Choom Signs Definitive Agreement to Acquire Clarity Cannabis Retail Stores in Alberta
VANCOUVER, Feb. 27, 2019 /CNW/ - Choom™ (CSE: CHOO) (OTCQB: CHOOF) (the "Company" or "Choom") 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
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
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.
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.
President & CEO
NEITHER THE CANADIAN SECURITIES EXCHANGE NOR ITS REGULATIONS SERVICES PROVIDER HAVE REVIEWED OR ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
This news release contains forward-looking information relating to the Company's proposed activities and other statements that are not historical facts. Forward-looking information relates to management's future outlook and anticipated events or results, and include statements or information regarding the future plans or prospects of the Company. Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. These factors include risks and uncertainties associated with the results of diligence investigations, developments in the cannabis sector, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources, reliance on key personnel, regulatory risks and delays and other risks and uncertainties discussed in the management discussion and analysis section of the Company's interim and most recent annual financial statement or other reports and filings, including the Company's Listing Statement, made with the applicable Canadian securities regulators. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward looking information.
SOURCE Choom Holdings Inc.