Synstream Energy Corp. Announces Non-Binding Letter of Intent with Sundial Growers Inc.

Calgary, Alberta - Synstream Energy Corp. ("Synstream" or the "Corporation”) (TSXV:SHM), announced that it has entered into a non-binding letter of intent (“LOI”) with 1262430 Alberta Ltd. (“126”) and Sundial Growers Inc. (“Sundial”).

 

Pursuant to the LOI the Corporation intends to negotiate a purchase and sale agreement to acquire up to 66.6% of the issued and outstanding common shares of 10370738 Canada Inc. (“Holdco”), a wholly owned subsidiary of Sundial (the “Proposed Transaction”).  Holdco is the sole shareholder of Kamcan Products Inc. (“KPI”), a company applying for a license to produce under the Access To Cannabis for Medical Purposes Regulation (“ACMPR”).  The LOI contemplates that Synstream will fund the construction of the required building as contemplated by the ACMPR application in exchange for common shares of Holdco (the “Holdco Shares”).  126 is a corporation wholly owned by Johannes Kingma, who, through personal and corporate holdings, is a control person of the Corporation.  Pursuant to the Proposed Transaction 126 would acquire 13.4% of the Holdco Shares and Sundial would hold 20% of the Holdco Shares.

KPI is a late stage applicant under the ACMPR with a facility under construction located in Kamloops, British Columbia.   Steps which have been completed to date include submission of an application to Health Canada (September 5, 2013 (10-MM0122)) and receipt of approval by the City of Kamloops for use of the land for medical cannabis production purposes. The full facility is expected to comprise growing facilities and enhanced cannabis product manufacturing capabilities with total build out size of approximately 39,258 sq. ft.

 

As part of the Proposed Transaction, Synstream intends to raise up to $7.5 million through the issuance of common share units (“Units”) and through unsecured convertible debentures (the “Debentures”) (collectively the “Financing”). Each Unit will consist of one common share and one common share purchase warrant (“Warrant”). Each Warrant will entitle the holder thereof to acquire one additional common share of the Corporation for a period of one (1) year after the issuance of the Warrant subject to acceleration of that expiry date in certain circumstances. The pricing of the Units and the conversion price and interest rate applicable to the Debentures will be determined by the Corporation in the context of the market and consultation with its advisors.  The net proceeds from the Financing are anticipated to be used to fund the construction of the building and facilities in connection with KPI’s ACMPR application and for general corporate purposes.

 

The completion of the Proposed Transaction is subject to a number of conditions including negotiation and execution of a definitive agreement, receipt of all required regulatory approvals, including approval of the TSX Venture Exchange and completion of due diligence by each of Sundial, 126 and Synstream. There is no guarantee that the Proposed Transaction will be completed on the terms as described above or that the Proposed Transaction will proceed at all. Further details about the Proposed Transaction will be provided in a comprehensive news release when the parties enter into a definitive agreement and in a disclosure document to be prepared and filed in respect of the Proposed Transaction. 

 

Finally, the Corporation also announced that, subject to TSX Venture Exchange acceptance, it has granted options to certain directors, officers, and consultants to acquire an aggregate of 3.5 million common shares of Synstream.  These options will be exercisable at a price of $0.10 per share and will be issued pursuant to the terms of the Corporation’s Stock Option Plan.

 

About Sundial Growers Inc.:

 

Sundial is a privately held ACMPR licensed cannabis producer based in Alberta. Sundial currently has a cultivation license to produce medical cannabis at its Rocky View County facility and is expanding its operations in the Town of Olds, Alberta. Once this expansion is fully realized in 2019, Sundial expects to operate over half a million square feet of production facilities capable of producing 77,000 kilograms of cannabis per year.

 

For further information, contact:

 

David Pinkman

Chief Executive Officer (Interim)

(403) 863-6034

 

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.

 

Forward-Looking Statements

 

This news release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information or statements. More particularly and without limitation, this news release contains forward-looking statements in respect of the completion of binding documentation to effect the Proposed Transaction and the terms of and completion of the proposed financing. There is no certainty that a final and binding definitive agreement will be entered into in respect of the Proposed Transaction or that the Proposed Transaction will be completed at all. There is no certainty that the proposed financing will be completed on terms acceptable to the Corporation or at all.  Although the Corporation believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward-looking statements and information because the Corporation can give no assurance that they will prove to be correct.

 

Since forward-looking statements and information address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, the risk that the Corporation of 126 is not satisfied with the results of its due diligence, that the formal documentation effecting the Proposed is not completed or accepted or that any debt or equity funding will be available to the Corporation. There is no certainty that a definitive agreement effecting the Proposed Transaction will be completed or accepted. Readers are cautioned that the foregoing list of factors is not exhaustive. The forward-looking statements and information contained in this news release are made as of the date hereof and the Corporation undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

 

 

Source: Synstream Energy Corp. (TSX Venture:SHM)