Chalice Brands Ltd (CHALF)

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Golden Leaf Holdings Announces Non-Brokered Private Placement of Convertible Debentures

TORONTO, ONTARIO--(Marketwired – September 30, 2016) – Golden Leaf Holdings Ltd. ("GLH" or the "Company") (CSE:GLH) is pleased to announce that it is offering for sale convertible senior secured debentures of the Company (the “Debentures”), on a non-brokered private placement basis, subject to all required regulatory approvals, at a price per Debenture of C$1,000 (the “Offering Price”), for minimum gross proceeds of up to C$8,000,000 and maximum gross proceeds of C$10,000,000 (the “Offering”).

The Debentures will mature on the date that is 18 months from closing of the Offering (the “Maturity Date”) and will bear interest accruing at a rate of 10.0% per annum from the closing of the Offering (the “Closing Date”), payable semi-annually on the last day of June and December of each year. The first interest payment will be made on December 31, 2016 and will consist of interest accrued from and including the Closing Date to June 30, 2016. Subject to certain conditions, the Company may elect, from time to time, subject to applicable regulatory approval, to satisfy its obligation to pay interest on the Debentures, on the date it is payable (i) in cash; or (ii) by issuing the equivalent value in common shares of the Company (“Common Shares”) at a price per Common Share equal to the 20 trading day volume weighted average price of the Common Shares on the Canadian Securities Exchange (the “CSE”) (or such other Canadian stock exchange on which the Common Shares may trade) ending five trading days preceding the interest due date.

The Debentures will be convertible at the holder’s option into Common Shares at any time prior to the close of business on the Maturity Date at a conversion price equal to C$0.30 per Common Share. Holders converting their Debentures will receive accrued and unpaid interest thereon, up to, but excluding, the date of conversion. The subscribers in the Offering will be granted certain rights with respect to anti-dilution and future equity issuances. If the Common Shares close at C$1.00 for 10 consecutive trading days, the Company may require that the holders of Debentures convert into Common Shares. The Company has also agreed to reduce the conversion price of C$9,702,000 principal amount of its convertible debentures issued since March 11, 2016 to C$0.30 per share.

The Debentures will be secured by a charge on all of the assets of the Company.

The Company intends to use the net proceeds of the Offering for working capital purposes.

The Debentures will be offered by way of private placement to accredited investors in all provinces of Canada and in the United States to “Accredited Investors” within the meaning of Regulation D in transactions that are exempt from registration pursuant to Rule 506 of Regulation D under the United States Securities Act of 1933, and such other jurisdictions as may be agreed upon by the Company.

Closing of the Offering is scheduled to be on or about October 6, 2016 and is subject to certain conditions including, but not limited to, the receipt of all necessary approvals, including the approval of the Canadian Securities Exchange and the applicable securities regulatory authorities.

As a result of any subsequent offering at a lower price than the Company’s previous convertible debenture offering, the Company would have been required to pay or issue up to C$2.0 million of additional convertible debentures as part of an anti-dilution provision in certain debentures. To settle this debt, certain convertible debenture holders have agreed to collectively accept up to three million additional Common Shares in lieu of the C$2.0 million debenture payment.

The Company has retained AlphaNorth Asset Management as its financial advisor. AlphaNorth will receive a cash payment in an amount equal to 8.0% of the gross proceeds of the Offering and such number of compensation options (“Compensation Options”) equal to 8.0% of the aggregate number of Debentures issued and sold pursuant to the Offering divided by C$0.30. Each Compensation Option shall be exercisable for one unit of the Company (a “Unit”) at an exercise price of C$0.30 for a period of 24 months following the Closing Date. Each Unit shall consist of one Common Share and one-half of one Common Share purchase warrant (each whole Common Share purchase warrant, a “Compensation Warrant”). Each Compensation Warrant shall entitle the holder thereof to acquire one Common Share at an exercise price of C$0.30 for a period of 24 months following the Closing Date.

The Debentures and underlying Common Shares will be subject to a statutory hold period in Canada of four months from the Closing Date pursuant to Canadian securities laws. The securities mentioned herein have not been and will not be qualified by prospectus for sale to the public under applicable Canadian securities laws and will be subject to transfer and selling restrictions in certain jurisdictions, including the United States and Canada.

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. The securities being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the United States Securities Act of 1933, as amended, and applicable state securities laws.


About Golden Leaf Holdings:

Golden Leaf Holdings Ltd. is one of the largest cannabis oil and solution providers in North America. It's a leading cannabis products company in Oregon built around recognized brands. GLH leverages a strong management team with cannabis and food industry experience to complement its expertise in extracting, refining and selling cannabis oil.


For further information, please contact:

Canadian Investor Relations:

Paul Searle
Investor Relations, Golden Leaf Holdings Ltd.
T: 778.240.7724