VANCOUVER, British Columbia, Dec. 22, 2020 (GLOBE NEWSWIRE) -- New Leaf Ventures Inc. (CSE: NLV) (“New Leaf,” “NLV” or the “Company”) is pleased to announce that it has entered into a letter agreement (the “Letter Agreement”) with Zen Asset Management LLC (“ZAM”) and its parent company, Artizen Asset Management LLC (“Artizen”). The Letter Agreement outlines the general terms and conditions pursuant to which New Leaf and ZAM would potentially undertake a business combination (the “Proposed Transaction”). The Proposed Transaction is subject to a number of conditions, including due diligence and the negotiation of a definitive agreement.
ZAM is a diversified asset management company that was founded to acquire, develop, and support companies and technologies in the emerging cannabis industry. ZAM primarily does so in Washington state, where it generates revenue by providing leasing, licensing, management, staffing, and supplies to cannabis production facilities. ZAM’s existing clients operate four licensed cannabis cultivation facilities and one processing facility in Washington, with about 180,000 square feet of canopy, of which about 70,000 square feet is used to produce about 8,000,000 grams of biomass annually. Most of the biomass produced by those facilities has been sold historically under the Artizen™ brand, including the all-time top selling product in flower in Washington state, and five of the all-time top ten. For more information, visit: www.artizencannabis.com.
“The Proposed Transaction provides the prototypical example of our plan to build a portfolio of investment-grade opportunities in the cannabis sector,” said Michael Stier, the Company’s CEO. “We’re particularly excited by the prospect of onboarding ZAM into our pre-existing footprint in Washington state. ZAM’s clients have successfully marketed Artizen™ branded products that have commanded a strong following in that market. We believe that those results are scalable with the right investment and support, both of which we look forward to providing as we execute on our previously-announced plans to build compelling shareholder value in the emerging cannabis industry.”
Terms of the Proposed Transaction
The Proposed Transaction is expected to proceed by way of a business combination agreement (the “Acquisition”) pursuant to which the Company will acquire 100% of the voting control of ZAM in exchange for the following consideration: (a) the transfer of all of the issued and outstanding securities of New Leaf USA Inc. (“New Leaf USA”) and its subsidiaries, directly or indirectly, to ZAM and (b) the Company altering its authorized capital structure to redesignate its outstanding common shares as subordinate voting shares (the “NLV Subordinate Voting Shares”) and creating a new class of special voting shares (the “NLVSpecial Voting Shares”), pursuant to which the Company shall then issue such NLV Special Voting Shares to Artizen.
Upon closing of the Acquisition, the NLV Special Voting Shares will provide Artizen with 40% of the voting rights in the Company. The features of the NLV Special Voting Shares shall include that, upon satisfaction of certain financial milestones related to the business of ZAM – the chief milestone being that the ZAM business unit must generate, within the 12-month period following the closing of the Acquisition exceeding US$16 mm, with neutral or better EBITDA – the voting power of the NLV Special Voting Shares will increase to carry up to 80% of the total voting rights of NLV on a fully diluted basis.
Upon completion of the Acquisition, Artizen shall be entitled to appoint one board member to the board of directors of NLV and to appoint the CEO of the Company. Mr. Mike Stier will become President of the Company. In connection with the Proposed Transaction, the Company will also amend its articles such that certain fundamental transactions and significant corporate actions shall require class-based shareholder approval. The Company will disclose further transaction terms once a definitive agreement has been entered into. The final Proposed Transaction structuring remains subject to tax and securities law considerations. Completion of the Proposed Transaction remains subject to a number of conditions, including approval of the shareholders of NLV and the Canadian Securities Exchange.
About New Leaf Ventures Inc. (CSE: NLV)
New Leaf Ventures Inc.’s flagship enterprise is New Leaf USA and its subsidiaries, which provide licenses, consulting services, real property, intellectual property and equipment for lease and ancillary services to a Washington-based Tier 3 Producer/Processor focused on cultivating, growing, processing, packaging, and distributing cannabis and cannabis related products.