BENCHMARK SIGNS DEFINITIVE INVESTMENT COOPERATION AGREEMENT WITH CHINA-BASED ZHEJIANG YATAI PHARMACEUTICAL
Benchmark Botanics Inc. has signed a definitive agreement with China-based Zhejiang Yatai Pharmaceutical Co. Ltd., a publicly listed company on the Shenzhen Stock Exchange, to set up a joint venture company in Canada.
Subject to compliance with relevant Canadian cannabis laws, the new company will explore business opportunities in the cannabis industry to become involved in: the cultivation, manufacture, processing and marketing of high-cannabidiol (CBD) cannabis products; the cultivation and research and development of medical cannabis; and the extraction, isolation and purification of high-CBD cannabis oil for commercial applications. This definitive agreement solidifies the terms of the letter of intent of strategic co-operation between Benchmark and Zhejian Yatai, which was reported in a news release dated May 7, 2019.
"This agreement with Zhejiang Yatai is a significant milestone for Benchmark Botanics," commented William Ying, chief executive officer of Benchmark Botanics. "Zhejiang Yatai is a top 500 Chinese corporation, and is a leader and an innovator in the pharmaceutical industry. Benchmark is the perfect partner to take Zhejiang Yatai's drug research and development, production and sales in the pharmaceutical field and synergize with Benchmark's expertise in cannabis cultivation and extraction."
On May 27, 2019, the companies signed the definitive investment co-operation agreement, whereby the parties agreed to set up the new joint venture company in Canada. The new company will have a share capital of $14-million, of which Zhejiang Yatai will invest $7-million cash, accounting for 50 per cent of the new company's share capital; Benchmark Botanics will cause its wholly owned subsidiary, Potanicals Green Growers Inc. (PGG), to use its existing Health Canada-issued licence to apply for a licence for property to be acquired by the new company for cannabis cultivation, processing and sale thereon, and, in exchange, Benchmark Botanics will receive 25 per cent of the new company's share capital (with a cash equivalent of $3.5-million); and Rippington Investment (RI) will invest $3.5-million, accounting for the remaining 25 per cent of the new company's share capital.
Objective of the agreement
The objective of the investment co-operation agreement is to explore business opportunities in the cannabis industry, subject to compliance with Canadian cannabis and hemp regulations as well as the Cannabis Act, to become involved in: the cultivation, manufacture, processing and marketing of high-CBD cannabis products; the cultivation and research and development of medical cannabis; the extraction, isolation and purification of high-CBD cannabis oil for commercial; and any other activities as approved by the board of directors. Future products from the joint venture company may also be marketed, sold and distributed in countries and jurisdictions where cannabis products are legal.
Primary components of the joint venture
The company name will be YATAI & BBT Biotech Ltd.
A limited liability corporation is to be established pursuant to the laws and regulations of Canada, with the company's first issue of 14 million shares will be made as follows:
- Yatai Pharmaceutical will purchase seven million shares for $7-million, representing 50 per cent of the initial issued shares. The contributions will be made in two stages. In the first stage, Yatai Pharmaceutical will contribute $4-million; in the second stage, Yatai Pharmaceutical will contribute $3-million.
- Benchmark Botanics will receive 3.5 million shares, representing 25 per cent of the initial issued shares, by causing PGG to use its existing Health Canada-issued licence to apply for a licence for the facility for cannabis cultivation, processing and sale. The shares will be issued at the time of the joint venture company's incorporation.
- RI will purchase 3.5 million shares for $3.5-million, representing 25 per cent of the initial issued shares. The contributions will be made in two stages. In the first stage, RI will contribute $2-million; in the second stage, RI will contribute $1.5-million.
The company's business scope will be to explore business opportunities in the cannabis industry, subject to compliance with the Canadian cannabis legislation and regulations; promote high content of CBD industrial hemp cultivation, processing, marketing and medical cannabis cultivation; research and development and high purity CBD-based cannabinoid extraction, separation, purification and commercialization of multifield applications; and other activities to be determined by the company.
The joint venture company will make full use of the existing resources and the company's experience in the field of drug development, promote the cultivation of high content of CBD industrial hemp cultivation, processing, marketing, and research and development of medical cannabis and high-purity CBD-based cannabinoids extraction, separation, purification and development.
"We are extremely happy to have signed this agreement with Benchmark Botanics and look forward to capitalizing on the medical applications of CBD. We are delighted to have partnered with a quality organization that shares the same standards as well as a philosophy rooted in science to produce unique, safe and quality products," commented Mr. Chen, chairman of Yatai Pharmaceutical. "We will utilize all of our expertise and resources to maximize our efforts to build the company's value and a long-term successful joint venture."
The definitive agreement filings will be available on SEDAR.
About Benchmark Botanics Inc.
Benchmark Botanics is a diversified multilicensed cannabis producer focused on a three-way vertical business model targeting the medical, pharmaceutical and recreational markets in Canada and the European Union. The company's business plan also includes a strategy to become a Canadian licensed producer to pioneer selling medical cannabis and hemp in China and throughout Asia.
Benchmark Botanics is focused on producing the highest-quality, indoor-grown cannabis for patients and adult recreational consumers as well as developing international business partnerships to extend the company's global footprint.
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