AURORA CANNABIS CALLS FOR ADDITIONAL DISCLOSURE FROM CANNIMED ON "BIZARRE" NEWSTRIKE SUPPLY AGREEMENT Aurora Cannabis Inc. today called for additional disclosure on yesterday's wholly inadequate announcement by CanniMed Therapeutics Inc. of a supply agreement with Up Cannabis Inc. (UCI), a subsidiary of Newstrike Resources Ltd., CanniMed's proposed acquisition candidate.
The timing of the supply agreement suggests no strategic rationale and raises serious questions about the apparent continuing failure of CanniMed's management and board to meet their fiduciary responsibilities to their shareholders, in view of the superior offer from Aurora to CanniMed shareholders.
"Simply put, this is a bizarre action by CanniMed management," said Cam Battley, executive vice-president of Aurora. "Why would CanniMed sign a supply agreement with a company they have proposed to acquire in three weeks? Why would they sign a supply agreement with a company that doesn't have a sales licence and therefore has no ability to fulfill the agreement? If CanniMed needed to purchase wholesale product, they could easily have signed a supply agreement with any number of producers currently licensed to sell. CanniMed has never previously entered into a wholesale supply agreement, nor ever indicated that they needed additional supply. So it's reasonable to ask whether their announcement actually meets the definition of a supply agreement as commonly understood -- or whether it represents a disguised scheme to achieve other objectives. It's clear based on publicly disclosed information that Newstrike is in urgent financial need. Is this an attempt to transfer CanniMed capital sufficient to keep the lights on and the doors open at Newstrike? Alternatively, is this an attempt to entrench a relationship between CanniMed and Newstrike under adverse terms that are counter to the interests of CanniMed shareholders, as the latest attempt at creating a poison pill? Given that CanniMed shareholders are due to decide in the next few weeks on both the proposed CanniMed-Newstrike transaction and the Aurora offer to acquire CanniMed, Aurora believes it is incumbent on CanniMed management to disclose the terms of the supply agreement they have signed with Newstrike's Up Cannabis subsidiary."
At a minimum, CanniMed must let investors know what consideration was paid for the supply agreement, what price product will be purchased at, the expected timing of deliveries under the supply agreement, what the conditions are for the renewal of the supply agreement, and what are the terms and conditions upon which the supply agreement may be terminated. Aurora looks forward to CanniMed's additional disclosure and the filing of what is clearly a material agreement on SEDAR.
Aurora has serious concerns, based on the minimal terms currently disclosed, that the supply agreement is not attractive from a financial or business perspective. Without clear and adequate public disclosure of the key terms of the supply agreement, Aurora believes CanniMed shareholders will be unable to assess the full financial impact and are likely to be misled by statements from CanniMed management.
If the Aurora offer is successful, Aurora will review all agreements entered into by CanniMed to ensure that they are reached on commercially reasonable terms and reserves the right to terminate any agreements entered into by CanniMed during the currency of the offer. Aurora is also prepared to hold CanniMed officers and directors accountable for value destroying transactions entered into while the Aurora offer is outstanding.
About the offer
On Nov. 24, 2017, Aurora formally commenced its offer to purchase all of the issued and outstanding common shares of CanniMed for consideration consisting of common shares of Aurora. The offer document, including the takeover bid circular and related documents, is available on SEDAR.
The offer documents are also available on Aurora's website.
How to tender
Aurora encourages CanniMed shareholders to read the full details of the offer set forth in the takeover bid circular and accompanying offer documents, which contain detailed instructions on how CanniMed shareholders can tender their CanniMed common shares to the offer. For assistance in depositing CanniMed common shares to the offer, CanniMed shareholders should contact the depositary and the information agent for the offer, Laurel Hill Advisory Group at phone: 1-877-452-7184 (North American toll-free) and 1-416-304-0211 (outside North America); facsimile: 416-646-2415; and e-mail: assistance@laurelhill.com.
About Aurora Cannabis Inc.
Aurora's wholly owned subsidiary, Aurora Cannabis Enterprises Inc., is a licensed producer of medical cannabis pursuant to Health Canada's Access to Cannabis for Medical Purposes Regulations (ACMPR). The company operates a 55,200-square-foot, state-of-the-art production facility in Mountain View county, Alberta, known as Aurora Mountain, a second 40,000-square-foot high-technology production facility known as Aurora Vie in Pointe-Claire, Que., on Montreal's West Island and is currently constructing an 800,000-square-foot production facility, known as Aurora Sky, at the Edmonton International Airport, and is completing a fourth facility in Lachute, Que., through its wholly owned subsidiary Aurora Larssen Projects Ltd.
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