Wed, 27 May 2020

  • Premium indoor cannabis cultivation assets acquired free of all liabilities
  • Trichome estimates pro-forma forward twelve-month EBITDA of $10 million with no additional capital spend
  • Total acquisition cost of $13 million or less than 1.5x Trichome's estimate of pro forma EBITDA, compared to $60 million invested by JWC

TORONTO, ON / ACCESSWIRE / May 19, 2020 / Trichome Financial Corp. (the 'Company', 'Trichome' or 'Trichome Financial') (CSE:TFC) is pleased to announce, following the conclusion of the Sales and Investor Solicitation Process ('SISP') conducted by Stoic Advisory, that it has been confirmed as the successful bidder for the business and assets of James E. Wagner Cultivation Corp ('JWC'). It is expected that a Sale Approval Motion will be heard on or around May 29, 2020 by the Ontario Superior Court of Justice (Commercial List) (the 'Court') and a final closing will occur upon Health Canada license approval. The business and assets of JWC are being purchased free and clear of any liabilities for an effective purchase price of approximately $13 million, being the value of Trichome Financial's pre-filing secured claim of $7.5 million plus the estimated amount of the outstanding debtor-in-possession financing upon closing.

'Having been invested in JWC since February 2019, Trichome Financial had a very good understanding of JWC's business and assets and was prepared to be the stalking horse in the court-approved SISP. A comprehensive operational review has been underway since April 9, 2020 led by Howard Steinberg in his capacity as Chief Restructuring Officer and a team of industry experts. The team of industry experts retained by JWC during these proceedings has worked with Mr. Steinberg to develop an operating plan that we believe will allow JWC to grow and prosper over the long term. We welcome working with the hard-working employees at JWC to make this a success for all,' commented Michael Ruscetta, Chief Executive Officer of Trichome Financial.

'As the Canadian cannabis industry continues to mature, we believe that our investment in JWC will prove to be prescient. We have created our investment in one of the largest licensed indoor cannabis facilities in Canada at less than 1.5x our estimated pro forma forward twelve-month EBITDA and a fraction of the amount of capital that has been invested in JWC. This transaction has the potential to earn multiples of our invested capital on a standalone basis and may well become a transformational platform to lead industry consolidation through our Trichome Special Opportunities business,' continued Michael Ruscetta.

JWC Highlights and Operating Plan

JWC's assets that are being acquired through the restructuring process include:

  • 114,000 sq. ft. of licensed indoor capacity, among the largest indoor facilities in the country.
  • Annual cultivation capacity of approximately 7,000 kilograms per year of premium cannabis.
  • Focus on 'premium value' market through high THC flower and single-origin derivative products with a genetic bank that has been extensively phenotyped, allowing for special runs depending on market appetite and demand.
  • Reset balance sheet free, clear of any liabilities and 100%-owned by Trichome Financial.

With the significant insight gained on operations, sales, distribution, spending and strategy since making its initial loan to JWC, Trichome Financial developed a business plan which forecasts production of 7,000 kgs per year of high-quality cannabis generating approximately $10 million of EBITDA within 12 months with no incremental capital expenditures.

'Many thanks to the entire team who worked together seamlessly and put their heart into JWC and in particular James Andrews, John Fowler, Doug Wilson, David Hyde and Sarah Seale. I am excited to continue working with these individuals and the very talented people at JWC and look forward to the opportunity to create significant value for stakeholders,' said Mr. Steinberg.

About Trichome Financial Corp.

Trichome Financial is a specialty finance company focused on providing flexible and creative credit solutions to the global legal cannabis market. Trichome was created to address the lack of credit availability in the large, growing and increasingly complex cannabis market. Trichome Financial's experienced founders and management team has a unique edge to capitalize on proprietary deal flow and industry insight while developing a first mover advantage as a global cannabis focused specialty finance company. Trichome Financial provides customized financing solutions across the industry value chain to support growth, capital expenditures, mergers, acquisitions, working capital and other needs. Leveraging the combined resources and knowledge of its founders, it is able to offer significant value-added financial, product, market and operational support to its partner companies.

For further information about Trichome Financial please visit us at www.trichomefinancial.com or @trichomefinance on Twitter and refer to the joint information circular of Trichome Financial and 22 Capital dated May 29, 2019 which is available on the Company's SEDAR profile at www.sedar.com.

READER ADVISORY

Neither the CSE nor its Regulation Services Provider (as that term is defined in the policies of the CSE) accepts responsibility for the adequacy or accuracy of this press release.

This news release contains 'forward-looking information' and 'forward-looking statements' (collectively, 'forward-looking statements') within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as 'expects', or 'does not expect', 'is expected', 'anticipates' or 'does not anticipate', 'plans', 'budget', 'scheduled', 'forecasts', 'estimates', 'believes' or 'intends' or variations of such words and phrases or stating that certain actions, events or results 'may' or 'could', 'would', 'might' or 'will' be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements. In this news release, forward-looking statements relate to, among other things: the timing and outcome of Court decisions, the timing and outcome of Health Canada licensing, the pro-forma production and EBITDA expected for JWC, and the prospect of JWC as a platform for consolidation. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general business, economic, competitive, political and social uncertainties; and the delay or failure to receive board, shareholder or regulatory approvals. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this news release. Except as required by law, Trichome Financial assumes no obligation to update the forward-looking statements of beliefs, opinions, projections, or other factors, should they change.

This press release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities described herein. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the 'U.S. Securities Act'), or any state securities laws and may not be offered or sold within the United States or to United States Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

Contact Information

Michael Ruscetta, CEO
Telephone: (416) 467-5229
info@trichomefinancial.com

Marc Charbin, Investor Relations
Telephone: (416) 467-5229
Email: marc.charbin@loderockadvisors.com

SOURCE: Trichome Financial Corp.



View source version on accesswire.com:
https://www.accesswire.com/590441/Trichome-Financial-To-Acquire-James-E-Wagner-Through-Restructuring-Process

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