Announcement • Aug 21
An undisclosed buyer signed a letter of intent to acquire Christina Lake Cannabis Corp. (CNSX:CLC) for transaction value of CAD 15 million.
An undisclosed buyer signed a letter of intent to acquire Christina Lake Cannabis Corp. (CNSX:CLC) for transaction value of CAD 15 million on August 20, 2026. The LOI contemplates an aggregate transaction value of CAD 15 million for 100% of the equity of the Company on a fully-diluted, cash-free, debt-free basis (the "Transaction Value"). The Transaction Value is not a per-Share purchase price. The cash consideration payable to shareholders would be the amount by which the Transaction Value exceeds the aggregate of all outstanding debt of the Company (including convertible debentures) and transaction expenses, distributed on a pro rata basis among shareholders. Accordingly, the per-Share consideration cannot be determined at this time and will be calculated and disclosed in the Circular prior to the Special Meeting. Prior to closing of the Proposed Transaction, the Company would also be required to retire all existing debt facilities and convertible debentures. The Proposed Transaction is intended to be completed on a cash-free, debt-free basis, with economic effect as of October 30, 2026 (the “Effective Date”). At or prior to closing, all outstanding indebtedness of the Company and its subsidiaries (including its operating or revolving line of credit, bank debt, shareholder loans, equipment financing, and convertible debentures, together with accrued and unpaid interest and any prepayment penalties or make-whole amounts) and all transaction expenses would be repaid, satisfied, redeemed or discharged, or provided for, in full. The net amount remaining after payment of such debt and transaction expenses would be distributed to shareholders as the consideration for their Shares. Surplus cash of the Company as at the Effective Date may be distributed to shareholders prior to or at closing, subject to the terms of the LOI.
The LOI contemplates that, if a Definitive Agreement is entered into, it will contain customary deal protection provisions for a transaction of this nature, including non-solicitation covenants, a fiduciary out, and matching rights in favour of the Purchaser. These provisions are expected to include a termination fee of CAD 450,000 payable by the Company to the Purchaser in certain circumstances, including where the Company accepts a Superior Proposal, together with reimbursement of the Purchaser’s documented out-of-pocket transaction expenses up to a maximum of CAD 450,000 in the event of a wilful breach by the Company.
The transaction is subject to to due diligence, negotiation of definitive terms and other conditions, including court approval. If a definitive agreement is executed, the Company expects that it will be required to hold a special meeting (the "Special Meeting") of the Company's shareholders to approve the Proposed Transaction. The Company's Board of Directors (the "Board"), after an extensive period of negotiation and consideration of various alternatives, has approved entry into the LOI. A Special Committee of the Board (the "Special Committee") has been formed to consider, negotiate and, if applicable, finalize the Proposed Transaction, and to make a recommendation to the Board for approval prior to the execution of the Definitive Agreement or the submission of the Proposed Transaction to shareholders of the Company for a vote.
Prelia Canada LLP acted as legal advisor to Christina Lake Cannabis Corp.
