Capital will Allow 4Front to Pursue Accretive Acquisitions as Companies Work Towards Definitive Agreement and Closing of Transaction
VANCOUVER, BC, December 28, 2018 – Cannex Capital Holdings Inc. (CSE: CNNX) (“Cannex” or the “Company”) is pleased to announce that it has issued 4Front Holdings LLC (“4Front”) a demand unsecured promissory note which allows 4Front to draw-down up to US$8,000,000 (the “Note”). The Note will provide 4Front additional capital to execute on growth initiatives and potential acquisitions while Cannex and 4Front move towards their previously announced business combination (the “Transaction”). No funds have been advanced by Cannex to 4Front at this time.
As we work diligently towards the signing of a definitive agreement combining our businesses, we want 4Front to be in a position of having additional capital available to execute on projects which will be strategically important to the combined entity.
Anthony Dutton, Cannex’s CEO
We also anticipate that a significant portion of the capital may be deployed to expand 4Front’s facilities in Illinois and Massachusetts. Cannex’s team, including its COO Leo Gontmakher, are already working on planning the expansions in those facilities.
The Note bears interest at the published prime rate (“Prime”) of 5.5% as of December 20, 2018. If the Transaction fails to close by April 30, 2019, or some other date as mutually agreed, the interest rate increases to Prime plus 5%, and the Note must be repaid within ninety (90) days. Per the covenants contained in the convertible debt issued in November 2018 to Gotham Green Partners LLC (“GGP”), GGP has approved the extension of the Note to 4Front.
For further information on the proposed Transaction, see the Company’s news release dated November 26, 2018 (a copy is available under the Company’s SEDAR profile at www.sedar.com). Closing of the Transaction will remain subject to Cannex shareholder approval, court approval(s), the Canadian Securities Exchange, as well as any other approvals for that are customary for a transaction of this nature. There can be no assurances that the Transaction will be completed as proposed or at all.
About Cannex Capital Holdings Inc.
Cannex, through its wholly-owned subsidiaries, provides a wide range of services including real estate, management, financial, branding and IP to licensed cannabis business operators domestically and internationally. Cannex is focused on premium indoor cultivation, extraction, manufacturing and branding of edible and derivative products as well as retail operations. Cannex is undertaking expansion initiatives to support the acquisition and development of additional assets in legal medical and recreational cannabis markets. Based in Vancouver, BC, Cannex is managed by a team of experienced industry and capital markets experts who are committed to aggressive, cost-effective growth. Cannex currently owns BrightLeaf Development LLC which holds real estate assets, property leases, brands and intellectual property, and material supply agreements with Superior Gardens LLC (d/b/a Northwest Cannabis Solutions), Washington State’s and the Pacific Northwest’s largest full-line cannabis producer/processor, as well as 7Point Holdings LLC, another Washington State licensed cannabis producer/processor. Northwest Cannabis Solutions and 7Point Holdings are not Cannex subsidiaries, and Cannex does not hold any ownership position in either company.