GTEC Holdings Ltd. (GTEC.V) (GGTTF) (FRA:1BUP) (“GTEC” or the “Company”) is pleased to announce that it has entered into a definitive agreement dated April 10, 2019 (the “Definitive Agreement”), between GTEC, GreenTec Retail Ventures Inc., a wholly owned subsidiary of GTEC (“GRV”), and the shareholders (the “Vendors”) of 1203648 B.C. Ltd. (“RetailCo”), pursuant to which GRV will acquire all the issued and outstanding shares of RetailCo for an aggregate purchase price of $2,113,000.00 (the “Acquisition”). The location will serve as GTEC’s flagship store in Western Canada, which will be operated under GRV’s storefront name, “Cake Cannabis Co.”
Transaction Highlights:
Over 4,000 square ft of available retail space
Location was previously licensed to operate and sell medical cannabis under the City of Vancouver’s Medical Marijuana Related Use program (which had ceased all operations prior to October 17th, 2018)
Located in one of Vancouver’s most affluent and diverse neighbourhoods
A high-end interior design, in which over $500,000 was spent in leasehold improvements, fixtures and finishings
Surrounded by various large retail businesses
Significant foot and vehicle traffic in one of Vancouver’s busiest arteries
Over 1400 pedestrians per day on average (source:City of Vancouver 2013 pedestrian survey)
Neighbourhood population of over 43,000 with a 40% population between the ages of 20-39
The capacity to develop a consumption lounge in the future, if regulations permit
“With the recent M&A activity in the retail cannabis sector in Vancouver, we have seen some stores produce significantly higher than expected sales and revenue, which we believe is a clear indication of the demand for adult-use retail cannabis stores in the city,” said Norton Singhavon, Founder, Chairman & CEO of GTEC. “We are extremely excited about this opportunity and are confident that its location will serve as a great flagship location, as it is currently the largest store in our portfolio of diversified and vertically integrated assets.”
RetailCo is in the process of obtaining certain Municipal and Provincial approvals (the “Application Materials”) in connection with a non-medical cannabis retail licence (the “Licence”) at the premises. RetailCo has a long-term lease in place and a development permit for a non-medical cannabis store at the premises issued by the City of Vancouver.
Pursuant to the Purchase Agreement, upon closing GTEC will:
Pay the sum of $47,705.75 in cash to the Vendors;
Cancel debt in the amount of $2,294.25 owing by the Vendors to GTEC; and
Issue $2,063,000 worth of common shares in the capital of GTEC (the “Common Shares”) to the Vendors, in the following:
50% of the Common Shares to be issued at closing; and
50% of the Common Shares to be issued and held in escrow to be released upon RetailCo successfully obtaining all necessary Provincial and Municipal approvals for the retail sale of non-medical cannabis. (In the event RetailCo does not obtain all necessary Provincial and Municipal approvals within twelve months from the date of closing, the escrowed Common Shares will be returned to GTEC treasury for cancellation.)
Accordingly, upon closing, GTEC intends to issue 3,438,333 Common Shares to the Vendors at a deemed price of $0.60 per share. The Common Shares will be subject to a statutory hold period of four months and one day from the date of issuance thereof.
In connection with the Acquisition, the board of directors of GTEC considered the merits of the Acquisition without the involvement of Chairman and CEO, Norton Singhavon, who recused himself from deliberation, as Mr. Singhavon’s brother, Norman Singhavon is one of the Vendors of RetailCo.
The Definitive Agreement and the transactions contemplated therein remain subject to final approval of the TSX Venture Exchange.