Green Growth Brands Files to Accelerate Expiration of Aphria Bid
GGB initiates 27.3 million share buyback from GA Opportunities which would result in the cancellation of 13% position
COLUMBUS, OH, April 15, 2019 /CNW/ – Green Growth Brands Inc. (“Green Growth” or the “Company”) (CSE: GGB) today announced that it has reached an agreement with Aphria Inc. (“Aphria”) to shorten the expiry time for acceptance of its formal offer (the “Offer”) to acquire all of the issued and outstanding common shares (the “Aphria Shares”) of Aphria (TSX: APHA and NYSE: APHA) from 5:00 p.m. (Toronto time) on May 9, 2019 to 5:00 p.m. (Toronto time) on April 25, 2019 (the “Expiry Time”).
The Company has also agreed to repurchase 27,300,000 of its common shares held by GA Opportunities Corp. (“GAOC”) for aggregate consideration of C$89 million, or a significantly discounted price of approximately C$3.26 per share (the “Repurchase”). The aggregate consideration will be paid through a combination of cash and a secured promissory note (the “Note”) payable in 6 months from the closing of the Repurchase. Green Growth has granted a security interest to GAOC to secure its obligations under the agreement relating to the Repurchase and the Note. GAOC will continue to hold 200,000 Green Growth shares following completion of the Repurchase, which shares will be subject to a 12 month lock-up agreement on customary terms with 16,666 shares released per month. As GAOC will hold less than 5% of the issued and outstanding Green Growth common shares on closing of the Repurchase (on a non-diluted basis), it will no longer have rights under the Nomination Rights Agreement with the Company.
The Company’s Repurchase of its common shares will allow for the elimination of the second largest block of its outstanding shares at a price that is significantly below the market price.
We are pleased to be buying back 27,300,000 shares owned by GA Opportunities significantly below the market price and the expected sale of our toehold position of 3 million shares of Aphria, all of which will benefit our shareholders,
Peter Horvath, CEO of Green Growth Brands
We are bringing our offer to an end on good terms with Aphria and are excited to turn our focus to our CBD personal care and retail cannabis businesses. We are actively continuing to review other partnerships and M&A opportunities to accelerate the build out of our company.
The Company is entitled to shorten the time period for acceptance of the Offer as Aphria today issued a deposit period news release (within the meaning of National Instrument 62-104 – Take-Over Bids and Issuer Bids (NI 62-104)) stating “Aphria has agreed to reduce the initial deposit period of the bid to 92 days from January 23, 2019”. In connection with the acceleration of the Offer, Aphria and the Company have also agreed to a mutual 12 month standstill period and have agreed to enter into discussions involving a potential commercial arrangement between the parties. All other terms and conditions of the Offer remain unchanged.
A Notice of Variation with respect to the Offer will be filed with the Canadian securities regulators, will be mailed to holders of Aphria Shares and will be available for review on SEDAR at www.sedar.com. The Notice of Variation should be read in conjunction with the original offer to purchase and circular, dated January 22, 2019 (the “Offer to Purchase and Circular”) and the other documents accompanying the Offer to Purchase and Circular.
Both Green Growth and Aphria have determined that the accelerated expiry of the Offer is, in lieu of proceeding with the Offer for an extended period of time, in their respective best interests. Both Green Growth and Aphria agree that the proposed transaction, as described in more detail in the Notice of Variation, is superior to the Offer. If the Offer is successful, then the proposed transaction among Green Growth, Aphria and GAOC will terminate and not be completed.
Relief was granted to Green Growth on April 12, 2019 by the Ontario Securities Commission (the “Relief”) from certain formal requirements relating to issuer bids in connection with completing the Repurchase. The Repurchase is expected to occur in early May after the expiry of the Offer and is conditional on the satisfaction of the terms of the Relief, including that the price at which the Repurchase is completed is not greater than the market price of the common shares (calculated in accordance with NI 62-104). The Company has obtained written consents for the Repurchase from shareholders holding, in the aggregate, a majority of the outstanding voting shares of the Company, other than voting shares held by interested parties, related parties of interested parties and their joint actors.
The Board of Directors of the Company has received an opinion from the Company’s financial advisor that the Repurchase is fair, from a financial point of view, to the Company’s shareholders (other than GAOC).
Based on the closing price of $3.86 per Green Growth Share on the CSE as of April 12, 2019, the last trading day prior to the date of the Notice of Variation, the implied Offer Consideration would be $6.07 per Aphria Share (being a 54.8% discount to the Aphria Shares’ closing price of $13.41 on the Toronto Stock Exchange on April 12, 2019).
Legal counsel to Green Growth was Norton Rose Fulbright Canada LLP and Canaccord Genuity Corp. was financial advisor for the Offer. Kingsdale Advisors was Green Growth’s strategic shareholder and communications advisor and depositary.