WINNIPEG, Oct. 11, 2018 /CNW/ - DELTA 9 CANNABIS INC.
(TSXV: NINE) ("Delta 9" or the "Company") is pleased to announce
that it has closed its previously announced acquisition of the land
and 80,000 square foot building containing the Company's current
cannabis production facility (the "Property") from 6599362 Canada
Ltd. (the "Vendor") for a price of $6.25
million, subject to certain closing adjustments and
conditions. The Company has also purchased certain cannabis grow
pods (the "Equipment") from the Vendor for a price of $952,000, plus applicable taxes. The Property is
located in a heavy industrial area in Winnipeg, Manitoba. The production facility of
Delta 9 has been located at the Property since July, 2013.
The Vendor is a non-arm's length party of Delta 9 due to the
fact that a director of Delta 9, Joanne
Duhoux-Defehr, is also a director of the Vendor and is the
owner of 20 per cent of the issued and outstanding shares of the
Vendor. Accordingly, the acquisition of the Property and the
Equipment are considered to be a non-arm's length party transaction
and are subject to the approval of the TSX Venture Exchange (the
"Exchange"). The Exchange has granted its conditional approval for
the acquisition of the Property and the Equipment and final
approval of the transaction is subject to certain final filings
with the Exchange.
A portion of the purchase price for the Property and Equipment
will be paid by the Company from funds advanced pursuant to a
$12,000,000 loan and credit facility
provided to the Company by the Canadian Western Bank ("CWB").
Pursuant to the terms of the agreement between CWB and the Company,
there are four separate loan segments, each of which is allocated
for a different purpose, and each with its own terms:
- A demand operating loan of $2,000,000 to be used to finance day-to-day
operations. Interest will float at a rate of 1.00% per annum above
CWB's prime lending rate, which at the current time is 3.45% per
annum.
- A demand revolving loan of $4,500,000 which was used to fund a portion of
the acquisition of the Property. Interest will initially float at
1% above prime, but CWB will use its best efforts to obtain funds
on a fixed rate acceptable to Delta 9 and CWB, which is intended to
be at between 4.68% per annum for a one year term up to 5.45% per
annum for a five year term.
- A demand non-revolving loan of $4,500,000 to assist in the purchase of lands
adjacent to the Company's current production facility, as
previously disclosed by the Company. Interest will float at a rate
of 1.00% per annum above prime, with fixed rate pricing subject to
negotiation up to the date of draw down.
- A non-revolving credit facility of $1,000,000 for the purchase or lease of equipment
required for the operation of the Company's business. Interest will
float at a rate of 1.75% above prime, with fixed rate pricing to be
the subject of negotiation up to the date of draw down. This
facility was used to fund a portion of the purchase price of the
Equipment.
Delta 9 CEO John Arbuthnot says
the agreement is another important step in the continued expansion
of Delta 9's production capacity. "Our focus this year has
been to ramp up production for the legalization of cannabis in
Canada on October 17, 2018, "said Arbuthnot. "The purchase
agreement and our financing arrangement with Canadian Western Bank
gives us certainty about the land on which we operate, and provides
funding to continue our expansion for years into the future."
Delta 9's first phase of expansion is on track to increase
annual production to 17,500 kilograms of cannabis annually by the
end of 2019. Further expansion is planned on a "Delta 9 Cannabis
Campus" slated for construction on an adjoining parcel of
industrial land.
About Delta 9 Cannabis Inc.
Delta 9's wholly-owned
subsidiary, Delta 9 Bio-Tech Inc., is a licensed producer of
medical marijuana pursuant to the ACMPR and operates an 80,000
square foot production facility in Winnipeg, Manitoba, Canada. Delta 9 was the
fourth company in Canada licensed
to produce legal cannabis. Delta 9's shares trade on the TSX
Venture Exchange under the symbol "NINE".
Neither the TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in the policies of the
TSX Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Disclaimer for Forward-Looking Information
Certain statements in this release are forward-looking
statements, which reflect the expectations of management regarding
the Company's future business plans and other matters.
Forward-looking statements consist of statements that are not
purely historical, including any statements regarding beliefs,
plans, expectations or intentions regarding the future. Forward
looking statements in this news release include statements relating
to: (i) final Exchange approvals for the transaction; (ii) future
use of the credit facility with CWB; (iii) adjustment to the
interest rates of certain loan segments of the credit facility with
CWB; (iv) Delta 9's future production of cannabis; and (v) Delta
9's expansion plans. Such statements are subject to risks and
uncertainties that may cause actual results, performance or
developments to differ materially from those contained in the
statements, including those risk factors set forth in the annual
information form of Delta 9 dated May 31,
2018 which has been filed on SEDAR. No assurance can be
given that any of the events anticipated by the forward-looking
statements will occur or, if they do occur, what benefits the
Company will obtain from them. Readers are urged to consider these
factors carefully in evaluating the forward-looking statements
contained in this news release and are cautioned not to place undue
reliance on such forward-looking statements, which are qualified in
their entirety by these cautionary statements. These
forward-looking statements are made as of the date hereof and the
Company disclaims any intent or obligation to update publicly any
forward-looking statements, whether as a result of new information,
future events or results or otherwise, except as required by
applicable securities laws.
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SOURCE Delta 9 Cannabis Inc.