August 23, 2023 By Grow Opportunity Staff
(Globe Newswire) Toronto — Red White & Bloom Brands Inc. is providing an update on matters relating to Aleafia Health Inc.
RWB is pleased to announce that the Ontario Superior Court of Justice has approved a stalking horse asset purchase and share subscription agreement pursuant to which RWB would acquire certain assets from Aleafia Health and subscribe for shares of certain subsidiaries of Aleafia Health if RWB becomes the successful bidder pursuant to the sale and investment solicitation process also approved by the Court in connection with the proceedings of Aleafia and certain of its subsidiaries under the Companies’ Creditors Arrangement Act (CCAA).
As part of the Aleafia CCAA proceedings, Aleafia obtained an order from the Court earlier today approving, among other things, (i) an extension of the stay period until October 31, 2023; (ii) the SISP submitted by the Aleafia Group and KSV Restructuring Inc. in its capacity as monitor in the Aleafia CCAA Proceedings; (iii) the Stalking Horse Agreement (solely for the purposes of being the stalking horse bid under the SISP; and (iv) the preservation and maintenance of the Aleafia Group’s Health Canada and cannabis excise licences until the expiration of the Stay Period, including the ability of the Aleafia Group to sell cannabis in the ordinary course under the licences and, to the extent any licence may expire during the Stay Period, an extension of such licence by a period equal to the Stay Period.
The Stalking Horse Agreement provides for a reverse vesting transaction whereby a wholly-owned subsidiary of RWB would subscribe for shares of Emblem Cannabis Corporation, Canabo Medical Corporation, Aleafia Farms Inc. and Aleafia Retail Inc. and acquire specific intellectual property owned, licensed or leased by Aleafia Health. Certain excluded assets and liabilities of the Aleafia Purchased Entities would be transferred to one or more corporations that would not be included among the Aleafia Purchased Entities at closing. RWB’s subsidiary would be the sole shareholder of the Aleafia Purchased Entities following closing.
The consummation of the transactions contemplated under the Stalking Horse Agreement are subject to satisfaction or waiver of certain conditions set forth in the Stalking Horse Agreement, including, among other things, the Court granting the requisite approval and vesting order as a final order, the Stalking Horse Agreement being determined to be the successful bid under the SISP, receipt of all required regulatory approvals and the licences being in good standing and continuing in good standing and not suspended or terminated following the closing date.
There is no assurance that RWB’s Stalking Horse Bid will be the successful bid under the SISP. If RWB’s Stalking Horse Bid is unsuccessful, the Stalking Horse Agreement will terminate. Any alternative successful bid would result in the repayment in full of all amounts outstanding under the Aleafia Senior Secured Loan Agreement and the DIP Loan in addition to the payment of an expense reimbursement of up to $500,000 associated with transaction costs incurred by RWB in connection with the preparation of RWB’s Stalking Horse Bid.
The entering into the Stalking Horse Agreement was evaluated and ultimately approved by the disinterested members of the board of directors of each of Aleafia Health and RWB. The disinterested members of the board of directors of RWB excluded Mr. Colby De Zen, President and Director, who, in accordance with Canadian corporate law requirements, recused himself from consideration of, and voting on, the Stalking Horse Agreement.
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