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KELOWNA, BC, July 11, 2018 /CNW/ - GTEC Holdings Ltd. (TSXV: GTEC) ("GTEC" or the "Company") is pleased to announce that on July 10th, 2018 it entered into an exclusive binding letter of intent ("LOI") with F-20 Developments Corp. ("F-20") to develop a 240,000 sq. ft. indoor cultivation facility located in Vernon, British Columbia.
F-20, a privately held corporation whose principals have been involved in the financing and construction of licensed cultivation facilities in Canada and the U.S, has secured a property (the "Property") with an existing 60,000 sq. ft. building that will be retrofitted as part of the first phase of construction to allow for the cultivation of cannabis ("Phase 1"). A second phase of the project will see the construction of a secondary purpose-built building to be 180,000 sq ft. in size. Phase 1 construction is expected to commence immediately upon the parties finalizing the definitive and ancillary agreements, and upon GTEC and F-20 incorporating a new company ("NewCo").
F-20 has committed to fund the large majority of the Phase 1 project costs up to $9,000,000, with GTEC committing to fund the final $1 million towards the estimated $10 million budget to complete Phase 1. As consideration for F-20 entering into this arrangement, upon execution of the definitive agreements, GTEC shall issue to F-20 common shares (the "Consideration Shares") equivalent to $2.5M at a deemed price equal to the 10-day volume-weighted average trading price of such shares, where the Consideration Shares are subject to performance milestones related to the construction of Phase 1. GTEC will have an option to acquire all of F-20's issued and outstanding shares of NewCo at a pre-determined valuation metric based on annual production capacity. NewCo will also have an option to purchase the Property at its fair market value pursuant to the terms of its lease subject to a predetermined floor and ceiling price.
F-20 will be the project manager and be responsible for the Project's Phase 1 construction and building retrofit, supported with oversight and guidance from GTEC's operations and regulatory team.
"This project with F-20 further increases our production capacity in BC, which positions the Company one step closer to realizing our objectives." said Norton Singhavon, Chairman and CEO of GTEC Holdings. "The Property is ideally located to maximize synergies with GTEC's existing production and laboratory facilities. The ability to utilize F-20's financial capacity and construction expertise will allow for GTEC to maintain focus on building and operating our existing facilities, while leveraging our expertise to further foster the Company's growth strategy."
Closing will be subject to a number of conditions including completion of due diligence by GTEC, execution by NewCo of a lease for the Property, a Shareholders' Agreement for NewCo, and an Initial Supply Agreement between NewCo and GTEC and/or its subsidiaries, as applicable, as well as GTEC Board of Directors' and regulatory approval.
GTEC was founded in 2017 to capitalize on opportunities in the nascent and rapidly growing legal cannabis industry. GTEC is a public corporation listed on the TSX Venture Exchange and based in Kelowna, British Columbia. GTEC is focused on growing premium quality craft cannabis in purpose-built indoor facilities. GTEC currently holds a 100% interest in GreenTec Bio-Pharmaceuticals Corp., Grey Bruce Farms Inc., Zenalytic Laboratories Ltd., Falcon Ridge Naturals Ltd., Alberta Craft Cannabis Inc., and Tumbleweed Farms Corp.
To view more about the company or to request our most recent corporate presentation, please visit our website at www.gtec.co.
On behalf of the board,
Norton Singhavon Founder, Chairman & CEO 778-760-8288
Michael Blady Co-Founder & Vice President
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 release.
The securities of the Company have not been and will not be registered under the United States Securities Act of 1933, as amended and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirement. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION: This news release includes certain "forward-looking statements" under applicable Canadian securities legislation. Forward-looking statements include, but are not limited to, statements regarding the ability of F-20 and the Company complete Phase 1 and Phase 2 and their respected funding requirements, successful completion of the acquisition and the ability of the Company and F-20 to meet all the conditions precedent to the transaction and the ability of GTEC to become a leading craft cannabis company in Canada. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the 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, competitive, political and social uncertainties; delay or failure to receive board, shareholder or regulatory approvals, where applicable and the state of the capital markets. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Company 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.