Navion Announces Letter of Intent and Intention to Complete Its Qualifying Transaction
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NAVION CAPITAL INC.
NAVION ANNOUNCES LETTER OF INTENT
AND INTENTION TO COMPLETE ITS QUALIFYING TRANSACTION
Press Release – For Immediate Dissemination
August 22, 2018 – Calgary, Alberta – NAVION CAPITAL INC. (TSXV - NAVN.P) (the
“Corporation”), a capital pool company, is pleased to announce that it has signed a letter of intent dated
August 17, 2018, (the " LOI") with Hollyweed North Cannabis Inc. (“ Hollyweed North ”), a private
Canadian company incorporated in British Columbia, established in 201 6, with operating subsidiaries
specializing in the growth, manufacturing, licensing and production of cannabis and other pharma -grade
products. Hollyweed North’s subsidiaries include Hollyweed Manufacturing and Extracts Inc.
(“Extracts”), federally dealers’ licensed company incorporated in British Columbia specializing in cannabis
extraction and product manufacturing , Hollyweed G row Inc. (“ Grow”), a late stage fede ral ACMPR
Applicant, also a private company incorporated in British Columbia specializing in the growth of medical
cannabis and cannabis products, Hollyweed Retail Inc. (“ Retail”), a retail strategies provider and supply
chain management company incorporated in British Columbia , Hollyweed Bakery Inc. (“ Bakery”), a
developer and manufacturer of unique cannabis baked goods and edibles incorporated in British Columbia,
and Terracube International Inc. (“ Terracube”), a manufacturer and developer of proprietary scalable,
sanitary grow facilities incorporated in British Columbia (collectively, the “Business”). Hollyweed North
is currently restructuring its capital such that, upon execution of the Definitive Agreement (defined
below), all of the subsidiaries will be wholly-owned by Hollyweed North.
The LOI outlines the general terms and conditions pursuant to which the Corporation and all its constituent
companies intend to complete a transaction that will result in a reverse take-over of the Corporation by the
security holders of Hollyweed North and is intended to constitute the “qualifying transaction” of the
Corporation under Policy 2.4 – Capital Pool Companies of the TSX Venture Exchange (the "TSXV"). The
Corporation expects to be classified as a Life Sciences issuer upon completion of the transaction.
The transaction is expected to result in the security holders of Hollyweed North exchanging all
securities, consisting of 84,902,686 common shares (following completion of the Financing, as defined
below), 4,181,843 stock options and 56,000 purchase warrants for 84,902,686 shares, 4,181,843 stock
options and 56,000 warrants of the Corporation, on the same terms, at a deemed price of $1.00 per share
for a total deemed consideration of $ 84,902,686. The transaction will be structured by way of a plan of
arrangement, amalgamation, merger, takeover bid, reorganization or other similar form of transaction,
as determined following a review of all relevant legal, regulatory and tax matters (the "Transaction").
The LOI contemplates the Corporation and Hollyweed North entering into a definitive agreement (the
"Definitive Agreement ") prior to August 31, 201 8 (or such other date as may be agreed to by the
parties). The Transaction is conditional upon the parties completing successful due diligence reviews of
each other, the completion by Hollyweed North (with the assistance of Navion) of an interim financing
yielding at least $2 million in gross proceeds, requisite regulatory approvals, including the approval of the
TSXV, and standard closing conditions, including the approval of the Transaction by directors of each of
the parties Corporation and those conditions outlined below. The legal structure for the Transaction
will be confirmed after the parties have considered all applicable tax, securities law and accounting
efficiencies although it is not anticipated that the Transaction will require shareholder approval..
The Corporation is incorporated under the provisions of the Business Corporations Act (Alberta)
with its registered and head office in Calgary, Alberta and is a "reporting issuer" in the provinces of
British Columbia and Alberta.
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The Transaction is not a Non-Arm's Length Qualifying Transaction within the meaning of the policies of the
TSXV. Trading in the shares of the Corporation on the TSXV has been halted and will remain halted
pending receipt by the TSXV of applicable documentation.
Terms of the LOI and Conditions to the Transaction
The LOI provides that completion of the Transaction is subject to a number of conditions including:
A concurrent private placement to raise a minimum CDN$2 million in additional funds by the
issuance of common shares of Hollyweed North (the “Financing”) at an effective price of $1.00 per
share. The proceeds of the Financing will be used by the Resulting Issuer for improvements to the
Facility, the purchase of equipment, and general and administrative expenses. The Financing will be
offered to persons who qualify as “accredited investors” or who similarly qualify in the jurisdiction
in which they reside to purchase subscription receipts on a prospectus-exempt basis.
The completion of satisfactory due diligence by each party by August 31, 2018;
The approval of the Transaction by the board of directors of each of Hollyweed North and Navion;
The Corporation will have obtained all necessary approvals, consents and acceptances, including all
necessary approvals from the applicable securities regulatory authorities.
The parties will prepare a filing statement or information circular in accordance with the rules of
the TSXV, outlining the terms of the Transaction.
Hollyweed will obtain the requisite securityholder approvals, as applicable, for the Transaction.
All requisite regulatory approvals relating to the Transaction, including, w ithout limitation,
meeting the minimum listing requirements of the TSXV and obtaining TSXV approval.
It is a further term of the LOI that upon completion of the Transaction the resulting issuer's board will be
comprised of directors that will be nominated by Hollyweed North and Navion jointly.
About Hollyweed North Cannabis Inc.
Hollyweed North Cannabis Inc. was founded Decem ber 2016 and incorporated February 2017 to enter
into the Canadian federally regulated cannabis production and manufacturing space, legislated for the
adult-use recreational market October 2018. Initiated and led by Renee Gagnon, the founder of one of
Canada’s original licensed producers (Thunderbird Biomedical (Federal License 005) now Emerald
Health (TXV:EMH.V)), Hollyweed North provides economies of scale to other licensed participants such
as existing licensed producers lacking these abilities (100+) as well as the new upcoming micro producer
marketplace.
The business and its subsidiaries to date has been the planning, preparation and application for two federal
licenses (ACMPR and Licensed Dealer) and development of its core proprietary technology, Terracube™
and various pre-license business development activities. To date over $6 million CAD has been deployed
on activities relating to these activities.
The Hollyweed North group of subsidiaries includes: Hollyweed Manufacturing and Extracts Inc.
(Licensed Dealer June 2018), Hollyweed Grow Inc. (late stage ACMPR applicant), Hollyweed Retail Inc.
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(retail solutions provider and supply chain management), Hollyweed Bakery Inc. (manufacturer of
cannabis baked goods and edibles) and Terracube International In c. (scalable, sanitary grow technology
manufacturer).
Further information relating to Hollyweed North and its subsidiaries, including financial information, will
be included in a subsequent press release in connection with the Transaction.
Renee Gagnon, CEO of the Hollyweed North, said “I’ve never been prouder of a team. I’ve been able to
assemble the best possible group of experts in global cannabis, pharma and technology. With our
extensive international reach and abilities, we are able to pursue an aggressive roadmap to success.”
Sponsorship
Sponsorship may be required by the TSXV unless exempt in accordance with TSXV policies. The
Corporation is currently reviewing the requirements for sponsorship and intends to apply for a waiver from
the sponsorship requirements. There is no assurance that a waiver from this requirement will be obtained.
The Corporation intends to include any additional information regarding sponsorship in a subsequent press
release.
All information contained in this news release with respect to the Corporation, Hollyweed North and its
subsidiaries was supplied by the parties, respectively, for inclusion herein, and each party and its directors
and officers have relied on the other party for any information concerning the other party.
For further information regarding the Transaction, please contact:
Livio Susin
Tel: (604) 789-2410
Email: [email protected]
Completion of the Transaction is subject to a number of conditions, including but not limited to, TSXV
acceptance and, if applicable, pursuant to the requirements of the TSXV, majority of the minority
shareholder approval. Where applicable, the Transaction cannot close until the required shareholder
and regulatory approval is obtained. There can be no assurance that the Transaction will be completed as
proposed or at all.
Investors are cautioned that, except as disclosed in the management information circular or filing
statement to be prepared in connection with the Transaction, any information released or received with
respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the
securities of the Corporation should be considered highly speculative.
This press release is not an offer of securities for sale in the United States. The securities described in this
press release have not been registered under the U.S. Securities Act of 1933, as amended, and may not be
offered or sold in the United States or to, or for the account or benefit of, U.S. persons (as defined in
Regulation S under the U.S. Securities Act of 1933, as amended) absent registration or an exemption from
registration. This press release shall not constitute an offer to sell or a solicitation of an offer to buy nor shall
there be any sale of the securities in any jurisdiction where such offer, solicitation, or sale would be unlawful.
The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed Transaction and
has neither approved nor disapproved the contents of this press release.
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NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES
PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE
EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS
RELEASE.
CAUTIONARY STATEMENT REGARDING FORWARD -LOOKING INFORMATION: This news release includes
certain "forward-looking statements " under applicable Canadian securities legislation. Forward-looking
statements include, but are not limited to, statements with respect to: the terms and conditions of the proposed
Transaction; the terms and conditions of the proposed Financing; future developments and the business and
operations of the "Resulting Issuer " after the proposed Transaction. 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, competitive, political and social uncertainties; and delay or failure to
receive board, shareholder or regulatory approvals. There can be no assurance that the Transaction will proceed
and 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 und ue reliance on forward -looking
statements. The Corporation and Hollyweed North disclaim 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.