MMCAP to Buy 80% of $35mm Cannabis Wheaton Convertible Debt Deal

Cannabis Wheaton Announces Private Placement of Convertible Debenture Units

VANCOUVER, BRITISH COLUMBIA–(Marketwired – Sept. 18, 2017) –

Cannabis Wheaton Income Corp. (TSXV: CBW) (OTC: KWFLF) (“Cannabis Wheaton” or the “Company”) is pleased to announce a private placement offering of up to 35,000 of convertible debenture units (“Convertible Debenture Units”) for aggregate gross proceeds of up to $35 million (the “Offering”).

The net proceeds received by the Company will be used to fund working capital and general corporate purposes, including but not limited to, financing of the Company’s streaming partners pursuant to certain streaming agreements and general and administrative expenses.

MMCAP International Inc. SPC (the “Lead Subscriber”) and the Company have executed a binding term sheet with respect to the Offering, whereby the Lead Subscriber has agreed to subscribe for up to $28 million aggregate principal amount of Convertible Debenture Units. Closing of the Offering is subject to the satisfaction of customary conditions.

The Company has agreed to use its commercially reasonable efforts to obtain a receipt from the applicable Canadian securities regulatory authorities (the “Securities Commissions”) for a (final) short form prospect qualifying the distribution of the common shares of the Company (the “Common Shares”) issuable upon conversion of the Debenture and CD Warrants (the “Qualifying Prospectus”) before the date that is four months and one day following the closing of the offering; provided, however, that there is no assurance that a Qualifying Prospectus will be filed or that a receipt therefor will be issued by the Securities Commissions prior to the expiry of the statutory four month hold period.

Convertible Debenture Units

Each Convertible Debenture Unit will be offered at a price of $1,000 per Convertible Debenture Unit for aggregate gross proceeds of up to $35 million. Each Convertible Debenture Unit will consist of $1,000 principal amount of 8% senior unsecured convertible debentures (the “Debentures”) and 833 Common Share purchase warrants (the “CD Warrants”) of the Company. Each CD Warrant will be exercisable to acquire one Common Share at an exercise price of $1.20 per Common Share for a period of 24 months following the Closing Date.

The Debentures will bear interest from the closing date of the Offering at 8.0% per annum, calculated semi-annually on June 30 and December 31 of each year. The first interest payment will be made on June 30, 2018 and will consist of interest accrued from and including the Closing Date to June 30, 2018. The Debentures will mature on the date that is 60 months from the Closing Date (the “Maturity Date”).

The Debentures will be convertible at the option of the holder, at any time prior to the close of business on the last business day immediately preceding the Maturity Date, into (i) that number of common shares of the Company (“Common Shares”) computed on the basis of the principal amount of the Debentures divided by the conversion price of $1.20 per Common Share (the “Conversion Price”), and (ii) a cash payment equal to the additional interest amount that such holder would have received if it had held the Debenture from the date of conversion until the Maturity Date.

The Debentures will provide for the adjustment of the Conversion Price in certain events including, without limitation, the subdivision or consolidation of the outstanding Common Shares, the issue of Common Shares or securities convertible into Common Shares by way of stock dividend or distribution, the issue of rights, options or warrants to all or substantially all of the holders of Common Shares in certain circumstances, and the distribution to all or substantially all of the holders of Common Shares of any other class of shares, rights, options or warrants, evidences of indebtedness or assets.

Upon a change of control of the Company, on the date that is not less than 30 days following the giving of notice of the change of control, the Debenture holders shall, in their sole discretion, have the right to require the Company to, either: (i) purchase the Debentures at 100% of the principal amount thereof plus unpaid interest to the Maturity Date; or (ii) if the Change of Control results in a new issuer, convert the Debenture into a replacement debenture of the new issuer in the aggregate principal amount of 101% of the aggregate principal amount of the Debenture.

The Debenture shall be offered and sold by private placement (i) in Canada to “accredited investors” within the meaning of NI 45-106 – Prospectus Exemptions and other exempt purchasers in each province of Canada, and (ii) outside Canada and the United States on a basis which does not require the qualification or registration of any of the Debentures or the Company. The Debentures, CD Warrants and, subject to the Company filing a Qualifying Prospectus (as described above), the Common Shares issuable upon the conversion of the Debentures and CD Warrants, will be subject to a statutory four month hold period.

Related Party Disclosure

The Lead Subscriber is considered to be a related party for purposes of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”) and Policy 5.9 – Protection of Minority Security Holders in Special Transactions of the TSX Venture Exchange, making the Offering a “related party transaction”. Pursuant to MI 61-101, the Company has filed a material change report providing disclosure in relation to each “related party transaction” on SEDAR under the Company’s issuer profile at www.sedar.com. The Company did not file the material change report more than 21 days before the expected closing date of the Offering as the definitive documentation for the Offering and the participation therein by each “related party” of the Company were not settled until shortly prior to the closing of the Offering, and the Company wishes to close the Offering on an expedited basis for sound business reasons.

Closing Conditions and Related Matters

Subject to the satisfaction of customary of conditions, the Offering is expected to close on or about September 29, 2017.

ON BEHALF OF THE BOARD

Chuck Rifici, Chairman & CEO

About Cannabis Wheaton Income Corp. (CBW)

Backed by a team of industry experts, Cannabis Wheaton is the first cannabis streaming company in the world. Our streams will include production from across Canada coming from our partners comprised of licensed producers of cannabis (LP) and LP applicants. Cannabis Wheaton’s mandate is to facilitate real growth for our streaming partners by providing them with financial support and sharing our collective industry experience.

Stay Connected

For more information about Cannabis Wheaton and our management team, please visit: http://www.cannabiswheaton.com, or follow us on Twitter @CannabisWheaton.

Original press release: http://www.marketwired.com/press-release/cannabis-wheaton-announces-private-placement-of-convertible-debenture-units-tsx-venture-cbw-2234093.htm

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