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LAS VEGAS, NV / ACCESSWIRE / December 20, 2021 / PRESS RELEASE / Planet 13 Holdings Inc. and Next Green Wave Holdings Inc. announced that they have entered into a definitive agreement (the “Agreement”) pursuant to which Planet 13 will do so will acquire all of the issued and outstanding common shares (the “NGW Shares”) of NGW through a court-approved Scheme of Settlement for an aggregate consideration of approximately $91 million (the “Transaction”).

Proposed Transaction

Under the terms of the Agreement and based on prices as of December 17, 2021, Next Green Wave shareholders (“NGW Shareholders”) will receive 0.1081 of a common share of Planet 13 (the “Exchange Ratio”), subject to the calculations as described below , and $0.0001 in cash for each NGW share held. Based on Planet 13’s 10-day volume weighted average price (“VWAP”) and exchange ratio as of December 17, 2021, the implied transaction price per NGW share is CAD$0.465, representing a premium of approximately 52% to the closing price and 44% on the 10-day VWAP of NGW shares on the Canadian Securities Exchange (the “CSE”) as of December 17, 2021. The exchange ratio is subject to the following adjustments:

  • If the 10-day VWAP of Planet 13 common stock (the “Planet 13 Shares”) on the CSE immediately prior to the second business day prior to the closing of the transaction (the “Planet 13 Closing Price”) is below $5.50 CAD, but above C$4.06, then the conversion ratio is calculated as C$0.4650 divided by the closing price of Planet 13;
  • If Planet 13’s closing price is less than or equal to CAD 4.06, the exchange ratio will be 0.1145; and
  • If Planet 13’s closing price is greater than or equal to CAD$5.50, the exchange ratio is 0.0845.

Upon the closing of the transaction, and based on December 17, 2021 prices, NGW shareholders will own approximately 9.2% of the shares in the pro forma entity (on a fully diluted basis).

transaction reason

  • NGW shareholders are being offered a significant premium of approximately 44% based on both companies’ 10-day VWAP, resulting in an implied offer price of approximately C$0.465 per NGW share as of December 17, 2021.
  • The transaction is expected to have an immediate positive impact on 2021 and 2022 EBITDA.
  • The transaction structure provides reasonable price protection against market volatility in Planet 13’s share price until the transaction is completed.
  • NGW’s operations will serve as the backbone of Planet 13’s continued focus on the California market. NGW will allow Planet 13 to showcase its diverse branded portfolio of exotic, phenomenally hunted strains both at the Santa Ana SuperStore and across the state.
  • NGW shareholders will immediately benefit from the enhanced size, reach and liquidity of Planet 13’s capital markets presence.
  • NGW shareholders will participate fully in the benefits of Planet 13’s upcoming expansion into Illinois and Florida.
  • Planet 13 will retain NGW’s management team and will deepen the pro forma company’s knowledge base and expertise across the California market.
  • Planet 13 benefits from NGW’s highly respected cultivation techniques and phenomenally hunted strains, greatly expanding the pro forma company’s cultivation capacity, product offering, consistency and expertise.
  • The combined experience and expertise of the Planet 13 and NGW operations teams will drive further improvements across the pro forma company’s footprint.

Management Comment

“Today’s announcement is an extension of the strategy we have developed for investors to add cultivation and manufacturing in California to vertically integrate and bring our hugely popular brands to the state. We are systematically expanding our footprint to drive revenue growth and profitability. said Bob Groesbeck, Co-CEO and Co-Founder of Planet 13. “We have been incredibly impressed with the Next Green Wave team and their ability to generate revenue and an Adjusted EBITDA based on the quality of their cultivation and manufacturing in the competitive market.”

“This is an exciting day for Next Green Wave shareholders. Planet 13 has demonstrated its ability to operate incredibly productive retail locations and manufacture finished products, which account for a significant portion of sales in its home state of Nevada,” said Mike Jennings, CEO by Next Green Wave. “They are a perfect fit for Next Green Wave and being part of their attractive growth profile and expansion in Illinois and Florida is the right next step for NGW.”

More transaction details

The Transaction will be consummated pursuant to a Scheme of Agreement under the Business Corporations Act (British Columbia) and is subject, among other things, to the approval of NGW shareholders at a special meeting of NGW shareholders anticipated to be held in February 2022 (the “NGW Special Meeting”), Obtain all applicable CSE, regulatory and court approvals and satisfy other customary closing conditions. At the NGW special meeting, the Arrangement requires the approval of at least two-thirds of the votes cast by NGW shareholders present in person or by proxy entitled to vote at the NGW special meeting. Planet 13 shareholders’ approval is not required.

The transaction was unanimously approved by the Boards of Planet 13 and Next Green Wave.

The Agreement contains customary representations, warranties and covenants for transactions of this type, including termination fees of $3,250,000 and $2,000,000 payable by Next Green Wave and Planet 13, respectively, if the transaction is terminated under certain circumstances . In addition, the agreement includes a reimbursement fee of up to $1,000,000 to be paid by Next Green Wave to Planet 13 if the transaction is terminated in certain circumstances. Pursuant to the Agreement, upon closing, all outstanding NGW options to purchase NGW shares will be exchanged for Planet 13 options entitling the holders to receive Planet 13 shares upon exercise based on the exchange ratio.

Further details of the transaction will be provided to NGW shareholders in an information circular being mailed in connection with the NGW special meeting and available on the NGW profile at www.sedar.com. Copies of the Agreement and certain related documents will be filed with Canadian securities regulators and are also available at www.sedar.com.

The transaction is currently expected to close in the first quarter of 2022, subject to receipt of all regulatory, court, shareholder and other approvals.

Recommendation of the NGW board

The Board of Directors of NGW (the “NGW Board”) formed a special committee of independent members (the “Selection Committee”) to, among other things, review and evaluate the terms of the Transaction and to make a recommendation to the NGW Board with respect to the Transaction and to negotiate the terms of the Agreement and related matters. The Special Committee obtained fairness opinions from INFOR Financial Inc. and Evans & Evans, Inc. indicating that as of the date of the Opinions and subject to the assumptions and limitations contained in those Opinions, consideration is to be received from NGW Shareholders pursuant to the transaction is fair to NGW shareholders from a financial perspective. Based on the advice and recommendations of the Special Committee, the NGW Board has determined that the transaction is fair to NGW shareholders, that the transaction is in the best interests of NGW and unanimously recommends that NGW shareholders vote for the resolution approving the Transaction to vote at NGW special meeting. All of NGW’s directors and officers and a designated NGW shareholder (who collectively hold approximately 21% of the issued and outstanding NGW shares) have entered into voting rights and endorsement agreements with Planet 13, which among other things, they have agreed to support the transaction and to vote their NGW shares for the transaction.

Financial and Legal Advisor

Beacon Securities Limited acted as Financial Advisor to Planet 13 and provided the Board of Directors of Planet 13 with a Fairness Opinion stating that as of the date of the Opinion and subject to the assumptions and limitations contained in the Opinion, consideration is payable by Planet 13 according to the transaction is fair to Planet 13 from a financial point of view.

Wildeboer Dellelce LLP and Cozen O’Connor acted as legal counsel to Planet 13.

INFOR Financial Inc. acted as financial advisor to NGW. INFOR Financial Inc. and Evans & Evans, Inc. have each provided a Fairness Opinion to the NGW Board of Directors and Select Committee, respectively, as described above.

Next Green Wave’s legal advisors were McMillan LLP and Farella Braun + Martel LLP.

proxy request

NGW has retained Kingsdale Advisors (“Kingsdale”) as its strategic shareholder and communications advisor and proxy solicitation agent. NGW shareholders can email Kingsdale with questions about the transaction at contactus@kingsdaleshareholder.com.