Aurora Cannabis to Issue Return of Capital to Shareholders via Spin-Out of U.S. Assets
Aurora Cannabis to Issue Return of Capital to Shareholders via Spin-Out of U.S. Assets |
[20-June-2018] |
/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR RELEASE, PUBLICATION, DISTRIBUTION OR DISSEMINATION DIRECTLY, OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES/ New Spin-Off Company Australis Capital Applying for CSE Listing TSX: ACB EDMONTON, June 20, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora" or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) announced today that it intends to distribute units consisting of shares and warrants of its subsidiary, Australis Capital Inc. ("Australis"), to shareholders of the Company by way of a return of capital. Capital distribution of Australis shares to Aurora shareholders The spin-out of Australis will happen in the form of a distribution of units (the "Units") in Australis Capital to resident holders of Aurora shares (the "Distribution"). Non-resident holders will receive cash instead of units pursuant to the spin-out, as explained below. The Distribution will be paid on the basis of one Unit for every 20 Aurora shares outstanding on the record date, to be fixed by the board of directors of Aurora. Each Unit will consist of one common share ("Share") and one Share purchase warrant ("Warrant") of Australis. Each Warrant will entitle the holder thereof to acquire one Share at an exercise price of $0.25 per Australis share, on or prior to 4:00 p.m. (Eastern Time) on the date that is one year from the date of the Distribution. Aurora shareholders are not required to pay for the Units they receive by way of the Distribution, to tender or surrender their Aurora shares, or to take any other action in connection with the Distribution, other than providing a declaration of residency. Australis has filed a preliminary prospectus in all provinces and territories of Canada, except for Quebec in respect of the Distribution, which is available on SEDAR under Australis' profile (www.sedar.com). Australis intends to file a preliminary prospectus in Quebec shortly, upon completion of translation of the preliminary prospectus into French. Spin-out to Non-resident Holders As described in further detail in the preliminary prospectus, no Shares will be issued to shareholders who are (or are deemed to be) non-residents of Canada. Rather, such Shares will be delivered to a custodian for sale in the open market following the Distribution, and the net cash proceeds will be delivered to non-resident shareholders, net of any withholding taxes. Shareholders who fail to provide a declaration of Canadian residency in the form that will be provided will be deemed to be a non-resident for these purposes. Canadian shareholders who hold their shares in Aurora through a brokerage or other account are therefore urged to contact their brokers to avoid being deemed a non-resident. CSE Listing Australis is applying to list its Shares and Warrants on the Canadian Securities Exchange (the "CSE"). Listing will be subject to Australis fulfilling all of the listing requirements of the CSE. Australis Capital Australis is an investment company that intends to acquire ownership interests in a variety of opportunities and asset classes, primarily in the cannabis and real estate sectors in the United States. The Australis Board, Management and Investment Advisory Committee have material experience with, and knowledge of, the cannabis space in the U.S., and are anticipated to execute on high-quality investments. The U.S. Cannabis Market While 29 states have legalized medical cannabis and 9 states plus the District of Columbia have proceeded with consumer legalization, cannabis remains a Schedule I controlled substance at the federal level in the United States. Consequently, the U.S. cannabis market is very fragmented in nature and includes many high-quality operations and technology innovators with limited access to capital. This has created a compelling opportunity for well-connected and capitalized companies to invest in U.S. assets, especially considering anticipated market growth, with over 50% of the U.S. population currently living in states with legal access. Recent changes in U.S. federal positioning with respect to cannabis have positively impacted the perception of risk to invest in U.S. cannabis assets. This has further incentivized capital market participants to seek opportunities to fund U.S. based operations. Entering the U.S. market now, in compliance with regulatory requirements, represents a risk/reward balance that is attractive to a well-connected and funded operators. Assets Aurora has completed a series of intercorporate transactions in connection with the proposed Distribution, resulting in the Company holding a direct interest in 100% of the issued and outstanding common Shares and Warrants of Australis, and Australis holding the following investments:
Furthermore, Australis intends to raise $15 million through a non-brokered private placement (see below for details), so that the company will be well-capitalized to act on opportunities. Funding Agreement and Restricted Back-in Right Aurora and Australis entered into the Funding Agreement on June 14, 2018 pursuant to which Aurora will advance $500,000 to Australis, in consideration for which Australis will issue to Aurora: (a) a warrant to purchase a number of Shares equal to 20% of the issued and outstanding Shares as of the date on which the Shares commence trading on the CSE, which will be exercisable for a period of ten years from the date of issue at an exercise price of $0.20 per Share, and (b) a warrant to purchase a number of Shares equal to 20% of the number of Shares issued and outstanding as of the date of exercise, which will be exercisable for a period of ten years from the date of issue at an exercise price equal to the five day volume weighted average trading price of the Shares on the CSE or such other stock exchange on which the Shares may then be listed at the time of exercise, or if the Shares are not then listed on a stock exchange at the fair market value of the Shares at the time of exercise (collectively, the "Restricted Back-in Right"). Aurora will be prohibited from exercising the Restricted Back-in Right unless all of Australis' business operations in the United States are allowed under applicable federal and state laws and Aurora has received the consent of the Toronto Stock Exchange and any other stock exchange on which Aurora may be listed, as required. Management Commentary "The proposed distribution of Australis shares and warrants delivers an immediate return to Aurora shareholders, and creates the opportunity for holders to benefit financially as Australis executes on its investment strategy in the U.S.," said Terry Booth, CEO of Aurora. "The fragmented U.S. cannabis market has many innovative and successful operators that struggle to access growth capital. This creates exciting and attractively priced opportunities for the well-connected and knowledgeable team at Australis to capitalize on. Although fragmented, many U.S. cannabis companies have done an excellent job in creating brand value and have developed high-quality, differentiated products with potential for geographic expansion. While regulatory requirements vary greatly from state to state, Australis are well prepared to navigate this landscape, secure opportunities, and pursue growth." Board and Management Australis' Board, Management team and Investment Advisory Committee have considerable financial, M&A and cannabis industry experience, and consist of the following people: Executive Officers Scott Dowty, CEO and Director Campbell Birge, CFO Directors Arlene Dickinson, Director Roger Swainson, Director\ John Dover, Director Investment Advisory Committee Desmond Balakrishnan Graham Saunders Neil Belot Private Placement Prior to the completion of the Distribution, Australis intends to complete a non-brokered private placement (the "Private Placement") with arm's length purchasers. Australis intends issue up to 75,000,000 Shares at an offering price of $0.20 per Share for gross proceeds of $15 million. The Shares issued pursuant to the Private Placement will be subject to a statutory four-month hold period, as applicable. Funds will be used to execute on Australis' investment strategy. Certain Aurora insiders, including Directors and Officers intend to participate in the private placement, and consequently will become shareholders of Australis. No insiders of Aurora will become insiders of Australis. This news release does not constitute an offer to sell or the solicitation of an offer to buy securities in any jurisdiction. The Australis Shares to be distributed have not been approved or disapproved by any Canadian or U.S. regulatory authority nor has any such authority passed upon the accuracy or adequacy of the preliminary prospectus. About Aurora Headquartered in Edmonton, Alberta, with funded capacity in excess of 430,000 kg per year and operations across Canada and in Europe, Aurora is one of the world's largest cannabis companies. The Company is vertically integrated and horizontally diversified across every key segment of the value chain, from facility design and engineering, to cannabis breeding and genetics research, cannabis and hemp production, extraction and high value-add product development, home cultivation and wholesale and retail distribution. Highly differentiated from its peers, Aurora has established a uniquely advanced, consistent and efficient production strategy, based on purpose-built facilities that integrate leading-edge technologies across all processes. Intended to be replicable and scalable globally, these production facilities are designed to produce cannabis on a massive scale, with high flower quality, industry-leading yields, and ultra-low per gram production costs. Each of the Company's facilities is built to meet European Union (EU) GMP standards, and both its first production facility and its wholly owned European medical cannabis distributor Pedanios have achieved that level of certification. In addition to its rapid organic growth and strategic M&A, which to date includes nine companies acquired, Aurora is distinguished by its reputation as a partner of choice in the cannabis sector, having invested in and established strategic partnerships with a range of leading innovators, including: The Green Organic Dutchman Holdings Ltd. (TSX: TGOD), Radient Technologies Inc. (TSXV: RTI), Hempco Food and Fiber Inc. (TSXV: HEMP), Cann Group Ltd. (ASX: CAN), Micron Waste Technologies Inc. (CSE: MWM), Choom Holdings Inc. (CSE: CHOO), Namaste Technologies Inc. (TSXV: N), and Alcanna Inc. (TSX: CLIQ). Aurora's Common Shares trade on the TSX under the symbol "ACB", and are a constituent of the S&P/TSX Composite Index. For more information about Aurora, please visit our investor website investor.auroramj.com. Forward looking statements This news release includes statements containing certain "forward-looking information" within the meaning of applicable securities law ("forward-looking statements"). Forward-looking statements are frequently characterized by words such as "plan", "continue", "expect", "project", "intend", "believe", "anticipate", "estimate", "may", "will", "potential", "proposed" and other similar words, or statements that certain events or conditions "may" or "will" occur and include, but are not limited to: statements in respect of the timing and details of the Distribution, the financial prospects of Australis, the listing of Australis Shares and Warrants on the CSE, the terms of the Restricted Back-in Right and the proposed Private Placement. These statements are only predictions. Various assumptions were used in drawing the conclusions or making the projections contained in the forward-looking statements throughout this news release. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. Investors should refer to the preliminary prospectus filed by Australis in connection with the Distribution for more information, in particular the risk factors described therein under the heading "Risk Factors". The Company is under no obligation, and expressly 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 expressly required by applicable law. Neither TSX nor its Regulation Services Provider (as that term is defined in the policies of Toronto Stock Exchange) accepts responsibility for the adequacy or accuracy of this release. Terry Booth, CEO SOURCE Aurora Cannabis Inc. | ||
Company Codes: OTC-QB:ACBFF, Toronto:ACB, OTC-PINK:ACBFF |
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