Lineage Grow amends financing re FLRish RTO
2019-05-06 18:14 ET - News Release
Mr. Peter Bilodeau reports
UPDATE ON REVERSE TAKE-OVER WITH FLRISH AND CONCURRENT FINANCING
Lineage Grow Company Ltd. has provided an update to its shareholders and others with respect to its reverse takeover transaction (RTO) with FLRish Inc., and the proposed concurrent financing of FLRish by way of a private placement of a minimum of $10-million of subscription receipts, further to Lineage's management information circular dated April 9, 2019, and amended on April 30, 2019, for its special shareholder meeting scheduled to be held on May 16, 2019. The Circular also includes a draft listing statement of Lineage with respect to the RTO (the "Listing Statement").
The terms of the Financing have been revised from what was disclosed in the Circular and the Listing Statement in that the price for the subscription receipts will be reduced from C$7.75 to C$7.00, each subscription receipt will be converted into one FLRish share and one full warrant, instead of one half of one warrant and the warrant exercise price will be reduced from C$9.70 to C$8.75 (the "Financing Amendments"). The broker warrants to be issued in the Financing are also repriced to C$7.00. Other terms of the Financing and the RTO remain unchanged from the disclosure in the Circular and the Listing Statement.
As a result of the Financing Amendments, Lineage shareholders will be subject to increased dilution from the Financing. Lineage shareholders will receive approximately 3.4% of the shares ("Resulting Issuer Shares") of the issuer resulting from the RTO (the "Resulting Issuer"), instead of approximately 3.5% of the Resulting Issuer Shares as previously disclosed in the Listing Statement.
Upon closing of the RTO, the Resulting Issuer will have the following capitalization after giving effect to the Financing Amendments:
Designation of Securities Subordinate Subordinate Subordinate Voting Shares Voting Shares Voting Shares (Minimum Offering) (Maximum Offering) (Full Exercise of Overallotment Option) Non-Diluted Subordinate Voting Shares 4,569,626 12,350,271 16,457,690 Total Lineage Convertible Securities (including Lineage Special Shares) 3,047,223 3,047,223 3,047,223 Total FLRish Convertible Securities 45,472,645 49,885,547 50,657,806 Total Convertible Securities 48,519,868 52,932,770 53,705,029 Total Fully Diluted Capital 53,089,493 65,283,041 70,162,719
The following is a detailed pro-forma capitalization for the Resulting Issuer after giving effect to the Financing Amendments.
Number of Number of Number of underlying underlying underlying subordinate subordinate subordinate voting shares Percentage voting shares voting shares (full exercise Percentage Percentage (full exercise Designation (minimum (maximum of overallotment (minimum (maximum of overallotment of securities offering) offering) option) offering) offering) option) Lineage existing shareholders 1,827,742 1,827,742 1,827,742 3.4% 2.6% 2.4% Conversion of Lineage Series A special shares 1,070,707 1,070,707 1,070,707 2.0% 1.5% 1.4% Advisory fee for FMICA for transaction 405,534 448,391 455,891 0.8% 0.6% 0.6% FLRish existing shareholders - - - 0.0% 0.0% 0.0% FLRish Series B convertible debenture holders 2,965,794 2,965,794 2,965,794 5.5% 4.2% 3.8% FLRish concurrent financing purchasers 1,428,571 10,000,000 11,500,000 2.7% 14.0% 14.8% Airfield stock consideration - - 3,040,000 0.0% 0.0% 3.9% Non-diluted subordinate voting shares 7,698,349 16,312,635 20,860,135 14.4% 22.8% 26.9% Lineage warrants 557,357 557,357 557,357 1.0% 0.8% 0.7% Lineage convertible debts 72,696 72,696 72,696 0.1% 0.1% 0.1% Lineage options 134,232 134,232 134,232 0.3% 0.2% 0.2% Lineage Series B special shares 275,325 275,325 275,325 0.5% 0.4% 0.4% Lineage Series C special shares 336,508 336,508 336,508 0.6% 0.5% 0.4% Shares issuable to vendors in Lineage's LUX acquisition 430,315 430,315 430,315 0.8% 0.6% 0.6% Shares issuable to finder for Lineage's LUX acquisition 20,046 20,046 20,046 0.0% 0.0% 0.0% Shares issuable to vendors in Lineage's Agris Farms acquisition 606,958 606,958 606,958 1.1% 0.8% 0.8% Convertible debt for assumption of Lineage's Agris Farms acquisition 251,087 251,087 251,087 0.5% 0.4% 0.3% Warrants issuable for Lineage's Agris Farms acquisition 221,920 221,920 221,920 0.4% 0.3% 0.3% FMICA M+A fee for legacy pipeline acquisitions 140,778 140,778 140,778 0.3% 0.2% 0.2% Total Lineage convertible securities 3,047,223 3,047,223 3,047,223 5.7% 4.3% 3.9% Series B convertible debenture holders 4,593,581 4,593,581 4,593,581 8.6% 6.4% 5.9% FLRish existing shareholders multiple voting shares (expressed in subordinate voting share terms) 25,902,918 25,902,918 25,902,918 48.3% 36.3% 33.4% FLRish options (expressed in subordinate voting share terms) 6,556,378 6,556,378 6,556,378 12.2% 9.2% 8.5% Series B warrants (expressed in subordinate voting share terms) 3,989,124 3,989,124 3,989,124 7.4% 5.6% 5.1% Series B broker and compensation warrants 311,544 311,544 311,544 0.6% 0.4% 0.4% Concurrent financing warrants 1,428,571 10,000,000 11,500,000 2.7% 14.0% 14.8% Concurrent financing broker warrants 100,000 700,000 805,000 0.2% 1.0% 1.0% Total FLRish convertible securities 42,882,116 52,053,545 53,658,545 80.0% 72.9% 69.2% Total convertible securities 45,929,339 55,100,768 56,705,768 85.6% 77.2% 73.1% Total fully diluted capital 53,627,688 71,413,403 77,565,903 100.0% 100.0% 100.0%
On closing of the RTO, the Resulting Issuer will file a Listing Statement to include updated information including the closing of the RTO and Financing, as well as updated financial statements.
About Lineage Grow Company Ltd.
Lineage Grow Company Ltd. is a reporting issuer that is listed on the Canadian Securities Exchange ("CSE"). Lineage is currently focused on operating two retail licensed stores located in two prominent cities in Oregon (Portland and Eugene), and on assembling licensed operators with good growth potential and superior management, either through direct acquisition or through joint ventures, with an aim towards building a dominant vertically-integrated cannabis business that leverages best-in-class cultivation, brands, distribution, and retail assets. Lineage has entered into a purchase agreement with Agris Farms and a binding letter of intent to acquire LUX. In addition, Lineage and Harborside have entered into a binding letter agreement pursuant to which Lineage will acquiring all the issued and outstanding securities of Harborside in a reverse takeover transaction.
We seek Safe Harbor.
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