CALGARY, AB – Simply Solventless Concentrates Ltd. (SSC) and CanadaBis Capital Inc. (operating as Stigma Grow) entered into an agreement under which SSC will acquire all of the issued and outstanding common shares of CanadaBis by way of a court-approved plan of arrangement under the Business Corporations Act.
Upon closing, the combined entity is estimated to rank second and fifth in the Canadian concentrates and preroll categories respectively, excluding Quebec.
CanadaBis also launched a brokered private placement of up to 2,500 unsecured convertible debentures at a price of $1,000 per debenture, for gross proceeds of up to $2.5 million, led by Research Capital as the sole agent and bookrunner.
Jeff Swainson, SSC’s President and CEO, stated: “This transaction is a true win-win for all parties, with CanadaBis garnering a premium of 78% to their 30-day VWAP while SSC increases Q2 2025 proforma annualized revenue and normalized net income per share by approximately 65% and 44%, respectively.” Swainson continued: “Through years of combined experience, both SSC and CanadaBis have developed competitive advantages in commercialization, market penetration, lean operations, accretive acquisitions, and acquisition integration, and as we move forward together, we will have the strength of team, critical mass, profitability, and strategic positioning to drive continued and sustainable positive results in a capital starved industry ripe with impactful opportunities.”
Travis McIntyre, President and CEO of CanadaBis, stated: “CanadaBis has achieved positive adjusted EBITDA in thirteen straight quarters and net income profitability in eleven of the past twelve quarters. Despite our profitable operations, it has become clear to our board that industry consolidation and critical mass is required to drive sustainable competitive advantage. After a thorough evaluation of potential acquisition targets and suitors, SSC stood out to our board as a premier licensed producer with a bright future, and ultimately, as the ideal partner to achieve these goals. It is our strong belief that CanadaBis and SSC together will be a formidable company capable of positively disrupting the cannabis industry in Canada and internationally, and most importantly, that this combination will drive significant value creation for our shareholders both now and into the future.”
A copy of the Arrangement Agreement will be available on SEDAR+ under each of SSC’s profile and CanadaBis’ profile.
Transaction highlights
- Structure: SSC will acquire all of the issued and outstanding shares of CanadaBis pursuant to the Arrangement Agreement and court approved plan of arrangement.
- Consideration to CanadaBis shareholders: 22,500,000 SSC common shares, amounting to 17.2% of the 130,714,466 proforma basic common shares of SSC outstanding. Approximately 3.0 million CanadaBis options will be cancelled prior to closing, and approximately 2.4 million CanadaBis options will be exchanged for 0.4 million SSC options at a weighted average exercise price of $1.31 per SSC share.
- CanadaBis valuation: $16.0 million at SSC’s 30-day volume weighted common share price of $0.71/share, equating to $0.116 per CanadaBis common share.
- CanadaBis assets: Through the Transaction, SSC will indirectly acquire all of CanadaBis’s assets, including but not limited to provincial product listings, intellectual property, assets (including land, facility, and buildings), facility equipment, security systems, and Health Canada licences. As at October 31, 2024, CanadaBis net assets were $8.4 million.
- Working capital: CanadaBis expects to have $2.0 million net working capital at closing (reducing net transaction consideration to $14.0 million).
- Escrow agreement: Approximately 67% of the SSC common shares issued to CanadaBis shareholders will be held in escrow, with 1/3 of the Escrow Shares being released from escrow every six months after closing.
- Travis McIntyre as COO of SSC: McIntyre will be appointed to the role of COO of SSC at closing. Mr. McIntyre will step down from his role with CanadaBis. Murray Brown, SSC’s current COO, will assume the role of Chief Integrations Officer at closing, focused on integrating acquisitions, restructuring, and corporate services.
- Board seat: Shane Chana, CanadaBis’ Chief Financial Officer, will join SSC’s board of directors at closing and step down as an officer of CanadaBis.
- Board approval: The Transaction has been unanimously approved by the Board of Directors of SSC and the Board of Directors of CanadaBis.
- TSXV and shareholder approval: The Transaction will be subject to the approval by 66 2/3% of CanadaBis shareholders at a special meeting of CanadaBis shareholders and subject to the receipt of certain regulatory, court, and TSXV approvals, and other closing conditions customary in transactions of this nature.
- CanadaBis support agreements: CanadaBis shareholders representing 67.0% of the CanadaBis issued and outstanding common shares have entered into support agreements to vote in favour of the Transaction.
- Transaction termination fee: The Arrangement Agreement provides that, under certain circumstances where the Transaction is not completed, CanadaBis will be subject to a termination fee payable to SSC in the amount of $1,200,000.
- Advisors: Stikeman Elliott LLP is acting as legal advisor to SSC and Borden Ladner Gervais LLP is acting as legal advisor to CanadaBis.
$2.5-million convertible debenture financing
Transaction termination fee: The Arrangement Agreement provides that, under certain circumstances where the Transaction is not completed, CanadaBis will be subject to a termination fee payable to SSC in the amount of $1,200,000.
Advisors: Stikeman Elliott LLP is acting as legal advisor to SSC and Borden Ladner Gervais LLP is acting as legal advisor to CanadaBis.
$2.5-million convertible debenture financing
The financing is an integral part of the transaction to CanadaBis. Proceeds from the debentures will be used to ensure CanadaBis meets various conditions of the transaction, as well as to free up cash flow to invest in inventory to accelerate the timing of product launches to coincide with the completion of the transaction.
The debentures have the following key terms:
- Conversion: The debentures are convertible into CanadaBis common shares at $0.10 per CanadaBis common share, following the date that is 4 months and 1 day from the date of issuance and prior to the maturity date, at the option of each holder.
- Early prepayment: CanadaBis or SSC, as applicable, will have a right to repay the principal amount of the debentures in cash with a 5% early repayment premium at any time following the date that is 5 months after issuance and prior to maturity by providing a minimum 10 days notice.
- Maturity date: 48 months from the date of issuance.
- Interest rate: 11% per annum payable quarterly in cash or in CanadaBis common shares at the conversion price, at the option of CanadaBis or SSC, as applicable.
- Security: Unsecured.
- Repayment: At maturity, the principal amount outstanding on the debentures will be repaid by CanadaBis in cash.
- Agent: Research Capital Corporation as sole agent and sole bookrunner, on a best-efforts agency basis.
- Commission: 6% of gross proceeds plus 6% of gross proceeds in broker warrants. Each broker warrant is exercisable for one CanadaBis common share at the price of $0.10 per CanadaBis common share for a term of 48 months from date of issue.
The debentures will be exchanged for debentures of SSCon closing of the transaction. The SSC debentures will be exercisable for SSC common shares and will otherwise be on the same terms as the debentures, with an adjustment to the conversion price of the SSC debentures based on the transaction’s exchange ratio.
CanadaBis will grant the agent an option to increase the size of the financing by up to 15% of the debentures, exercisable by giving written notice of the exercise of the agent’s option, or a part thereof, to CanadaBis at any time up to 48 hours prior to the time of closing of the financing.
Closing of the financing is expected to occur on or about April 2, 2025, and is subject to a number of conditions precedent, including but not limited to the approval of the TSXV. The debentures and any common shares issuable upon conversion thereof will be subject to a statutory hold period of four months and one day after the closing of the financing.
About Simply Solventless Concentrates Ltd.
SSC is a public company (TSXV: HASH) incorporated under the Business Corporations Act (Alberta). SSC’s mission is to provide pure, potent, terpene-rich ready to consume cannabis products to discerning cannabis consumers.
About CanadaBis Capital Ltd.
CanadaBis Capital Inc. is a public company (TSXV: CANB) is a vertically integrated Canadian cannabis company focused on achieving large-scale growth in the global cannabis market – with specific attention paid to supplying the fast-emerging concentrates category through their Stigma Grow cultivation and BHO extraction facility.
