AIM3 and Southern Sun Enter into Letter of Intent to Complete Qualifying Transaction
AIM3 VENTURES INC.
AIM3 AND SOUTHERN SUN ENTER INTO LETTER OF INTENT
TO COMPLETE QUALIFYING TRANSACTION
NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN
THE UNITED STATES
TORONTO, January 21 , 2019 (Globe Newswire) – AIM3 Ventures Inc. (TSXV:AIMC .P) ("AIM3") and
Southern Sun Pharma Inc. (“Southern Sun” or the “Company”) are pleased to announce that they have
entered into a binding letter of intent dated January 21, 2019 (the "LOI"), which outlines the terms and
conditions pursuant to which AIM3 and the Company will complete a transaction that will result in a
reverse take-over of AIM3 by Southern Sun (the "Proposed Transaction"). The Proposed Transaction will
be an arm's length transaction, and, if completed, will constitute AIM3's "Qualifying Transaction" (as such
term is defined in Policy 2.4 of the TSX Venture Exchange (the "TSXV") Corporate Finance Manual (the
“Manual”)).
In connection with the Proposed Transaction, AIM3 and the Company will issue a subsequent news
release setting out further information contemplated in Policy 2.4 of the Manual.
Southern Sun
Southern Sun has been operating since February 2017 and was incorporated on June 7, 2018 under the
Business Corporations Act (British Columbia) and is not a reporting issuer in any province or territory of
Canada. The Company is led by a team of executives with a proven track record of execution and
creation of shareholder value in Africa. W arren Schewitz, a resident of Cape Town, South Africa
indirectly holds a controlling interest in Southern Sun. Southern Sun aims to differentiate itself through
best of class cultivation, processing, distribution, brand and retail with a focus on the sign ificant sub -
Saharan African consumer demographic. To date, in South Africa, the Company has applied for a
cannabis cultivation, production and extraction licence; in Lesotho, the Company has entered into a share
purchase agreement to acquire ownership of the majority of an existing cannabis production licence
holder with closing expected in the next few weeks; in Malawi, the Company has entered into a
memorandum of understanding to acquire an ownership position in two separate cultivation cannabis
licence applicants; and in Zimbabwe, the Company has entered into a memorandum of understanding
with a governmental agency to acquire an ownership position in a cultivation cannabis licence.
Southern Sun aims to capitalize on significantly lower cost production in Africa to distribute and supply
both the local cannabis market and export markets with a focus on countries in near proximity to its
headquarters in South Africa. The Company plans to build a fully integrated cultivation, extraction,
processing and pro duct manufacturing facility at each of its locations with a combination of outdoor
greenhouses and controlled growing environments.
Southern Sun is also establishing a retail footprint and uniquely African brand and product line. This
includes both the rol lout of their own stores as well as through partnerships and joint ventures with major
retailers and beverage distributors. The brand and retail arm of the Company is overseen by a team of
veteran South African retailers who have been successful at buildin g brands from inception into major
retail chains.
AIM3 Ventures
AIM3 was incorporated under the Business Corporations Act (Ontario) and is a Capital Pool Company (as
defined in the policies of the TSXV) listed on the TSXV. AIM3 has no commercial operation s and no
assets other than cash.
Proposed Transaction Summary
The Proposed Transaction is expected to be structured as a three -cornered amalgamation pursuant to
the provisions of the Business Corporations Act (British Columbia) (the “BCA”), whereby AIM3 wi ll
incorporate a wholly -owned subsidiary, under the BCA, which will amalgamate with Southern Sun (the
"Amalgamation") to form a newly amalgamated company ("Amalco"). In connection with the
Amalgamation, holders of common shares in the capital of Southern S un ("Southern Sun Shares") will
receive one common share in the capital of the Resulting Issuer (as defined below) for each Southern
Sun Share held immediately before the Amalgamation and each whole Southern Sun common share
purchase warrant will be exchanged for a common share purchase warrant to acquire one common share
in the capital of the Resulting Issuer. In addition, each outstanding AIM3 common share (the “AIM3
Shares”) and security convertible into an AIM3 Share shall be adjusted in accordance wit h its terms to
account for the Consolidation (as defined below) and, in respect of certain of the AIM3 stock options, to
amend the expiry date of such options to a date that is 12 months following completion of the Proposed
Transaction.
In connection with the Proposed Transaction, it is anticipated that AIM3 will consolidate its common
shares (“AIM3 Shares”) on the basis of an agreed upon formula whereby the value of AIM3 will be divided
by the combined value of AIM3 and Southern Sun to yield a percentage with such percentage
representing the percentage ownership of the Resulting Issuer to be held by AIM3 shareholders and
whereupon such AIM3 Shares will be consolidated accordingly to yield such percentage ownership upon
completion of the Proposed Transactio n (the “Consolidation”). More specifically and as set forth in detail
in the LOI, upon completion by the Company of a financing within set parameters (the “Consolidation
Financing”), the total issued and outstanding Southern Sun Shares, including Southern Sun Shares
issued in connection with the Consolidation Financing, will be multiplied by the subscription price per
security from such Consolidation Financing to yield the value of the Company for purposes of determining
the combined value of AIM3 and the Company on which the Consolidation will be based.
Upon completion of the Proposed Transaction, Amalco and will carry on the business of Southern Sun as
a wholly-owned subsidiary of AIM3. Accordingly, AIM3 will change its name (“Name Change”) to a name
to be determined by the Company and as may be acceptable to the TSXV and regulatory authorities (the
“Resulting Issuer”).
In addition, if deemed necessary to facilitate completion of the Proposed Transaction, AIM3 will continue
out of the Province of Ontario and into the Province of British Columbia and in connection therewith, will
adopt a new general by -law in accordance with the provisions of the BCA (the “Continuation”). It is also
expected that AIM3 will put in place a new stock option plan on terms acceptable to the TSXV and
applicable regulatory authorities (the “Option Plan”).
The Proposed Transaction is subject to the parties entering into a definitive agreement in respect of the
Proposed Transaction (the "Definitive Agreement") on or be fore April 15, 2019, or such other date as
AIM3 and the Company may mutually agree. Completion of the Proposed Transaction is also subject to a
number of other conditions, including obtaining all necessary board, shareholder and regulatory
approvals, including TSXV approval.
In connection with the Proposed Transaction, AIM3 will convene a meeting of its shareholders for the
purpose of approving, among other matters, the Consolidation, the Continuation, the election of the Board
Nominees (if necessary pursua nt to applicable law; as defined herein), the Proposed Transaction (if
required by the policies of the TSXV), the Name Change and the adoption of the new Option Plan.
Southern Sun will convene a meeting of its shareholders for the purpose of approving the Amalgamation
As at the date of this news release, on a pre-Consolidation basis, AIM3 has: (a) 10,650,000 AIM3 Shares;
and (b) 1,065,000 stock options and 500,000 broker warrants, each exercisable to acquire one AIM3
Share. As at the date hereof, the Company has 20,770, 000 Southern Sun Shares and 2,199,395
common share purchase warrants, each exercisable to acquire one Southern Sun Share.
As at the date hereof it is not possible for the parties to determine the number of Resulting Issuer Shares
that will be issued upon completion of the Proposed Transaction nor the ownership percentages
associated with AIM3 and the Company as this will depend upon the Consolidation Financing and the
Consolidation, both factors having an impact on the total number of Resulting Issuer Sha res that will be
issued in connection with the Amalgamation.
A joint management information circular of AIM3 and Southern Sun will be prepared and filed in
accordance with the policies of the TSXV and mailed to shareholders of record of each of AIM3 and
Southern Sun.
Concurrent Financing
In connection with the Proposed Transaction, it is expected that Southern Sun will undertake one or more
financings for aggregate gross proceeds of up to $10,000,000 but not less than $5,000,000.
Notwithstanding the for egoing, at the time of such financings the Company will consider, among other
things, general market conditions, the development and growth of the Company along with the capital
requirements necessary to execute on the business plan and strategy of the Com pany and may revise or
adjust the scope of the financings accordingly.
Officers and Directors
Prior to completion of the Proposed Transaction and subject to approval by the TSXV and the filing of all
required materials, the members of the board of dire ctors of the Resulting Issuer (the “Board Nominees”)
will be nominated by the Company and elected by the shareholders of AIM3, such election to be subject
to the completion of the Proposed Transaction. Further, the officers of the Resulting Issuer will be
determined prior to completion of the Proposed Transaction.
Non-Arm’s Length Parties
Alan Friedman serves as a director on the boards of both AIM3 and Southern Sun, a position that Mr.
Friedman has disclosed to AIM3 and Southern Sun. Neither Mr. Friedma n, nor any other party to the
Proposed Transaction or their respective Associates or Affiliates (as defined in the Manual), is a Control
Person (as defined in the Manual) of both AIM3 and the Company and as such the Proposed Transaction
will not be a Non-Arm’s Length Party Transaction (as defined in the Manual).
Trading in AIM3 Shares
Trading in AIM3 Shares has been halted in compliance with the policies of the TSXV. Trading in AIM3
Shares will remain halted pending the review of the Proposed Transaction by the TSXV and satisfaction
of the conditions of the TSXV for resumption of trading. It is likely that trading in the AIM3 Shares will not
resume prior to the closing of the Proposed Transaction.
About Southern Sun
Southern Sun is a Canadian registered co mpany with an exclusive focus on cannabis in Africa. Led by a
team of executives with a proven track record of execution and shareholder value creation on the African
continent, the Company aims to differentiate itself through best in class cultivation, p rocessing,
distribution, brand and retail. The Company has a portfolio of licences and licence -applications in South
Africa, Lesotho, Malawi and Zimbabwe. In addition, the Company is establishing a retail footprint and
uniquely African brand and product line both with their own stores as well as established partnerships
with major retailers and beverage distributors focused on the significant sub -Saharan African consumer
demographic.
Cautionary Note Regarding Forward-Looking Information
This press release contains statements which constitute "forward -looking information" within the meaning of
applicable securities laws, including statements regarding the plans, intentions, beliefs and current expectations of
AIM3 and Southern Sun with respect to fut ure business activities and operating performance. Forward -looking
information is often identified by the words "may", "would", "could", "should", "will", "intend", "plan", "anticipate",
"believe", "estimate", "expect" or similar expressions and includes i nformation regarding: (i) expectations regarding
whether the Proposed Transaction will be consummated, including whether conditions to the consummation of the
Proposed Transaction will be satisfied including, but not limited to, the necessary board, shareh older and regulatory
approvals and the timing associated with obtaining such approvals, if at all; (ii) the timing for completing the Proposed
Transaction, if at all; (iii) whether and on what basis the AIM3 Shares will be consolidated and if the Consolida tion will
be approved by shareholders and the timing associated therewith; (iv) the necessity of the Continuation and if
determined necessary, the timing associated therewith; (v) the timing associated with entering into the Definitive
Agreement and the te rms and conditions therein; (vi) the financings including the size and timing associated with
completing such financings; (vii) the preparation and delivery to shareholders of a joint management information
circular, the timing associated with its preparat ion and delivery to shareholders and the convening of the necessary
shareholder meetings; (viii) the business plans and expectations of the Company including, in Lesotho, the expected
timing for closing the share purchase transaction; (ix) trading in AIM3 Shares and when such trading will resume, if at
all; (x) the issuance of and timing associated with issuing a further comprehensive news release or news releases;
and (xi) expectations for other economic, business, and/or competitive factors.
Investors are cautioned that forward-looking information is not based on historical facts but instead reflect AIM3 and
Southern Sun's respective management's expectations, estimates or projections concerning future results or events
based on the opinions, assumptions and estimates of management considered reasonable at the date the statements
are made. Although AIM3 and the Company believe that the expectations reflected in such forward -looking
information are reasonable, such information involves risks and uncertaintie s, and undue reliance should not be
placed on such information, as unknown or unpredictable factors could have material adverse effects on future
results, performance or achievements of the Resulting Issuer. Among the key factors that could cause actual r esults
to differ materially from those projected in the forward-looking information are the following: the ability to consummate
the Proposed Transaction; the ability to obtain requisite regulatory and shareholder approvals and the satisfaction of
other conditions to the consummation of the Proposed Transaction on the proposed terms and schedule; the potential
impact of the announcement or consummation of the Proposed Transaction on relationships, including with regulatory
bodies, employees, suppliers, cust omers and competitors; changes in general economic, business and political
conditions, including changes in the financial markets; changes in the perception and demand for cannabis in both
local and export markets; changes in applicable laws and regulation s both locally and in foreign jurisdictions;
compliance with extensive government regulation and the costs associated with compliance; costs of building and
developing projects and product opportunities; the risks and uncertainties associated with foreign markets; and the
diversion of management time on the Proposed Transaction. This forward -looking information may be affected by
risks and uncertainties in the business of AIM3 and the Company and market conditions.
Should one or more of these risks or unce rtainties materialize, or should assumptions underlying the forward -looking
information prove incorrect, actual results may vary materially from those described herein as intended, planned,
anticipated, believed, estimated or expected. Although AIM3 and th e Company have attempted to identify important
risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause
results not to be as anticipated, estimated or intended and such changes could be material . AIM3 and the Company
do not intend, and do not assume any obligation, to update this forward -looking information except as otherwise
required by applicable law.
Completion of the Proposed Transaction is subject to a number of conditions, including but no t limited to TSXV
acceptance and, if applicable pursuant to TSXV requirements, majority of the minority shareholder approval. Where
applicable, the Proposed Transaction cannot close until the required shareholder approval is obtained. There can be
no assurance that the Proposed Transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the joint management information circular of AIM3 and Southern
Sun to be prepared in connection with the Proposed Transaction, any information released or received with respect to
the Proposed Transaction may not be accurate or complete and should not be relied upon. Trading in the securities
of AIM3 should be considered highly speculative.
The TSXV has in no way passed upon the merits of the Proposed Transaction and has not approved or disapproved
of the contents of this news release.
Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts
responsibility for the adequacy or accuracy of this release.
SOURCE AIM3 Ventures Inc.
For further information: please contact:
Southern Sun Pharma Inc.
Warren Schewitz
E-mail: [email protected]
Phone (+27) 82 040 7274
AIM3 Ventures Inc.
Zachary Goldenberg, Chief Executive Officer
E-mail: [email protected]
Phone: 647-987-5083