Strategic Transaction Opens New Sales Channel Opportunity to Canada's Largest
Construction Labor Union
Highlights:
- Supply Agreement Expected to Generate up to $40mm in Revenue and Make a Material Contribution to Profitability
- Sale Agreement of Non-Core Asset adds Non-Dilutive $7mm to Balance Sheet
- Accelerates Previously Announced Consolidation, Improving Operating Performance
TORONTO, Sept. 20, 2016 /CNW/ - Mettrum Health Corp.
("Mettrum" or the "Company") (TSXV:MT), a vertically integrated provider of cannabis products, is pleased to announce
that it has entered into an agreement with Cannabis Care Canada Inc. ("CCC") to sell to CCC its wholly-owned subsidiary Mettrum
(Bennett North) Ltd. ("Bennett Road North"), which is licensed to produce and sell dried cannabis
and cannabis extracts for medical purposes. CCC is financially backed by Laborers International Union of North America ("LiUNA"), North America's single largest construction union
with over 100,000 Canadian members. Under the terms of the agreement, CCC will pay $7 million in cash
to acquire Bennett Road North and enter into a three-year Supply Agreement that is expected to generate up to $40mm in revenue for
Mettrum over the next three years. As part of the transaction, CCC will assume all outstanding obligations associated with Bennett
Road North.
Once the transaction is completed in the coming months, Bennett Road North will be renamed Starseed Medicinal Inc. ("Starseed")
and will become a wholly-owned subsidiary of CCC, whose board members include Mr. G. Edmund King
(former CEO and Chairman of Wood Gundy), Dr. Hugh E. Scully (previously president of both the
Ontario and Canadian Medical Associations), and retired Major General Lewis Mackenzie. Mettrum will supply Starseed with cannabis and cannabis extracts to sell to members of LiUNA
who have valid medical documents to use cannabis for medical purposes.
As previously announced, Mettrum will continue to consolidate operations at its new facility and headquarters, at 314 Bennett
Road ("Bennett Road South"). Bennett Road South occupies 60,000 sq/ft on seven acres of land. Mettrum has begun construction to
double its total production capacity, currently at approximately 6,000 kg per year, to 12,000 kg before the end of its current
fiscal year ending March 31, 2017, and plans to have total production capacity of approximately
25,000 kg by the end of the fiscal year ending March 31, 2018.
Divesting of Bennett Road North is not anticipated to have any material impact on Mettrum's production, as the yearly production
at the facility is approximately 500 kg. As a result of the sale, the Company is expecting to achieve material operational
efficiencies by streamlining and consolidating its operations. Furthermore, the three-year Supply Agreement is expected to make a
material contribution to the Company's revenue and profitability.
"Given the scale of our operations at Bennett Road South and Creemore, it was very timely to
find a purchaser for Bennett Road North who is also a great strategic partner," said Michael Haines,
Chief Executive Officer of Mettrum. "We are extremely excited to enter into this agreement which does three important things for
Mettrum. First, it allows us to continue to lower operating costs by streamlining and consolidating our operations at our new
headquarters. Second, it strengthens our already robust balance sheet in a non-dilutive manner. Lastly, and most
importantly, it greatly enhances the scale of our business through our supply agreement, and access to a new market, with Cannabis
Care Canada Inc."
Laborers International Union of North America ("LiUNA"), North
America's single largest construction union with over 100,000 Canadian members, is a shareholder of Cannabis Care Canada
Inc. and will be working closely with Starseed on behalf of its members. Mr. Joseph Mancinelli, VP
of LiUNA said, "We believe cannabis is a medicine able to treat many ailments, including the management of pain. Working in
conjunction with Mettrum and Starseed, we want to make medicinal cannabis treatment available to all of our members and their
families and will, in time, make it a paid benefit."
The transaction is expected to be completed by January, 2017 and is subject to the completion of certain conditions of
closing.
Neither the Exchange nor its Regulation Services Provider (as that term is defined in the policies of the
Exchange) accepts responsibility for the adequacy or accuracy of this Press release.
About Mettrum Health Corp.
Mettrum Health Corp. is a Tier 1 Industry Issuer listed on TSX Venture Exchange. Mettrum Ltd., a wholly owned subsidiary of the
Company, is a Toronto-based company and a licensed producer of medical cannabis under the
Access to Cannabis for Medical Purposes Regulations (Canada) issued pursuant to the
Controlled Drugs and Substances Act (Canada) (the "ACMPR"), which came into effect on
August 24th, 2016. Mettrum received its first license from Health Canada under the
Marihuana for Medical Purposes Regulations (the "MMPR") on November 1, 2013 and began
production of medical cannabis at its first production facility in Bowmanville, Ontario. Mettrum
received its second license from Health Canada under the MMPR on December 11, 2014 for its other
wholly-owned subsidiary, Agripharm Corp., at Mettrum Creemore facility in Clearview, Ontario. Mettrum received its third license from Health Canada under the MMPR on December 17, 2015 for Mettrum Ltd. at its new 60,000 square foot production and distribution facility in
Bowmanville, Ontario. Mettrum is a leading producer and vendor of medical cannabis under the ACMPR
system. In addition, through its wholly-owned subsidiary Mettrum Hempworks, Mettrum also is a licensed producer and
distribution of industrial cannabis (hemp) products, including Mettrum's functional food line, Mettrum Originals™, under the
Industrial Hemp Regulations (Canada) issued pursuant to the Controlled Drugs and
Substances Act (Canada).
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION: This news release includes certain "forward-looking statements"
under applicable Canadian securities legislation, including, without limitation, the estimated and anticipated impact on the
Company's operations, financial results and information, efficiencies, access to markets, licenses and production capacities, as
well as the anticipated dates of completion and impacts. Forward-looking statements are necessarily based upon a number of
estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other
factors which may cause the actual results and future events to differ materially from those expressed or implied by such
forward-looking statements. Such factors include, but are not limited to: general business, economic, financial, operational,
competitive, regulatory, political and social uncertainties; delay or failure to receive board, shareholder or regulatory
approvals; and the results of operations. There can be no assurance that such statements 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 statements. The Company expressly disclaims any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
SOURCE Mettrum Health Corp.
