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Crop Infrastructure to be bought by MYM Nutraceuticals

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bUrRpPPP!   Thursday, 11/07/19 09:53:01 AM
Re: None
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Crop Infrastructure to be bought by MYM Nutraceuticals

2019-11-07 08:24 ET - News Release

Also News Release (C-MYM) MYM Nutraceuticals Inc

Mr. Michael Yorke of Crop reports

CROP SIGNS NON-BINDING LOI TO BE ACQUIRED BY MYM NUTRACEUTICALS

Crop Infrastructure Corp. has signed a non-binding letter of intent with MYM Nutraceuticals Inc., whereby MYM will acquire all of the issued and outstanding common shares of the company by way of a plan of arrangement under the Business Corporations Act (British Columbia) (BCBCA), resulting in Crop becoming a wholly owned subsidiary of MYM.

The LOI provides that CROP and MYM shall negotiate and enter into a definitive agreement in respect of the Proposed Transaction (the "Definitive Agreement") on or before November 15, 2019. The LOI also contemplates a closing date on or before January 7, 2020.

CROP currently has issued and outstanding 170,698,865 Shares (on an un-diluted basis) and, as of August 31, 2019, MYM had 148,363,629 common shares (each, a "MYM Share") issued and outstanding (on an un-diluted basis). Under the terms of the LOI, all of these issued and outstanding Shares are to be exchanged for MYM Shares on the basis of approximately 0.0952 of an MYM Share for each Share (the "Exchange Ratio"). The Exchange Ratio implies consideration for each Share at approximately $0.0229 per Share or $0.24 per MYM Share, based on the closing price of the MYM Shares on the Canadian Securities Exchange ("CSE") on November 5, 2019. Although the LOI does not restrict the ability of either company to issue additional shares to third parties outside of the Proposed Transaction, if we assume that no additional shares of either company are to be issued prior to the closing date, there would be 164,620,664 MYM Shares issued and outstanding at the closing of the Proposed Transaction, after adjusting for the MYM Shares issued in the Proposed Transaction. In addition: (i) all outstanding warrants to acquire Shares shall remain outstanding in accordance with their terms; (ii) all outstanding options (whether or not vested) to acquire Shares shall, subject to regulatory approval, be exchanged for options of MYM, exercisable to acquire MYM Shares, subject to adjustment of the number of MYM Shares purchasable thereunder and the exercise price per MYM Share payable thereunder based upon the Exchange Ratio; and (iii) all debentures previously issued by CROP (collectively, the "CROP Debentures") shall be amended such that they will become obligations of MYM and convertible into MYM Shares at a conversion price to be determined by MYM and the holders of the CROP Debentures on or before November 15, 2019.

Michael Yorke, CEO of CROP said: "As a result of a significant crop loss in September, the Company is not in a position to service its outstanding liabilities and the debt financings associated to maintaining the Company's assets. MYM's talented and well capitalized team has proven to be extremely knowledgeable and reliable in helping CROP realign our strategy. CROP was structured to play a passive role in its joint ventures and MYM has an operating team in place to oversee the assets assembled by CROP and the capital to service its debt and get things back on track. We believe that this transaction is in the best interest of our shareholders."

"The capital markets in the cannabis industry have become complex and demanding," said Howard Steinberg, CEO of MYM. "We are looking to acquire companies with valuable core assets that are poised to benefit from the restructuring expertise our team can bring, in terms of both capital and management support. We look forward to working closely with the Crop team as we develop a financial and operational plan to enable its assets to flourish in the future."

"As CROP's debt obligations to Plaza and associated debenture holders is currently in arrears and the Company is in default, we enthusiastically support the MYM transaction to acquire CROP," said Jesse Kaplan, Principal of Plaza Capital Advisors. "We have confidence in their deeply talented team and ability to restructure CROP's distressed assets to make them profitable. We look forward to working with them on this and potentially future restructuring projects."

In addition, the LOI provides for a binding exclusivity period starting on the date the execution of the LOI until the earlier of: (i) the entry into of the Definitive Agreement; and (ii) the termination of the LOI pursuant to its terms (the "Exclusivity Period"). In the event that CROP breaches the exclusivity provisions of the LOI or accepts an alternative offer during the Exclusivity Period, a break fee of $450,000 shall be payable by CROP to MYM.

The Proposed Transaction is subject to a range of conditions, including, but not limited to: (i) the entry of the Definitive Agreement, in form and substance satisfactory to each of CROP and MYM, which shall include customary terms and conditions (including representations and warranties, covenants, conditions and completion mechanics) for a transaction of its nature; (ii) the directors and officers of CROP, the holders of the CROP Debentures, and certain shareholders owning or exercising control or direction over 5% of more of the outstanding Shares entering into support agreements concurrent with the Definitive Agreement; and (iii) the receipt of shareholder approval for the Proposed Transaction by the shareholders of CROP in the manner required by the BCBCA, the CSE and applicable securities laws.

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