Choom Holdings (CHOO-Cse) ™ Signs Definitive Agreement to Acquire Clarity Cannabis Retail Stores in Alberta
Feb 27, '19 - NR
Choom Holdings ™ an emerging adult use cannabis company that has secured one of the largest national retail networks in Canada, is pleased to announce has entered a definitive agreement ("Purchase Agreement") with Clarity Cannabis MD Holdings ("Clarity") and its shareholders, to acquire 30 retail locations, three of which are licensed with the Alberta Gaming, Liquor & Cannabis Commission ("AGLC"). Clarity has successfully progressed through AGLC licensing and is operating the following three stores in the legal adult use cannabis market in Alberta and is awaiting licences for the following seven cannabis retail stores.
CANNABIS RETAIL STORES OPENED
High River, AB
Cold Lake, AB
Red Deer, AB
CANNABIS RETAIL STORES COMPLETED
• Cold Lake #2, AB – awaiting licensing
| • Westlock, AB – awaiting licensing
| • Lloydminster, AB – awaiting licensing
| • Camrose, AB – awaiting licensing
| • Drumheller, AB – awaiting licensing
| • Camrose #2, AB – awaiting licensing
| • Brooks, AB – awaiting licensing
| • Lethbridge, AB – awaiting licensing
| • Medicine Hat, AB – awaiting licensing
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In addition to the three licensed cannabis retail stores, the acquisition includes all 30 leases secured and applications submitted to the AGLC by Clarity. Clarity currently has 11 development permits awaiting construction, with 6 stores to commence construction, and 9 stores completed construction.
Choom expects the licenses for the remaining completed stores to be granted soon after the AGLC starts to grant additional retail licenses. Upon approval from the AGLC, all of the Clarity retail stores and retail opportunities will be re-branded under the "Choom Cannabis Co." name. The completion of the acquisitions of the retail stores and retail opportunities will be dependent on the timing of the receipt of all necessary provincial and municipal approvals. The Purchase Agreement has been structured to permit Choom to acquire Clarity itself or all of the thirty retail stores and retail opportunities on a location-by-location basis, to provide flexibility to obtain timely receipt of necessary provincial and municipal approvals on a location-by-location basis or through the acquisition of Clarity itself.
"We are thrilled to welcome Clarity into the Choom brands portfolio through this acquisition," states Chris Bogart, President & CEO of Choom. "Clarity has been successfully operating in Alberta since December and has submitted applications across the province. This transaction gives us a strong foothold in the Alberta retail landscape. Moving forward we will be working diligently to maximize our retail footprint Canada wide, and this transaction helps us to achieve that goal."
Purchase Terms
Pursuant to the Purchase Agreement, among other things, Choom will
pay $2,000,000 to the principal shareholder of Clarity (the "Principal") and issue 6,000,000 Choom Shares to all of the shareholders of Clarity, subject to escrow release over two years;
pay $500,000 to the Principal and issue 2,500,000 Choom Shares to all of the shareholders of Clarity, subject to escrow release over two years, once Choom acquires Clarity or acquires one of the Clarity retail stores; and
issue 2,500,000 Choom Shares to all of the shareholders of Clarity, subject to escrow release over two years, once the AGLC approves Choom to either acquire one of the Clarity retail stores or to operate any cannabis retail store in Alberta.Choom will issue 8,867,000 Choom Shares and pay $2.5 million to the Principal in connection with the acquisition. As the Principal is also a director of Choom, the acquisition constitutes a related party transaction within the meaning of Multilateral Instrument 61-101 ("MI 61-101"), however, the transaction will be exempt from the formal valuation and minority shareholder approval requirements of MI 61-101 as the fair market value of the consideration and the transaction will not exceed 25% of the Company's market capitalization. A material change report in relation to this transaction will be filed less than 21 days before the issue of the majority of the Choom Shares and cash consideration in accordance with the terms of the Purchase Agreement but at least 21 days prior to closing.
SAY HELLO TO CHOOMTM
Choom™ is an emerging adult use cannabis company that has secured one of the largest retail networks in Canada. The Choom brand is inspired by Hawaii's "Choom Gang"—a group of buddies in Honolulu during the 1970's who loved to smoke weed—or as the locals called it, "Choom". Evoking the spirit of the original Choom Gang, our brand caters to the Canadian adult use market with the ethos of cultivating 'Good Times with Good Friends'. Choom™ is focused on delivering an elevated customer experience through our curated retail environments, offering a diversity of brands for Canadians across a national retail network.
"Chris Bogart"
President & CEO |
