TORONTO, Nov. 5, 2019 /CNW/ - PharmaCielo Ltd. ("PharmaCielo" or the "Company") (TSXV:PCLO, OTC:PHCEF) announces that earlier today it was advised by Creso Pharma Limited ("Creso Pharma") that due to BDO Corporate Finance (WA) Pty Ltd. changing its independent expert report to conclude that the PharmaCielo Share Scheme is neither fair nor reasonable and is not in the best interests of shareholders of Creso Pharma, it is impossible for the Board of Directors of Creso Pharma to support the Share and Option Schemes (the "Schemes") in their current form. As a result of the Creso Pharma Board of Directors changing its recommendation in respect of the Schemes, PharmaCielo has terminated the Scheme Implementation Agreement (the "Scheme Implementation Agreement"), originally announced on June 6, 2019, in accordance with its terms. No break or expense reimbursement fees are payable by either PharmaCielo or Creso Pharma in connection with the termination of the Scheme Implementation Agreement. The AUD$3.8 million (approximately CAD$3.57 million) secured bridge loan (the "Bridge Loan") previously advanced by PharmaCielo to Creso Pharma on June 6, 2019, will now mature on November 30, 2019. The Bridge Loan, which bears interest at a rate of 15% per annum, is secured by a general security agreement over the assets of Creso Pharma and a pledge of the shares of Mernova Medicinal Inc., a subsidiary of Creso Pharma, in favour of PharmaCielo.
"While we are disappointed by this outcome, we have appreciated the interactions between our teams over the past several months and wish them much success in their future endeavours," said David Attard, Chief Executive Officer of PharmaCielo. "Our team has made significant strides over the past several months on an organic basis, expanding cultivation and production with a best in class cost structure, as well as growing international sales. As we near completion of Phase I of our processing centre, which will be capable of producing over 24 metric tonnes of refined cannabis oil capacity per year, we are ramping up sales efforts. We are well-positioned to grow our business and the progress made over the past several months has set the Company up for a strong close to 2019 and solid growth in 2020."
