Toronto, Ontario--(Newsfile Corp. - March 20, 2020) - Pure Global Cannabis Inc. (TSXV: PURE) (OTC Pink: PRCNF) (the "Company" or "Pure Global" or "Pure"), an integrated growth-oriented cannabis, bulk extracts, and consumer products manufacturing company, operating through its wholly-owned subsidiary PureSinse Inc., a Health Canada Licensed Producer under the Cannabis Act, announced today that the Company and its wholly-owned subsidiaries PureSinse Inc., 237A Advance Inc., 237B Advance Inc., SPRQ Health Group and The Great Canadian Hemp Company Ltd. (collectively, the "Applicants") obtained an order on March 19, 2020 (the "Order") from the Ontario Superior Court of Justice (Commercial List) (the "Court") granting it protection under the Companies' Creditors Arrangement Act (Canada) ("CCAA") to allow it to stabilize and restructure its business and financial affairs. In accordance with the initial Order, all creditors of the Applicants are stayed from enforcing against the Applicants.
After reviewing a number of options and careful consideration of all available alternatives following a thorough consultation with its legal and financial advisors, the board of directors of Pure Global determined that a CCAA proceeding was the most effective way to maximize stakeholder value and to address short-term liquidity challenges, while continuing to operate the business. While in CCAA protection, the Applicants will continue their normal day-to-day operations and plan to commence a review of strategic alternatives in the immediate future.
In connection with the CCAA filing, on March 18, 2020, the Applicants entered into a debtor-in-possession facility term sheet with Hillmount Capital Inc. for financing in the initial amount of up to $700,000 (the "DIP Facility") which facility can be increased to $4.0 million with approval of the Court. Advances under the DIP Facility are subject to a Court-ordered priority charge in favour of Hillmount Capital Inc. to secure the obligations of the Company.
The DIP Facility provides working capital financing and liquidity required to ensure that the Company's operations continue uninterrupted and preserve value in the Company for the benefit of its stakeholders. Availability of the DIP Facility demonstrates the value of the Company and its growth potential.
The CCAA filing was necessitated by the pressures on the cannabis market exerting a downward pressure on cannabis retail pricing, as well as the recent deterioration of investor sentiment within the industry and the financial markets generally. However, Pure Global continues to exhibit strong fundamentals and is poised to meet its next-phase milestones and commence revenue generating operations in the near term.
The Company will continue to operate and manage its business lines in the ordinary course with the liquidity provided by the DIP Facility and expects to be able to meet its post-filing payment obligations to employees, suppliers and customers as and when they become due.
Ernst & Young Inc. has been appointed as Monitor to oversee the CCAA proceedings and report to the Court. Scott Langille, the Chief Financial Officer of the Company, has been appointed as Chief Restructuring Officer to advise management during the restructuring. Management of the Company will remain responsible for its day-to-day operations.
A copy of the Order and other Court materials and information related to the Company's CCAA proceedings, all as may be updated or amended from time to time, is available on the website maintained by Ernst & Young Inc. at www.ey.com/ca/pureglobal.
The Company intends to provide a further update on these matters when more information is available.