High Hampton Announces Closing of $5.6 Million Financing Related to Acquisition of Coachellagro Corp.
High Hampton Holdings Corp. (CSE: HC) (“High Hampton” or the “Company“) is pleased to announce that it has closed its previously announced private placement (the “Offering“), disclosed in news releases of the Company dated February 6, 2017, and April 18, 2017, the Company issued 11,271,000 subscription receipts (the “Subscription Receipts“) at a price of $0.50 per Subscription Receipt (the “Purchase Price“) for aggregate gross proceeds of $5,635,500. The Offering was completed in connection with the previously announced acquisition by the Company from Coachellagro Corp. (“Coachellagro“) of 100% of the issued and outstanding shares of Coachellagro (the “Acquisition“).
Pursuant to an agency agreement dated May 31, 2017, among First Republic Capital Corporation (the “Agent”), Coachellagro, and the Company (the “Agency Agreement“), the Agent agreed to act as lead agent to the Company to arrange for the sale of up to 8,471,000 Subscription Receipts for aggregate gross proceeds of up to $5,635,500 on a “commercially reasonable efforts” private placement basis. In addition, the Company completed a non-brokered portion for an additional 2,746,000 Subscription Receipts.
The gross proceeds of the Offering less 100% of the Agent’s fees and certain expenses of the Agent, 50% of the fees of agents who compose the Agent’s selling group (the “Selling Agents”), and 50% of the fees of eligible finders in connection with the non-brokered portion of the Offering (the “Finders”), have been paid to such recipients with the remainder (the “Escrowed Funds“) having been delivered into escrow on behalf of the purchasers of Subscription Receipts, to be held by a third party subscription receipt agent, Garfinkle Biderman LLP (the “Subscription Receipt Agent“) from the date hereof until the date on which the Escrow Release Conditions (as defined herein) are satisfied (the “Escrow Release Date“) pursuant to a subscription receipt agreement dated May 31, 2017 among the Subscription Receipt Agent, the Company and the Agent (the “Subscription Receipt Agreement“).
Pursuant to the Subscription Receipt Agreement, each Subscription Receipt shall be automatically exchanged, without any further action by the holder thereof and for no additional consideration, for one unit (a “Unit“) of the Company, upon the satisfaction of the Escrow Release Conditions. Each Unit shall consist of one common share in the capital of the Company (a “Unit Share“) and one- half of one common share purchase warrant (each whole warrant, a “Warrant“). Each Warrant entitles the holder thereof to acquire one common share (a “Warrant Share“, and together with the Units, Unit Shares, and Warrants, the “Underlying Securities“) for an exercise price of $0.75 per Warrant Share for a period of 24 months from the issuance of such Warrant.
For their services in connection with the Offering, the Agent received a cash commission (the “Agent’s Commission“), paid out of the gross proceeds of the Offering, equal to 7% of the aggregate gross proceeds of the brokered portion of the Offering, 100% of which was paid to the Agent on closing, and 50% of which was paid to the Selling Agents. The Finders received a cash commission of 9% of the aggregate gross proceeds of the non-brokered portion of the Offering, 50% of which was paid to the Finders on closing. The balance of the such fees to Selling Agents and Finders has been deposited into escrow with the Subscription Receipt Agent and shall be payable by the Company to the Agents upon the satisfaction of the Escrow Release Conditions (as hereinafter defined). Additionally, the Agent and the Selling Agents were granted compensation warrants (“Compensation Warrants”) equal to 7% of the total number of Subscription Receipts sold under the brokered portion of the Offering, equal to 629,680 Compensation Warrants, and the Finders were granted Compensation Warrants equal to 9% of the total number of Subscription Receipts sold under the non-brokered portion of the Offering, equal to 236,000 Compensation Warrants, that will entitle the holder thereof to acquire that number of Common Shares pursuant to the Offering at an exercise price of $0.50 per Common Share at any time on or prior to the date that is 24 months from the Escrow Release Date. Additionally, the Agent was issued a corporate finance fee equal to 1% of the gross proceeds of the brokered portion of the Offering and corporate finance Compensation Warrants equal to 1% of the Subscription Receipts sold pursuant to the brokered portion of the Offering.
The following are conditions precedent (the “Escrow Release Conditions“) to the conversion of the Subscription Receipts: (i) the completion of the Acquisition; (ii) receipt of all necessary regulatory and shareholder approvals for the Acquisition; (iii) the receipt of all other approvals for the Acquisition including approval of the Canadian Securities Exchange (“CSE“); (iv) the consolidation of the common shares of the Company on the basis of 1 new share for each 5 common shares outstanding having been made effective (the “Consolidation“); (v) there being no material breach or material default by either the Company or Coachellagro with respect to the Subscription Receipt Agreement; and (vi) there not being discovered any previously undisclosed material fact relating to either the Company or Coachellagro which, in the opinion of the Agent, would reasonable be expected to have a material adverse effect on the Company or upon completion of the Acquisition.
Pursuant to the Subscription Release Agreement, the Escrow Release Conditions are to be satisfied on or before 5:00 p.m. (Toronto time) on June 30, 2017 (the “Escrow Deadline”).The Agent has been granted a right to extend the Escrow Deadline to August 31, 2017, and has in the Subscription Receipt Agreement covenanted to the Company to provide such extension.If the Escrow Release Conditions are not satisfied on or before the Escrow Deadline, as extended, or if the Company, before the Escrow Deadline, provides notice to the Agent and the Subscription Receipt Agent that the Acquisition has been terminated (each event being a “Termination Event”), then on the date of the Termination Event (or as soon as practicable thereafter): (i) the Subscription Receipts shall be automatically cancelled without any further action or formality; and (ii) the Subscription Receipt Agent shall distribute the Escrowed Funds, less the balance of the Agent’s expenses together with any interest earned thereon (less withholding tax, if applicable) to the holders of the Subscription Receipts on a pro-rata basis. To the extent that the amounts distributed to holders of Subscription Receipts in accordance with this paragraph are insufficient to refund to the holders of Subscription Receipts an amount equal to the full Issue Price for each Subscription Receipt, the Company shall contribute such amount as is necessary to satisfy any shortfall (the “Escrow Shortfall”).
The Acquisition is subject to a number of conditions precedent, including CSE approval.
All securities issued pursuant to the Offering, including the Underlying Securities, will be subject to a four month and one day hold from the date of issuance of the Subscription Receipts.
The Company will use the net proceeds of the Offering to complete the Acquisition and for general working capital purposes of the resulting issuer.
Unless otherwise expressed, all references herein to securities issuable in the Offering and corresponding subscription prices are made on a post-Consolidation basis.
Notice to Subscription Receiptholders
The Company wishes to notify all Subscription Receiptholders of the delivery of personal information to all applicable securities regulatory authorities in relation to filings that Company is obligated to make in connection with the completion of the Offering under applicable securities laws. The information is being collected by the securities regulatory authorities under the authority granted in applicable securities laws for the purposes of administration and enforcement of such securities laws.
The Company further wishes to provide to the Subscription Receiptholders the contact information of the public official in each applicable Canadian jurisdiction in which securities of the Company have been sold in connection with the Offering, who can answer questions about this indirect collection of personal information.
On behalf of the Board of Directors
High Hampton Holdings Corp.
Certain statements contained in this press release constitute forward-looking information. These statements relate to future events or future performance. The use of any of the words “could”, “intend”, “expect”, “believe”, “will”, “projected”, “estimated” and similar expressions and statements relating to matters that are not historical facts are intended to identify forward-looking information and are based on the Company’s current belief or assumptions as to the outcome and timing of such future events. Actual future results may differ materially. In particular, this release contains forward-looking information relating to the intention of the parties to complete the Acquisition and certain ancillary transactions contemplated thereby. These transactions are subject to a number of material risks, and there is no assurance that they will be completed on the terms or within the timeframes currently contemplated, or at all. The forward-looking information contained in this press release is made as of the date hereof and the Company is not obligated to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. Because of the risks, uncertainties and assumptions contained herein, investors should not place undue reliance on forward-looking information. The foregoing statements expressly qualify any forward-looking information contained herein.
This press release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities to be distributed pursuant to the Offering have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act“) or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.
All monetary references herein refer to Canadian dollars unless otherwise specified.
Neither Canadian Securities Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Canadian Securities Exchange) accepts responsibility for the adequacy or accuracy of this release nor have either of them in any way passed upon the merits of the qualifying transaction or in any way approved or disapproved of the contents of this release.
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