Delta West scheduled to open in summer of 2019 and will be a world-class cannabis research, extraction and production facility
CALGARY, Jan. 28, 2019 /CNW/ - Westleaf Inc. (TSX-V: WL) ("Westleaf"), is pleased to announce it has signed a definitive agreement ("Definitive Agreement") to acquire Delta 9 Cannabis Inc.'s (TSXV: NINE) ("Delta 9") 50% interest in the Delta West extraction facility, bringing Westleaf's total ownership to 100%. Under the Definitive Agreement, Westleaf has agreed to issue an aggregate of 5,600,000 common shares in the capital of Westleaf ("Common Shares") in consideration for the acquisition of Delta 9's 50% interest in the project (the "Purchase Price"). Closing is expected to occur on or about January 31, 2019 ("Closing").
The Delta West facility is approximately 60,000 square feet with Phase I (~15,000 sq. ft.) to include R&D, processing, extraction, manufacturing and order fulfillment, all built to EU GMP specifications with the intent to access international export markets. Phase II of the facility is designed to produce new derivative product lines in preparation of Health Canada's legalization of derivative products, expected to occur on October 17, 2019. The Delta West facility is scheduled to open in the summer of 2019.
"This transaction is another step in the direction of becoming a significant vertically integrated player in the Canadian cannabis industry," said Scott Hurd, President and CEO of Westleaf. "It is our view that over time, a diversified offering of derivative cannabis products will account for the majority of consumer demand. We are positioning to formulate unique, high quality derivative products and leverage our expertise in building and running these types of facilities." Hurd refers to the senior management team at Westleaf who have combined, designed, built and operated multiple cultivation and extraction facilities in Canada and in U.S. where medicinal or recreational cannabis has been legalized.
- Focus on Derivative Products – Upon legalization of the broader set of derivative cannabis products, Westleaf believes a diversified offering of derivative cannabis products will account for the majority of consumer demand. Westleaf is focused on differentiated product formulations to produce vape cartridges, edibles, beverages, and topicals to meet this expected demand.
- Demonstrated Focus on Accretive Consolidation – The transaction reinforces Westleaf's focus on consolidation in the various verticals of the cannabis industry. The cannabis market is highly fragmented and Westleaf continues to actively evaluate additional accretive merger and acquisition opportunities.
- Truly Vertically Integrated Company – Westleaf is one of the few truly vertically integrated companies in the Canadian cannabis industry, with assets owned and under development across each vertical of the business, including cultivation, extraction, processing & manufacturing, distribution and wholly owned retail. Westleaf believes that being vertically integrated provides significant optionality and defensively positions the company to protect margins across the life cycle of the industry.
Under the Definitive Agreement, Westleaf will purchase Delta 9's 50% interest in the Delta West Limited Partnership (the "Partnership"), which owns the Delta West extraction facility, bringing Westleaf's total ownership of the Partnership to 100%. The Purchase Price is payable by way of the issuance of an aggregate of 5,600,000 Common Shares which, based on the closing price of the Common Shares on the TSX Venture Exchange ("TSXV") of $2.67 per Common Share on January 25, 2019, represents an approximately $14.95 million. It is a condition to Closing that, Delta 9 enter into a voluntary escrow agreement, that in addition to the four month restricted period required by law, will restrict the transfer of the Common Shares issuable under the Definitive Agreement as to: (i) 1,000,000 Common Shares for a four (4) month period following Closing; and (ii) 4,600,000 Common Shares for an eight (8) month hold period for Closing. Closing is expected to occur on or about January 31, 2019.
Completion of the transaction is subject to certain conditions and the receipt of all required regulatory and third party approvals, including the approval of the TSXV.
About Westleaf Inc.
Westleaf is a vertically integrated cannabis company focused on innovative retail experiences and engaging cannabis brands as well as cultivation, production and extraction of cannabis products. Westleaf is rolling out a national retail footprint for its retail concept Prairie Records, with stores planned for British Columbia, Alberta, Saskatchewan and potentially Ontario. The retail concept leverages the instinctual tie between recreational cannabis and music and redefines the cannabis purchasing experience. The Company also has two significant production facilities under construction and scheduled for completion in 2019. For more information, please visit www.westleaf.com or www.prairierecords.ca.
Neither 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
This news release contains "forward-looking information" and "forward-looking statements" (collectively, "forward-looking statements") within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as "expects", or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "budget", "scheduled", "forecasts", "estimates", "believes" or "intends" or variations of such words and phrases or stating that certain actions, events or results "may" or "could", "would", "might" or "will" be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements. This news release, forward-looking statements relate, among other things, to: (i) the development of the Delta West facility, the quality of the facility and the expected opening date thereof; (ii) the legalization of derivative products and the resulting market therefor; (iii) the occurrence of Closing and the expected timing thereof; and (iv) the business and operations of Westleaf. 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; and the delay or failure to receive board, shareholder, court or regulatory approvals. 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 the forward-looking statements and information contained in this news release. Except as required by law, Westleaf assume no obligation to update the forward-looking statements of beliefs, opinions, projections, or other factors, should they change, except as required by law.
SOURCE Westleaf Inc.
For further information: Bruce Leslie, VP Corporate Communications, [email protected], 403-801-7612