MATERIAL CHANGE REPORT FORM 51-102F3
Name and Address
Choom Holdings Inc. (“Choom” or the “Company”) 191 W. 2nd Avenue
Vancouver, BC
Date of Material Change
August 4, 2022
News Release
The news release describing the material change was disseminated on August 4, 2022 through Stockwatch and filed on SEDAR.
Summary of Material Change
The Company announced that Choom and certain of its subsidiaries (Choom BC Retail Holdings Inc., 2151414 Alberta Ltd., 2688412 Ontario Inc., and Phivida Holdings Inc., and together with Choom, the “Companies”), in connection with their previously announced transaction with High Tide Inc. (NASDAQ: HITI, TSXV: HITI) (“High Tide”) , completed the sale of substantially all of their business and assets in the province of British Columbia and Alberta to High Tide, pursuant to a letter agreement dated June 28, 2022 (the “Acquisition Agreement”). The transaction arises from the sale and investment solicitation process permitted under the Companies’ previously announced proceedings under the Companies’ Creditors Arrangement Act (Canada) (“CCAA”).
On July 8, 2022 the Companies obtained an Approval and Vesting Order from the Supreme Court of British Columbia (the “Court”), which approved the Acquisition Agreement and the transaction contemplated therein.
Further, provided that all remaining closing conditions are satisfied, the Companies anticipate completing the sale of substantially all of the business and assets in the province of Ontario to High Tide by September 2022, all pursuant to the Acquisition Agreement and the Approval and Vesting Order. Readers are cautioned that there are a number of factors outside of the control of Choom that may delay or impact the closing of this sale transaction and, as a result and notwithstanding the approval of the Court, the transaction may not close on the timeline or in the manner expected by Choom or at all.
Upon the closing of these transactions, Choom and its subsidiaries will have sold substantially all of their assets in their retail cannabis business in British Columbia, Alberta and Ontario. The Company will progress the final stages of the CCAA proceedings towards an orderly distribution to creditors. Any such distribution to creditors will also require Court approval in the CCAA proceedings. Net proceeds from the transactions contemplated under the Acquisition Agreement will be used
Item 5.
to repay outstanding debts incurred in the CCAA proceedings and secured by Court-ordered charges against the Companies’ property, with the surplus disturbed to creditors subject to approval by the Court.
Full Description of Material Change
5.1 Full Description of Material Change
The material change is fully described in the news release of the Company dated August 4, 2022 (the “News Release”), which is attached as Schedule “A” to this report.
5.2 Disclosure for Restructuring Transactions
Not applicable.
Reliance on subsection 7.1(2) of National Instrument 51-102
Not applicable.
Omitted Information
No information has been omitted in respect of this material change.
Executive Officer
The following person is knowledgeable about the material change disclosed in this report and may be contacted as follows:
Chris Bogart
Telephone: (604) 683-2509
Date of Report
August 5, 2022
Schedule “A”
See attached.
Choomholdings.ca
CSE: CHOO OTCQB: CHOOF
Choom Announces Sale of Assets under the Companies’ Creditors Arrangement Act Proceedings
Vancouver, BC – August 4, 2022 – Choom Holdings Inc. (“Choom”) (CSE: CHOO; OTCQB: CHOOF), announces today that Choom and certain of its subsidiaries (Choom BC Retail Holdings Inc., 2151414 Alberta Ltd., 2688412 Ontario Inc., and Phivida Holdings Inc., and together with Choom, the “Companies”), in connection with their previously announced transaction with High Tide Inc. (NASDAQ: HITI, TSXV: HITI) (“High Tide”) , completed the sale of substantially all of their business and assets in the province of British Columbia and Alberta to High Tide, pursuant to a letter agreement dated June 28, 2022 (the “Acquisition Agreement”).
proceedings under the Companies’ Creditors Arrangement Act (Canada)
(“CCAA”).
On July 8, 2022, the Companies obtained an Approval and Vesting Order from the Supreme Court of British Columbia (the “Court”), which approved the Acquisition Agreement and the transaction contemplated therein.
Further, provided that all remaining closing conditions are satisfied, the Companies anticipate completing the sale of substantially all of the business and assets in the province of Ontario to High Tide by September 2022, all pursuant to the Acquisition Agreement and the Approval and Vesting Order. Readers are cautioned that there are a number of factors outside of the control of Choom that may delay or impact the closing of this sale transaction and, as a result and notwithstanding the approval of the Court, the transaction may not close on the timeline or in the manner expected by Choom or at all.
Upon the closing of these transactions, Choom and its subsidiaries will have sold substantially all of their assets in their retail cannabis business in British Columbia, Alberta and Ontario. The Company will progress the final stages of the CCAA proceedings towards an orderly distribution to creditors. Any such distribution to creditors will also require Court approval in the CCAA proceedings. Net proceeds from the transactions contemplated under the Acquisition Agreement will be used to repay outstanding debts incurred in the CCAA proceedings and secured by Court-ordered charges against the Companies’ property, with the surplus disturbed to creditors subject to approval by the Court.
As required by the CCAA, pursuant to an earlier order of the Court, Ernst & Young Inc. has been appointed as monitor in the Companies’ CCAA proceeding (in that capacity, the “Monitor”). The duties and powers of the Monitor are outlined in that earlier order. All inquiries regarding the CCAA proceeding should be directed to the Monitor (Philippe Mendelson, 604-891-8491). Information about the Companies’ CCAA proceeding, including all court orders and the Monitor's reports, will be available on the Monitor’s website at www.ey.com/ca/choom.
About ChoomTM
ChoomTM is a retail cannabis company that has established an extensive store network across Canada. ChoomTM is focused on delivering an elevated customer experience through high quality service. The Choom brand is inspired by Hawaii's “Choom Gang”—a group of friends in Honolulu during the 1970s who loved to have fun and smoke weed—or as the locals called it, “Choom”. Evoking the spirit of the original Choom Gang, our brand caters to the Canadian market with the ethos of ‘cultivating good times’.
The transaction arises from the sale and investment solicitation process permitted under the
Companies’ previously announced
For additional information contact:
investors@choom.ca
Cautionary Statement on Forward-looking information
This news release contains forward-looking information relating to Choom’s proposed activities and other statements that are not historical facts, including the successful completion of the transactions contemplated under the Acquisition Agreement. Forward-looking information relates to management's outlook and anticipated events or results and includes statements or information regarding the future or prospects of Choom. When used in this news release, words such as "will”, “hope”, “could”, “plan”, “estimate”, “expect”, “intend”, “may”, “potential”, “believe”, “should” and similar expressions, are forward-looking statements. Although management of Choom has attempted to identify important factors that could cause actual results to differ materially from those contained in forward looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. These factors include risks and uncertainties associated with or arising as a result of delays in obtaining or an inability to obtain required regulatory approvals, access to sufficient quantities of cannabis, the actions of third parties, the results of negotiations with third parties, developments in the cannabis sector, the ability to access sufficient capital from internal and external sources, reliance on key personnel, regulatory risks and delays and other risks and uncertainties discussed in the management discussion and analysis section of Choom’s interim and most recent annual financial statement or other reports and filings, including those made with the CSE and applicable Canadian securities regulators. There can be no assurance that such forward looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward looking information.
NEITHER THE CANADIAN SECURITIES EXCHANGE NOR ITS REGULATION SERVICES PROVIDER HAS REVIEWED OR ACCEPTED RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.