GATINEAU, Quebec, Sept. 10, 2018 (GLOBE NEWSWIRE) -- HEXO Corp. (“HEXO” or the “Company”) (TSX:HEXO) has
announced the acquisition of an interest in a 2,004,000 sq. ft. facility in Belleville, Ontario. This is the first facility of the
Company to be established outside of Quebec, further delivering on its national expansion strategy and providing capacity for the
manufacturing of advanced cannabis products, including cosmetics, vapes, non-alcoholic beverages and other edibles.
The centralized location, conveniently located along primary shipping routes in Ontario, presents the
opportunity to process and distribute products and to fulfil commitments across Canada. The space also supports the Company’s hub
and spoke model. Its scalability, flexibility and location are ideal to deliver on anticipated future joint ventures with Fortune
500 companies for cosmetics, edibles, vapes, and more, positioning it to become a centre of excellence for all of HEXO’s joint
ventures. HEXO’s expansion will also lead to the creation of jobs and a rejuvenated employment sector for the area.
The building, previously used as a Sears distribution centre, will be owned in a joint venture with Olegna
Holdings Inc. Initially, HEXO plans to lease up to 500,000 sq. ft. of the space from the joint venture. The proposed use of the
building is conditional on the city approving the rezoning application.
“There is a skilled workforce in the Belleville area, and we look forward to capturing it,” said Sebastien
St-Louis, HEXO’s co-founder and CEO. “We are investing in the region and its people with a view to achieving a sustainable national
presence. For the first time, we are stepping out of our home province of Quebec and are committed to and demonstrating our
commitment to serve and expand across Canada. And we are keeping future partnership and international opportunities in sight for
the near future.”
The building is owned by Belleville Complex Inc., a joint venture in which HEXO will hold a 25% interest and
Olegna Holdings Inc. will hold a 75% interest. In addition to its initial lease of 500,000 sq. ft. of the space under a long-term
lease, HEXO will have rights of first offer and first refusal to lease the remaining space in the building. As part of the
transaction, HEXO has loaned $20,000,000 to Belleville Complex to acquire the building. The loan will be repaid within 120 days
from September 7, 2018, and as of October 7, 2018, will bear interest at an annual rate of 4%, which interest shall be payable
monthly. The loan is secured by a first mortgage over the building. The transaction is subject to the satisfaction of certain
conditions and is scheduled to close on October 12, 2018.
The transaction is considered a “related party transaction” within the meaning of Multilateral Instrument 61 -
101 - Protection of Minority Security Holders in Special Transactions (“MI 61-101”) because Mr. Vincent Chiara, a director
of HEXO, holds a majority interest in Olegna Holdings Inc. HEXO is relying on applicable exemptions from the minority
approval and valuation requirements of MI 61-101 on the basis that neither the fair market value of the subject matter of, nor the
fair market value of the consideration for, the transaction exceeds 25% of HEXO’s market capitalization. The terms of the
transaction have been reviewed and approved by the independent directors of the Company, and the rental rates for the
facility were supported by estimates from independent appraisers.
About HEXO Corp.
HEXO Corp. creates and distributes innovative, easy-to-use and easy-to-understand products to serve the Canadian
cannabis market. One of the country’s lowest-cost producers, HEXO is rapidly increasing its production capacity in the lead up to
the adult-use cannabis market. The Company currently operates with over 310,000 sq. ft. of production capacity with construction on
another 1,000,000 sq. ft. expansion set to be complete by year end. HEXO will serve the adult-use market under the HEXO brand,
while continuing to serve its medical cannabis clients through the well-known Hydropothecary brand.
Forward-Looking Information
This press release may contain forward-looking information that is based on certain assumptions and involves
known and unknown risks and uncertainties and other factors that could cause actual events to differ materially from current
assumptions and expectations. These statements should not be read as guarantees of future performance or results. Such statements
involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be
materially different from those implied by such statements. A more complete discussion of the risks and uncertainties facing the
Company appears in the Company’s Annual Information Form and continuous disclosure filings, which are available on SEDAR’s website
at www.sedar.com. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date of this press release. The Company disclaims any
intention or obligation, except to the extent required by law, to update or revise any forward-looking statements as a result of
new information or future events, or for any other reason.
Neither the Toronto Stock Exchange nor its Regulation Services Provider (as that term is defined in the
policies of the Toronto Stock Exchange) accepts responsibility for the adequacy or accuracy of this release.
Investor Relations:
Jennifer Smith
Manager of Financial Reporting and Investor Relations
1-866-438-8429
invest@HEXO.com
www.THCX.com
Media Relations:
Sarah Brown
sarah.brown@hexo.com
Director
Adam Miron
819-639-5498
