VANCOUVER, BC — Christina Lake Cannabis Corp. (CLC) has received an unsolicited offer from an arm’s length third party for a proposed acquisition of substantially all its assets. The proposed transaction involves a different potential buyer and is not related to the proposed transaction announced August 21. CLC has entered into a non-binding letter of intent in respect of the second offer.
The Special Committee of the Board of Directors formed in August 2026 will review the merits of the proposed transaction. The Special Committee is also continuing to review the merits of the original transaction proposal. The Board of Directors has not approved the entering into of any definitive agreement for either transaction at this time.
Original transaction
On August 21, CLC entered into a non-binding letter of intent with a private Alberta corporation to engage in due diligence and negotiations regarding the terms of a proposed transaction whereby the original purchaser would acquire all of the issued and outstanding common shares of the company. The final structure of the proposed transaction has not been determined.
The Initial LOI contemplates an aggregate transaction value of $15 million for 100% of the equity of the company on a fully-diluted, cash-free, debt-free basis. The Initial LOI is non-binding and there can be no assurance that a definitive agreement for the original transaction will be entered into or that the original transaction or any other transaction, will be completed.
Alternative transaction
Subsequent to the execution of the initial LOI and the August 21 announcement, the company received an unsolicited offer from Medical Saints Ltd. an arm’s length third party, for the sale of substantially all the assets of CLC. In connection with the fiduciary obligations of the Board and the Special Committee, and as permitted by the exclusivity provisions of the initial LOI, the company entered into a non-binding letter of intent with the alternative purchaser effective September 11 for an alternative transaction. No definitive agreement has been entered into in respect of the alternative transaction.
Unlike the original transaction, which contemplates an acquisition of the shares, the alternative transaction contemplates the acquisition of all the assets of the company (other than cash, cash equivalents, tax receivables and certain other assets to be agreed as excluded), free and clear of any encumbrances. The assets to be acquired would include all owned land and buildings and assigned commercial leases used in the business, all machinery, office equipment, computers, furniture and inventory, and all customer lists, proprietary data, historical records, trademarks, patents, copyrights, and software.
The second LOI provides for an aggregate purchase price of $18 million on a cash-free, debt-free basis, payable in cash at closing and inclusive of a $2 million advance payment on the purchase price. The advance would be delivered to the company’s counsel, for the benefit of the company, concurrently with the execution of a definitive agreement and would be credited against the purchase price at closing. In certain circumstances in which the transaction does not close as a result of the alternative purchaser’s failure to fund or a material breach by the alternative purchaser, the advance would be retained by the company as liquidated damages; in other circumstances, including a failure to close not caused by the alternative purchaser or a breach by the company, the advance would be repaid to the alternative purchaser.
Under the second LOI, the parties would negotiate and enter into a definitive agreement within 40 days of executing the second LOI, and would use reasonable commercial efforts to work towards a closing following the satisfaction or waiver of the applicable closing conditions. The second LOI provides for an exclusivity period of 40 days, which is expressly subject at all times to the fiduciary duties of the board, including its ability to consider, negotiate or respond to unsolicited bona fide proposals, and which is expressly subordinate to the company’s existing contractual obligations to third parties, including its obligations under the initial LOI.
The alternative purchaser is expected to offer employment to all of the company’s employees engaged in the business on substantially comparable terms, with any related severance, termination or similar liabilities to be for the account of the alternative purchaser.
