QUEBEC, Quebec, Oct. 31, 2018 (GLOBE NEWSWIRE) -- HEXO Corp. (“HEXO” or the “Company”) (TSX:HEXO) has announced the
closing of the acquisition of its interest in a large facility in Belleville, Ontario. This is the first facility that the Company
has established outside of Quebec, further delivering on its national expansion strategy and allowing HEXO to create a centre of
excellence for the development of advanced cannabis products.
“Closing the transaction and acquiring our interest in this facility is integral to carrying out our hub and spoke business
strategy,” said Sebastien St-Louis, HEXO’s CEO and co-founder. “The space can be scaled up based on our future needs and provides
HEXO with the infrastructure it needs to continue partnering with Fortune 500 companies and to create category-winning cosmetics,
edibles, vapes and more.”
The centralized location, conveniently located along primary shipping routes in Ontario, will allow HEXO to process and
distribute cannabis-based products to fulfil its commitments across Canada.
The Company will host an event in late November to give the residents of Belleville and the surrounding areas the opportunity to
come learn about HEXO’s history and vision from Chief Brand Officer and co-founder, Adam Miron. HEXO will also use the event as an
opportunity to provide information about the types of jobs that will be available at the facility and the projected timelines for
the Belleville location.
“Establishing operations in Belleville allows us to capture the skilled local workforce, many of whom may have previously worked
at the facility when it was a Sears Distribution Centre,” said Miron. “We look forward to building close ties in the region and
supporting its economic wellbeing for years to come.”
The building is owned by Belleville Complex Inc. and is a joint venture in which Olegna Holdings Inc. will hold a 75% interest
and HEXO will hold a 25% interest, with the potential to acquire an additional 10% interest once certain milestones are met.
In addition to its initial lease of 579,000 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.
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:
Kathy Chow
1-866-438-8429
invest@HEXO.com
www.ir.hexo.com
Media Relations:
Sarah Brown
media@hexo.com
Director
Adam Miron
819-639-5498
