Bluerock Ventures Corp. Announces Acquisition of Colombian Cannabis Assets as Qualifying Transaction
NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
BLUEROCK VENTURES CORP. ANNOUNCES ACQUISITION OF COLOMBIAN CANNABIS ASSETS AS QUALIFYING TRANSACTION
April 17, 2019 – Vancouver, British Columbia: Bluerock Ventures Corp. (NEX: BCR.H - the “Company” or “Bluerock”), a capital pool company (a “CPC”), is pleased to announce it has entered into a letter of intent dated April 5, 2019 (the “LOI”) to enter into an arm’s length business combination transaction (the “Proposed Transaction”) with Verabys Inc. (“Verabys”). Verabys is a private company incorporated under the laws of Alberta that has entered into a letter of intent (the “Letter Agreement”) with Plantas Medicinales de Colombia (“PlantMedco”) dated December 24, 2018, pursuant to which Verabys will acquire all of the issued and outstanding shares of Plantmedco, in exchange for shares of Verabys (the “Plantmedco Acquisition”).
The purpose of the Proposed Transaction is the creation of a public, TSX Venture Exchange-listed, Colombian-focused, cannabis cultivation and extraction company. The working capital of the combined entity (the "Resulting Issuer"), upon successful closing of the Proposed Transaction and the Concurrent Financing (as defined herein) is expected to be approximately CDN$2.8, sufficient to support the Resulting Issuer’s current 12-month business strategy, and the ongoing evaluation of new opportunities.
Bluerock intends that the Proposed Transaction will constitute its Qualifying Transaction, as such term is defined in the policies of the TSX Venture Exchange (the “Exchange”). Upon completion of the Proposed Transaction, the Company expects that the Resulting Issuer will be named “Plantmedco Inc.” and will be listed as a Tier 2 Life Sciences or Industrial Issuer on the Exchange.
Summary of the Qualifying Transaction
The LOI contemplates Bluerock and Verabys undertaking an arm's length business combination transaction, currently proposed to be completed by way of a three-cornered amalgamation pursuant to the provisions of the Business Corporations Act (Alberta). Immediately prior to the completion of the Proposed Transaction, Verabys would complete the Plantmedco Acquisition.
Each common share in the capital of Verabys (the “Verabys Shares”) that is outstanding immediately prior to the completion of the Proposed Transaction (other than Verabys Shares held by shareholders of Verabys (“Verabys Shareholders”) who exercise their dissent rights) is expected to be converted into one (1) issued, fully paid and non-assessable common share in the share capital of the Resulting Issuer (“Resulting Issuer Shares”). Upon completion of the Plantmedco Acquisition and the Proposed Transaction, and assuming completion of the minimum Concurrent Financing (as defined below), former holders of Bluerock Shares are anticipated to hold, in the aggregate, 5,085,000 Resulting Issuer Shares representing approximately 9% of the outstanding Resulting Issuer Shares, former holders of Verabys Shares are expected to hold, in the aggregate, 15,350,000
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Resulting Issuer Shares, representing approximately 28% of the outstanding Resulting Issuer Shares, investors under the Concurrent Financing will hold, in the aggregate, 12,980,769 Resulting Issuer Shares, representing approximately 24% of the outstanding Resulting Issuer Shares and former holders of Plantmedco common shares are expected to hold, in the aggregate, 20,666,667 Resulting Issuer Shares, representing approximately 38% of the outstanding Resulting Issuer Shares.
In addition, each share purchase warrant and option of Verabys outstanding immediately prior to the completion of the Proposed Transaction is expected to be converted into securities of the Resulting Issuer at the same ratio as the Verabys Shares.
Significant Conditions to Closing
The Amalgamation must be approved by not less than 662/3% of the votes cast at the meeting (the “Verabys Meeting”) of Verabys Shareholders being held to consider, among other things, the Amalgamation. It is expected that the Verabys Meeting will be held in the second quarter of 2019 and a management information circular (the “Circular”) will be provided to Verabys Shareholders in due course.
The completion of the Proposed Transaction is subject to the satisfaction of various conditions that are standard for a transaction of this nature, including but not limited to (i) execution of a definitive agreement (the “Definitive Agreement”) on or prior to April 30, 2019; (ii) the completion of the Concurrent Financing; (iii) the approval by the shareholders of each of Bluerock and Verabys to complete the Proposed Transaction (if required), (iv) receipt of all requisite regulatory, stock exchange, court or governmental authorizations and consents, including the Exchange; (v) the completion of satisfactory due diligence by each of the parties; and (vi) the completion of the Plantmedco Acquisition. There can be no assurance that the Proposed Transaction will be completed on the terms proposed above or at all.
Each of Bluerock and Verabys will bear their own costs in respect of the Proposed Transaction.
Proposed Concurrent Financing
Prior to or concurrent with completion of the Proposed Transaction, Verabys will complete a financing for gross proceeds of no less than USD $5,000,000 (the "Concurrent Financing''). The proceeds raised will be used to fund the costs associated with completing the Proposed Transaction, build-out of the Plantmedco facilities and for general working capital. All securities issued pursuant to the Concurrent Financing will be subject to a hold period of four months and one day. Commissions may be paid on proceeds raised commensurate with industry norms. Richardson GMP Ltd. is expected to be engaged to assist with fund raising activities.
Sponsorship of the Qualifying Transaction
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Sponsorship of a "Qualifying Transaction" of a CPC is required by the Exchange unless exempt therefrom in accordance with the Exchange's policies. Given the size and nature of the Proposed Transaction, including the amount of the Concurrent Financing, Bluerock intends to apply for an exemption from the sponsorship requirements pursuant to the policies of the Exchange. If the exemption is not granted by the Exchange, then Bluerock would be required to engage a sponsor.
Trading Halt
At the Company's request, trading in the Bluerock's Shares has been halted. Trading is expected to remain halted until, at the earliest, the completion of the Proposed Transaction.
The Resulting Issuer’s Management
Upon completion of the Proposed Transaction, it is anticipated that all of the existing directors and officers of Bluerock, will resign and the management of the Resulting Issuer will include the persons identified below:
Luis Ortiz, BSc. Eng., MBA – President, Chief Operating Officer and Director
Mr. Ortiz has over 20 years of experience in international sales and channel sales distribution and project development experience in the oil & gas, infrastructure and technology industries. He has successfully lead business expansions throughout Latin America, Europe and Africa for several publicly traded companies (including, SMART Technologies, Wi-LAN Inc., and International Road Dynamics Inc.). Since 2014 Mr. Ortiz has been President and CEO of CATENA Energy. Prior to that, he served as Chief Operating Officer of Grand Vision Energy, a private Canadian integrated oil & Gas company with operations in Colombia. Mr. Ortiz holds a Bachelor of Science Degree in Mechanical Engineering and a MBA from Thunderbird School of Global Management in Glendale, Arizona.
Doug Porter, CA, CBV - Chief Financial Officer
Since 1997 Mr. Porter has been Managing Director of Porter Valuations & Financial Consulting Inc., a specialty business valuation firm providing valuation and financial consulting services to a broad spectrum of private and public companies throughout Western Canada. From 1990 to 1997 he practiced in the business valuation group of an international accounting firm. Mr. Porter has a Bachelor of Commerce degree from the University of Calgary (1990). He is a Chartered Professional Accountant (1994) and a Chartered Business Valuator (1999). Mr. Porter has been a director and officer of several TSXV listed companies in the resource, fin-tech and cannabis industries.
Russ Jackson - Special Advisor
Mr. Jackson is a Canadian businessman with more than 15 years of direct Latin American business experience. Mr. Jackson is currently CEO and Director of Sun God Resources, a Mexico-focused oil
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and gas producer. Previously, he was the principal founder of C & C Energy, a successful Colombian energy exploration company. He served as President of C & C Energy (Barbados Ltd.) from 2005- 2007, and served as a director of the parent company until the successful completion of the IPO in 2010. Mr. Jackson was also a co-founder of Prospero Hydrocarbons Inc., a private Colombian oil company (sold to Alange Energy Corp. in 2009).
Ivan Arias – Executive Chairman and Director
Mr Arias is the founder and Chairman of Plantmedco. He has been an entrepreneur and venture capital investor for the past 20 years in the digital media, infrastructure and now the Cannabis industries. He is currently Managing Director of SHINSEN TELECOM. Previously he served as Director for Colombia of KBR Finance and as Director for Latin America and the Caribbean of KCB Capital Dubai, UAE. Mr. Arias was also a director for Jump TV (at the time the world largest broadcaster of sport content over the internet) until it went public in the TSX and London Stock Exchange. Mr. Arias holds a Bachelor of Agronomics Engineering Degree. He also graduated in Administration Science and Global Economics from Fairleight Dickinson University in New Jersey, USA and Wroxton College in England.
Alberto Montoya, - Country Managing Director
Mr. Montoya has held senior management positions in the agro-industry for more than 35 years, working in the formulation and execution of various large scale processing and distribution projects. Most recently Mr. Montoya was the Director in the Agro-industrial Division of Meals of Colombia, a subsidiary of Grupo Nutresa. Mr. Montoya also has vast experience on boards of directors including the Superior Council of the University of Quindio, the Departmental Committee of Coffee Growers of Quindio and the National Congress of Coffee Growers of Colombia
Juan Pablo Lopez – Colombian Chief Operating Officer
Mr. Lopez is an entrepreneur with more than 25 years of experience in start-up companies, operations, and management. Mr. Lopez has served as the Director of Frutropic, USA, starting the first US branch of the Frozen Fruit Plant where hedeveloped and managed the marketing goals with proven ability to implement strategic planning and organizational initiatives to increase profitability and reduce operational cost. He has also served as a Director of The Coffee Growers Federation of Colombia. He is also a partner and part of Director of Shinsen Telecom. He has a Bachelor’s degree in Agronomic Engineering from Universidad Nacional de Colombia. Mr. Lopez also graduated from AIU with a Master’s in International Business. Mr. Lopez studied Strategic Marketing in Universidad Javeriana.
Gustavo Catano - Head of Agronomy
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Mr. Catano is a senior Agronomist holding a Masters of Science degree. He was a founding partner of several successful and innovative companies in the produce cultivation and processing industry. These include Defrescura and Organic Green, which both focused on the production of organic fruits and vegetables and their derivatives for the domestic and international markets. Mr. Catano has also served on the boards of directors of several companies in the agroindustry. In addition, for eight years he was a guest lecturer in the Market and Management in the Food Industry program at Cornell University.
About Bluerock Capital Corp.
Bluerock is a CPC that completed its initial public offering and obtained a listing on the Exchange in May 2011 (trading symbol: "BCR.H"). It does not own any assets, other than cash or cash equivalents and its rights under the LOI. The principal business of Bluerock is to identify and evaluate opportunities for the acquisition of an interest in assets or businesses and, once identified and evaluated, to negotiate an acquisition or participation subject to acceptance by the TSXV so as to complete a qualifying transaction in accordance with the policies of the TSXV. As this transaction is arm’s length in nature there is no requirement to get shareholder approval.
About Verabys Inc.
Verabys was incorporated on March 10, 2017 under the Business Corporations Act (Alberta). Verabys’s principal business is the identification, negotiation for, and investment in cannabis-related opportunities, with a specific focus on Colombia-based operators. The head office of Verabys is located at#1100, 736 – 8th Avenue SW, Calgary, AB T2P 1H4.
Pursuant to Letter Agreement, Verabys agreed to acquire all of the issued and outstanding shares of Plantmedco in consideration of the issuance of Verabys Shares to the shareholders of Plantmedco. It is anticipated that Verabys and Plantmedco will enter into a definitive agreement setting forth the terms and conditions of the Plantmedco Acquisition on or prior to April 15, 2019.
A subsequent news release disclosing certain financial information of Verabys will be disseminated in due course.
About Plantmedco
Plantmedco was established in 2017 to take advantage of the evolving cannabis laws and opportunities in Colombia. Plantmedco possesses all four Colombian cannabis licenses for the: importation, marketing and commercialization of seeds for cannabis production; production of non- psychoactive plants; production of psychoactive plants, and; extraction, production and export of oil and cannabis derivatives.
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The local management team has extensive experience in agricultural food production and processing for consumer market. Plantmedco’s existing cultivation land is situated in an ideal agricultural region in west-central Colombia. The Company currently owns and operates seven hectares and has an option for long-term lease on an additional 100 hectares. Plantmedco is beginning the tendering process for the acquisition of cannabis oil extraction equipment with an initial annual capacity of approximately 6,700 liters of full spectrum CBD and THC oil. The Company is in late stage negotiations for the acquisition of a full European-level GMP (Good Manufacturing Process) facility. Both the company’s current cultivation site and the proposed extraction facility are within a 15minute drive to an international airport.
Verabys and Plantmedco continue to work jointly to establish international off-take customers for its oil production, which is expected to be available for marketing in H2-2019.
Cautionary Note
As noted above, completion of the Proposed Transaction is subject to a number of conditions including, without limitation, approval of the Exchange, approval of the shareholders of Verabys and Bluerock, completion of the Concurrent Financing and completion of the Plantmedco Acquisition. Where applicable, the Proposed Transaction cannot close until the required approvals have been obtained. There can be no assurance that the Proposed Transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the continuous disclosure document containing full, true and plain disclosure regarding the Proposed Transaction, required to be filed with the securities regulatory authorities having jurisdiction over the affairs of the Company, any information released or received with respect to the Proposed Transaction may not be accurate or complete and should not be relied upon. The trading in the securities of Bluerock on the Exchange, if reinstated prior to completion of the Proposed Transaction, should be considered highly speculative.
ON BEHALF OF THE BOARD OF DIRECTORS:
Praveen Varshney, President and Director
For further information, please contact:
Karan Thakur Tel: 778-987-3446 [email protected]
Disclaimer for Forward-Looking Information
This press release contains forward-looking statements and information that are based on the beliefs of management and reflect Bluerock's current expectations. When used in this press release, the words "estimate", "project", "belief", "anticipate", "intend", "expect", "plan", "predict", "may" or
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"should" and the negative of these words or such variations thereon or comparable terminology are intended to identify forward-looking statements and information. The forward-looking statements and information in this press release include information relating to the business plans of Bluerock, Verabys, and the Resulting Issuer, the Concurrent Financing, the Proposed Transaction (including Exchange approval and the closing of the Proposed Transaction), the Plantmedco Acquisition and the proposed board of directors and management of the Resulting Issuer upon completion of the Proposed Transaction. Such statements and information reflect the current view of Bluerock. Risks and uncertainties that may cause actual results to differ materially from those contemplated in those forward-looking statements and information.
By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.
Such factors include, among others, the following risks:
• there is no assurance that the Concurrent Financing will be completed or as to the actual offering price or gross proceeds to be raised in connection with the Concurrent Financing. In particular, the amount raised may be significantly less than the amounts anticipated as a result of, among other things, market conditions and investor behaviour;
- there is no assurance that Bluerock and Verabys will obtain all requisite approvals for the Proposed Transaction, including the approval of Verabys Shareholders, or the approval of the Exchange for the Proposed Transaction (which may be conditional upon amendments to the terms of the Proposed Transaction);
• there is no assurance that Verabys will be able to complete the Plantmedco Acquisition on the terms currently proposed or at all;
• following completion of the Proposed Transaction, the Resulting Issuer may require additional financing from time to time in order to continue its operations. Financing may not be available when needed or on terms and conditions acceptable to the Resulting Issuer;
• new laws or regulations could adversely affect the Resulting Issuer's business and results of operations; and
• the stock markets have experienced volatility that often has been unrelated to the performance of companies. These fluctuations may adversely affect the price of the Resulting Issuer's securities, regardless of its operating performance.
There are a number of important factors that could cause Bluerock's actual results to differ materially from those indicated or implied by forward-looking statements and information. Such factors include, among others: currency fluctuations; limited business history of Bluerock; disruptions or changes in the credit or security markets; results of operation activities and development of projects; project cost overruns or unanticipated costs and expenses, fluctuations in commodity prices, and general market and industry conditions.
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Bluerock cautions that the foregoing list of material factors is not exhaustive. When relying on Bluerock's forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Bluerock has assumed that the material factors referred to in the previous paragraph will not cause such forwardlooking statements and information to differ materially from actual results or events. However, the list of these factors is not exhaustive and is subject to change and there can be no assurance that such assumptions will reflect the actual outcome of such items or factors.
THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS PRESS RELEASE REPRESENTS THE EXPECTATIONS OF BLUEROCK AS OF THE DATE OF THIS PRESS RELEASE AND, ACCORDINGLY, IS SUBJECT TO CHANGE AFTER SUCH DATE. READERS SHOULD NOT PLACE UNDUE IMPORTANCE ON FORWARD-LOOKING INFORMATION AND SHOULD NOT RELY UPON THIS INFORMATION AS OF ANY OTHER DATE. WHILE BLUEROCK MAY ELECT TO, IT DOES NOT UNDERTAKE TO UPDATE THIS INFORMATION AT ANY PARTICULAR TIME EXCEPT AS REQUIRED IN ACCORDANCE WITH APPLICABLE LAWS.
This press release is not an offer of the securities for sale in the United States. The securities have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an exemption from registration. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any state in which such offer, solicitation or sale would be unlawful.
Completion of the Proposed Transaction is subject to a number of conditions, including but not limited to, Exchange acceptance. Where applicable, the transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Proposed Transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the filing statement to be prepared in connection with the Transaction, any information released or received with respect to the Proposed Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.
The TSX Venture Exchange Inc. has in no way passed upon the merits of the Proposed Transaction and has neither approved nor disapproved the contents of this press release.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.
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