MONTREAL, Oct. 31, 2017 /CNW Telbec/ - LGC Capital Ltd. (TSXV: LG) ("LGC") is pleased to announce that it has signed an option with Quebec based Tricho-Med Corporation, doing business as AAA Trichomes (AAA Trichomes) to acquire a 49% interest (plus a 5% royalty) in a new cannabis processing facility to be built in the Province of Quebec.
Subject to permitting, the AAA Trichomes processing facility will be one of the first enclosed multi-level medical cannabis producers in Quebec. Trichomes is scheduled to start operations in 2019 with an initial annual production rate of over 2,500 kilograms reaching a planned production rate of over 20,000 kilograms by 2021.
"This is LGC's first deal directly in the Canadian cannabis sector and hopefully the first of a number of Canadian deals the Company is looking at taking a strategic investment." Commented John McMullen, LGC Capital's CEO. "This deal is on the back of our recent investment in Little Green Pharma, one of Australia's fully licensed and permitted medical cannabis companies that is moving rapidly towards planting its first commercial crop (/or - has just planted its first commercial crop). We are also progressing well with our due diligence process on our potential investment in South Africa's House of Hemp, having now completed 3 months of the due diligence on this exciting business."
Under the terms of the exclusive option agreement, LGC plans to fund the building of the facility by way of a $4 million fully secured convertible debenture bearing interest at the rate of 10% per annum. Upon the facility being approved for cannabis cultivation and production, the debenture will automatically be converted to a 49% holding in the issued common share capital of Trichomes as well as a 5% royalty on all net sales of cannabis products.
AAA Trichomes was incorporated in 2014 with the objective of becoming a manufacturer and distributor of cannabis products in Canada with an initial focus on Quebec market. Since November 2016, AAA Trichomes has been in the final review stage with Health Canada for the processing of its application to become a licensed producer under the Access to Cannabis for Medical Purposes Regulations.
The critical path in this transaction calls for due diligence to be completed by November 15th with a closing on an initial funding of $2 Million to take place on November 24th of this year. Conditions precedent to closing include, inter alia, execution and delivery of all definitive agreements relating to the convertible debentures, the net sales royalty and registration of securities against the assets of the Borrower. LGC plans to fund this investment over the construction period from current cash reserves and from Institutional debt.
Closing is also conditional upon LGC having obtained all requisite regulatory and TSX Venture Exchange approvals.
About LGC (www.lgc-capital.com):
LGC Capital Ltd. is a Canadian incorporated public company listed on the TSX Venture Exchange (TSXV: LG). LGC's objective is to become a diversified business group with core business divisions that provide shareholders with exposure to a diverse range of businesses, products and services.
This press release may contain forward-looking statements with respect to LGC Capital Ltd. ("LGC"), its investment in AAA Trichomes Inc., and LGC's operations, strategy, investments, financial performance and condition. These statements generally can be identified by use of forward-looking words such as "may", "will", "expect", "estimate", "anticipate", "intends", "believe" or "continue" or the negative thereof or similar variations. The actual results and performance of LGC, including its proposed investment in AAA Trichomes Inc., could differ materially from those expressed or implied by such statements. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Some important factors that could cause actual results to differ materially from expectations include, among other things, general economic and market factors, competition, government regulation and the factors described under "Risk Factors and Risk Management" in LGC's Management's Discussion and Analysis for the fiscal year ended September 30, 2016, as filed on SEDAR (www.sedar.com). The cautionary statements qualify all forward-looking statements attributable to LGC and persons acting on its behalf. Unless otherwise stated, all forward-looking statements speak only as of the date of this press release and LGC has no obligation to update such statements, except to the extent required by applicable securities laws.
Information Relating to AAA Trichomes Inc.:
All information contained in this press release relating to AAA Trichomes Inc. has been provided to LGC by AAA Trichomes Inc.. LGC has relied upon this information without having made independent inquiries as to its accuracy or completeness and assumes no responsibility for any inaccuracy or incompleteness of such information.
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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.
SOURCE LGC Capital Ltd
For further information: Company & Media Contacts, Canada contact: John McMullen, Chief Executive Officer, Tel.: (416) 803-0698, Email: John@lgc-capital.com; London contact: Anthony Samaha, Chief Financial Officer, Tel.: +44 (0) 20 7440 0640; Investor Relations contact: Dave Burwell, The Howard Group Inc., Tel.: (403) 221-9015, Toll Free: 1-888-221-0915, Email: email@example.com