Origin House Provides Corporate Update
Ottawa, Canada – July 2, 2019 – CannaRoyalty Corp. d/b/a Origin House (CSE: OH) (OTCQX: ORHOF) (“Origin House” or the “Company“), a North American cannabis products and brands company, provided an update regarding its pending transaction with Cresco Labs Inc. (“Cresco Labs”), the replacement of its debt facility and other business updates.
Update on U.S. Antitrust Review
As recently disclosed, in connection with the previously announced plan of arrangement pursuant to which Cresco Labs will acquire all of the issued and outstanding shares of Origin House (the “Arrangement”), the Company and Cresco Labs received requests for additional information (“Second Requests”) from the United States Department of Justice Antitrust Division (the “DOJ”) pursuant to the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“HSR Act”). The issuance of Second Requests is a statutory tool used by the DOJ to investigate pending transactions.
The effect of the Second Requests is to extend the waiting period imposed by the HSR Act until 30 days after both Origin House and Cresco Labs have substantially complied with their respective Second Requests, unless that period is extended voluntarily by the parties or terminated sooner by the DOJ. Origin House and Cresco Labs are cooperating fully with the DOJ’s investigation, are in active discussions with the DOJ regarding the Second Requests, have allocated the resources required to expeditiously and completely respond to the Second Requests, and look forward to completing the Arrangement.
The Origin House and Cresco Labs businesses are highly complementary, and areas of overlap are minimal and not material to either the strategic or financial rationale of the pending acquisition. Both companies are confident that the regulatory approvals will be obtained, and the Arrangement will proceed as planned.
Replacement of C$12 Million Debt Facility
The Company announced that it has entered into a binding term sheet agreement (the “Term Sheet”) with Opaskwayak Cree Nation (“OCN”) for a C$12 million debt financing (the “Financing”). Proceeds from the Financing are expected to be used by Origin House for the construction and expansion of its premium craft cannabis production facilities in Sonoma County – Cub City and FloraCal, for costs related to closing of the Arrangement, and for general corporate purposes. The Financing replaces the Company’s previously announced $12 million debt facility with a subsidiary of Sprott Inc. (“Sprott“), which has now been terminated.
$3,500,000 of the Financing has already been funded with the balance expected to be advanced in the coming days. The Financing is subject to a 5% commitment fee, bears interest at a rate of 10% per annum on the amount advanced and matures on December 31, 2019. The advances are currently evidenced by a promissory note which will be replaced by definitive loan and security documentation once such documentation is finalized.
The Company’s consolidated cash balance as of the end of the first quarter of 2019 was C$39.3 million.
Grant of Subordinate Voting Shares
The Company also announced that, as approved by shareholders at the Company’s special meeting of shareholders held on June 11, 2019, the Company has now amended its articles to create an unlimited number of subordinate voting shares. Each subordinate voting share is convertible into 0.000001 of one Common Share of the Company. As set out in the Company’s management information circular dated May 13, 2019, the Company intends to issue the subordinate voting shares to officers of the Company who are not resident in the United States.
On June 28, 2019, Origin House issued to Marc Lustig, Chairman and CEO of the Company, 50,000,000 subordinate voting shares as a share-based award for his past services at a deemed issue price of C$0.00000821 per subordinate voting share (an aggregate deemed issue price of C$410.50). The subordinate voting shares issued to Mr. Lustig are convertible into, in the aggregate, 50 Common Shares of the Company.
In accordance with Canadian Securities Exchange requirements, the securities issued are subject to a four month hold period.
About Origin House
Origin House is a growing cannabis brands and distribution company operating across key markets in the U.S. and Canada, with a strategic focus on becoming a preeminent global house of cannabis brands. Origin House’s foundation is in California, the world’s largest regulated cannabis market, where it delivers over 130 branded cannabis products from 50+ brands to the majority of licensed dispensaries. Origin House’s brand development platform is operated out of five licensed facilities located across California, and provides distribution, manufacturing, cultivation and marketing services for its brand partners. Origin House is actively developing infrastructure to support the proliferation of its brands internationally, initially through its acquisition of Canadian retailer 180 Smoke. Origin House’s shares trade on the CSE under the symbol “OH” and on the OTCQX under the symbol “ORHOF”. Origin House is the registered business name of CannaRoyalty Corp. For more information, visit www.originhouse.com.
For further inquiries, please contact:
LodeRock Advisors Inc., Origin House Investor Relations
Communications Manager, Origin House