
(the “Over-Allotment Option”) to increase the size
of the Offering by up to an additional number of Debenture Units,
and/or the components thereof, that in aggregate would be equal to
15% of the total number of Debenture Units (or the securities
underlying the Debenture Units) to be issued under the Offering, to
cover over-allotments, if any, and for market stabilization
purposes, exercisable at any time and from time to time up to 30
days following the closing of the Offering.
The net proceeds from the Offering are intended
to be used for additional processing and production equipment
purchases, facility upgrades and working capital and other
corporate purposes.
Upon a change of control of the Company, holders
of the Convertible Debentures and Secured Notes will have the right
to require the Company to repurchase their Convertible Debentures
and Secured Notes, in whole or in part, on the date that is 30 days
following the giving of notice of the change of control, at a price
equal to 104% of the principal amount of the Convertible Debentures
and Secured Notes then outstanding plus accrued and unpaid interest
thereon (the "Offer Price"). If 90% or more of the
principal amount of the Convertible Debentures and Secured Notes
outstanding on the date of notice of the change of control have
been tendered for redemption, the Company will have the right to
redeem all of the remaining Convertible Debentures and Secured
Notes at the Offer Price.
The Company will use commercially reasonable
efforts to obtain the necessary approvals to list the Convertible
Debentures, the Warrants and the Common Shares issuable upon
conversion of the Convertible Debentures and the exercise of the
Warrants and the compensation warrants to be issued to the Agent as
additional consideration for the services rendered in connection
with the Offering ("Compensation Warrants") on the
TSXV.
The closing of the Offering is expected to occur
on or about the week of April 11, 2022 and is subject to certain
conditions including, but not limited to, the execution of an
agency agreement and the receipt of all necessary regulatory
approvals, including the approval of the TSXV.
In connection with the Offering, the Company
intends to file a prospectus supplement (the
"Supplement") to the Company's short form base
shelf prospectus dated February 26, 2021 (the "Shelf
Prospectus"), with the securities regulatory authorities
in each of the provinces of Canada, except Quebec. Copies of the
Shelf Prospectus and, the Supplement to be filed in connection with
the Offering, can be found on SEDAR at www.sedar.com. The Shelf
Prospectus contains, and the Supplement will contain, important
detailed information about the Company and the Offering.
Prospective investors should read the Supplement and accompanying
Shelf Prospectus and the other documents the Company has filed on
SEDAR at www.sedar.com before making an investment
decision.
This press release is not an offer to sell or
the solicitation of an offer to buy the securities in the United
States or in any jurisdiction in which such offer, solicitation or
sale would be unlawful prior to qualification or registration under
the securities laws of such jurisdiction. The securities being
offered have not been, nor will they be, registered under the
United States Securities Act of 1933, as amended, and such
securities may not be offered or sold within the United States or
to, or for the account or benefit of, U.S. persons absent
registration or an applicable exemption from U.S. registration
requirements and applicable U.S. state securities laws.
CORPORATE UPDATE
The Company has entered a 6-month marketing and
consulting contract with Toronto based marketing firm, North
Equities Corp. (the "Contract"). North Equities
Corp. specializes in various social media platforms and will be
able to facilitate greater awareness and widespread dissemination
of the Company's news.
In connection with the Contract, the Company
will pay North Equities $100,000 CAD. North Equities currently owns
0 shares of the Company.
About Sugarbud
Sugarbud is a leading consumer-driven craft
cannabis company focused on the cultivation and production of
superior, select-batch, craft cannabis products. The Sugarbud Craft
Cannabis Collection offers consumers "Hand-Crafted Cannabis for a
New Era". The Company is proudly Albertan and is proud to share
Western Canada's long tradition of exceptional craft cannabis with
the most discerning of enthusiasts.
Sugarbud strives to define the intersection of
product craftsmanship, quality, and value for consumers in the
Canadian craft cannabis space. Our vision and mission are to become
a trusted and well-respected consumer brand renowned for providing
exceptional high-quality craft cannabis products to legal
markets.
We Take Pride.
We Take Our Time.
Experience The Difference.
Sugarbud Craft Cannabis products are currently
available to adult recreational consumers in the Yukon Territory,
British Columbia, Alberta, Saskatchewan, Manitoba, Ontario and
nationally to registered medical patients through MendoCannabis.ca.
Sugarbud products are also distributed in the Province of Quebec
through ROSE LifeScience.
CONTACTS:
John Kondrosky Chief Executive
Officer Sugarbud Craft Growers Corp. Phone: (604) 499-7847
E-mail: johnk@sugarbud.ca Investor
Relations Contact Chris Moulson Chief Financial Officer
Sugarbud Craft Growers Corp. Tel: (778) 388-8700 E-mail:
chrism@sugarbud.ca
Websites:
http://www.sugarbud.ca/
http://craftcannabiscollection.ca
Forward Looking and Cautionary Statements
This news release contains forward-looking
statements. More particularly, and without limitation, this news
release contains statements concerning: the Offering, including the
receipt, in a timely manner, of regulatory and other required
approvals and clearances, including the approval of the TSXV; the
number of Debenture Units to be sold; the maximum gross proceeds of
the Offering; the number of Debentures, Warrants and Compensation
Warrants to be issued by the Company; the payment of interest and
the principal amount, and the conversion or exercise of other
rights attached to the Debentures, the Warrants and the
Compensation Warrants; the listing of the Debentures, Warrants and
the Common Shares issuable upon conversion of the Debentures or the
exercise of the Warrants and Compensation Warrants on the TSXV; the
use of the net proceeds of the Offering; the Company's ability to
close the Offering; and the business plan of the Company,
generally. When used in this document, the words "will,"
"anticipate," "believe," "estimate," "expect," "intent," "may,"
"project," "should," and similar expressions are intended to be
among the statements that identify forward-looking statements. The
forward-looking statements are founded on the basis of expectations
and assumptions made by Sugarbud. Forward-looking statements are
subject to a wide range of risks and uncertainties, and although
Sugarbud believes that the expectations represented by such
forward-looking statements are reasonable, there can be no
assurance that such expectations will be realized. Any number of
important factors could cause actual results to differ materially
from those in the forward-looking statements including, but not
limited to: currently contemplated expansion and development plans
may cease or otherwise change; production of cannabis may be lower
than expected; ability to ship cannabis products may be lower than
expected; demand for Sugarbud's products may be lower than
anticipated; results of production and sale activities; results of
scientific research; changes in prices and costs of inputs; demand
for labour; demand for products; failure of counter-parties to
perform contractual obligations; failure to maintain consumer brand
recognition and loyalty of customers; reliance on relationships
with wholesalers and retailers for distribution of products and
failure to maintain strategic business relationships; intense
competition, including from illicit sources; uncertainty and
continued evolution of markets; product liability litigation;
reliance on information technology; infringement on intellectual
property; failure to benefit from partnerships; sensitivity of
end-customers to increased sales taxes and economic conditions;
failure to comply with certain regulations; departure of key
management personnel or inability to attract and retain talent;
actions and initiatives of federal and provincial governments and
changes to government actions, initiatives and policies and the
execution and impact thereof; the ability to implement corporate
strategies; the state of domestic capital markets; the ability to
obtain financing; changes in general market conditions; industry
conditions and events; the size of the medical marijuana market and
the recreational marijuana market; government regulations,
including future legislative and regulatory developments involving
medical and recreational marijuana; construction delays; risks
inherent in the agricultural business, such as insects, plant
diseases and similar agricultural risks which can have a
significant impact on the size and quality of the harvest of
cannabis crops; competition from other industry participants; and
other factors more fully described from time to time in the reports
and filings made by Sugarbud with securities regulatory
authorities. In addition, the Company cautions that current global
uncertainty with respect to the spread of the COVID-19 virus, and
variant strains of the virus, and its effect on the broader global
economy may continue to have a significant negative effect on the
Company. While the precise impact of the COVID-19 virus on the
Company remain unknown, rapid spread of the COVID-19 virus may
continue to have a material adverse effect on global economic
activity, and can result in volatility and disruption to global
supply chains, operations, mobility of people and the financial
markets, which could affect interest rates, credit ratings, credit
risk, inflation, business, financial conditions, results of
operations and other factors relevant to the Company. Please
refer to Sugarbud's most recent annual information form and
management's discussion and analysis for additional risk factors
relating to Sugarbud, which can be accessed under Sugarbud's
profile on www.sedar.com. Except as
required by applicable laws, Sugarbud does not undertake any
obligation to publicly update or revise any forward-looking
statements.
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
release.
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