Franchise Cannabis Announces Reverse Takeover Transaction and Concurrent Subscription Receipt Financing
We are pleased to announce that Franchise Cannabis Corp. (“Franchise”) has entered into an arm’s length non-binding letter of intent (“LOI“) accepted June 7, 2019 with Newton Energy Corporation (“Newton”) with ticker symbol on the TSX Venture “NTN.H”. The LOI outlines the proposed terms by which Franchise and Newton will merge (the “Proposed Transaction”), resulting in a reverse takeover of Newton by the shareholders of Franchise and the listing of the resulting issuer shares on the Canadian Securities Exchange.
Concurrently, Franchise will undertake a subscription receipt financing open to accredited investors. A term sheet outlining the details of the financing shall be distributed shortly. Each subscriber will be required to complete a subscription agreement that confirms, among other things, the eligibility of an exemption from the prospectus requirements of applicable securities laws in respect of the sale of securities to such subscriber. Eligible investors wishing to participate in the placement are invited to contact the company via the email firstname.lastname@example.org.
The Proposed Transaction
The Proposed Transaction will be structured as an amalgamation, arrangement, takeover bid, share purchase or other similar form of transaction or a series of transactions determined by the legal and tax advisors to each of Newton and Franchise. The final structure for the Proposed Transaction will be determined after Newton and Franchise have considered all applicable tax, securities law and accounting considerations. It is anticipated that Franchise, or a company established for the purpose, will conduct a private placement of subscription receipts in conjunction with the Proposed Transaction for an amount to be determined. Franchise has engaged Canaccord Genuity Corp. to act as lead agent in relation to the private placement of subscription receipts.
Completion of the Proposed Transaction is subject to a number of conditions, including the negotiation and signing of a Definitive Agreement, receipt of all necessary securityholder and regulatory approvals, approval from the NEX board of the TSX Venture Exchange (the “NEX“) for the delisting of the common shares of Newton from the NEX and conditional approval of the Canadian Securities Exchange for the listing of the common shares of Newton following completion of the Proposed Transaction.
In connection with the Proposed Transaction, Newton will be required to, among other things:
- change its name to a name requested by Franchise and acceptable to applicable regulatory authorities; and
- replace the directors and officers of Newton on closing of the Proposed Transaction with nominees of Franchise.
Upon successful completion of the Proposed Transaction, the resulting issuer will carry on the business currently carried on by Franchise. There can be no guarantees that the Proposed Transaction will be completed as proposed or at all.
The common shares of Newton will remain halted until all necessary filings have been accepted by applicable regulatory authorities. Unless the Proposed Transaction fails to close, Newton does not expect its common shares to resume trading again until the listing has been accepted by the Canadian Securities Exchange.
Further comprehensive information regarding the Proposed Transaction will be provided in a future press release at such time the parties execute a Definitive Agreement.
The initial news release, dated June 7th, 2019, outlining the transaction can be accessed below:
For accredited investors seeking additional information regarding the subscription receipt financing, please contact:
Franchise Cannabis Corp.
Clifford Starke, President & CEO
100 King St W. Suite 1600.
Toronto, Ontario M5X 1G5
Newton Energy Corporation
Gino DeMichele, President & CEO
1600, 333 – 7th Avenue S.W.
Calgary, Alberta T2P 2Z1