- The Board of Directors Unanimously Recommends that the
Alcanna Shareholders Vote "FOR" the Arrangement
- Alcanna shareholders who have questions about the
Arrangement or need assistance with voting their shares should
contact Laurel Hill Advisory Group by telephone at 1-877-452-7184
or by e-mail at assistance@laurelhill.com
EDMONTON, AB, Nov. 16, 2021 /CNW/ - Alcanna Inc. (the
"Company" or "Alcanna") (TSX: CLIQ) is pleased to
announce that it has filed its management information circular (the
"Circular") and related meeting and proxy materials
(together with the Circular, the "Meeting Materials") for
the special meeting (the "Meeting") of shareholders (the
"Alcanna Shareholders") to be held in connection with the
proposed plan of arrangement (the "Arrangement") with
Sundial Growers Inc. ("Sundial") previously announced on
October 7, 2021. The Meeting
Materials are also available on SEDAR under Alcanna's profile at
www.sedar.com and on Alcanna's website at
https://www.alcanna.com/ALCANNA-Special-Meeting-Materials. Mailing
of the Meeting Materials has commenced and Alcanna Shareholders
should receive them shortly.
SPECIAL MEETING ON DECEMBER 14,
2021
The Meeting is scheduled to be held at 10:00 a.m. (Mountain Time) on December 14, 2021 and will be conducted via a
virtual-only live audio webcast at
https://web.lumiagm.com/213163286. At the Meeting, Alcanna
shareholders will be asked to consider, and if deemed advisable, to
pass a special resolution (the "Arrangement Resolution") to
approve the Arrangement. Under the terms of the Arrangement,
Sundial will acquire all of the issued and outstanding common
shares in the capital of Alcanna (each, an "Alcanna Share").
Alcanna Shareholders will receive 10.69 common shares (each, a
"Sundial Share") in the capital of Sundial for each Alcanna
Share held (the "Consideration").
The Arrangement Resolution must be approved by: (i) not less
than 66⅔% of the votes cast by Alcanna Shareholders present in
person (virtually) or represented by proxy at the Meeting; and (ii)
a simple majority (greater than 50%) of the votes cast by Alcanna
Shareholders present in person (virtually) or represented by proxy
at the Meeting excluding votes cast in respect of Alcanna Shares
which are required to be excluded pursuant to applicable Canadian
Securities Laws. Multilateral Instrument 61-101 – Protection of
Minority Security Holders in Special Transactions.
The Consideration represents an acquisition price of
approximately $9.12 per Alcanna
Share, which represents a 39% premium to the 10-day volume weighted
average trading price ("VWAP") of the Alcanna Shares on the
Toronto Stock Exchange (the "TSX") before September 1, 2021, being the date that Alcanna
and Sundial entered into a non-binding letter of intent in respect
of the Arrangement and a 23% premium to the 10-day VWAP of the
Alcanna Shares on the TSX for the period preceding the September 15, 2021 press release regarding
Alcanna's trading activity.
BOARD RECOMMENDATION
The Alcanna Board of Directors, following the unanimous
recommendation of a special committee of independent directors,
unanimously recommends that Alcanna Shareholders vote "FOR" the
Arrangement Resolution.
Your vote is important regardless of the number of Alcanna
Shares you own. It is very important that you carefully read
the Meeting Materials and vote your Alcanna Shares. You are
eligible to vote if you were an Alcanna Shareholder of record at
the close of business on November 9,
2021. To ensure that your Alcanna Shares will be represented
and voted at the Meeting, you should carefully follow the
instructions provided in the Meeting Materials. All Alcanna
Shareholders are encouraged to vote by proxy or in person
(virtually) at the Meeting. The deadline for the receipt of proxies
is 10:00 a.m. (Mountain Time) on
December 10, 2021. However, Alcanna
Shareholders are encouraged to vote their Alcanna Shares as soon as
possible in advance of the Meeting. Detailed instructions on how to
vote and how to participate in the Meeting are contained in the
Meeting Materials.
REASONS FOR AND BENEFITS OF THE ARRANGEMENT
In recommending that Alcanna Shareholders vote in favour of the
Arrangement Resolution, the Alcanna Board of Directors considered a
number of factors, including, but not limited to those listed
below:
- Value Creation—The value offered to Alcanna
Shareholders under the Arrangement represents a 104% increase from
the Alcanna closing price of $4.48 on
the TSX on October 6, 2020 (one year
prior to the date of the arrangement agreement, dated October 7, 2021 (the "Arrangement
Agreement") between Sundial and Alcanna), crystallizing the
value of the Alcanna Shares more favourably than might have
resulted from other strategic alternatives available to
Alcanna.
- Significantly Enhanced Market Liquidity—The
Sundial Shares have a high daily average trading value. During the
30 days ended October 7, 2021, the
average daily trading value of the Sundial Shares was approximately
US$52.5 million on the NASDAQ Capital
Market versus approximately C$1.1
million for Alcanna on the TSX, respectively.
- A Larger, More Diversified Company—As Alcanna
Shareholders will receive Sundial Shares, the Arrangement offers
Alcanna Shareholders the opportunity to participate in the future
growth of Sundial, a leading cannabis business with significant
growth opportunities associated with Sundial's substantial
unrestricted cash position. The Arrangement is also expected to
allow management of the consolidated entity to focus more effort on
its rapidly expanding investment arm through the SunStream Bancorp
Inc. joint venture.
- Retail Expertise—Alcanna's business and brands
are expected to be preserved and certain members of its leadership
team will continue under the Sundial umbrella following completion
of the Arrangement. It is currently expected that Alcanna's
day-to-day liquor retail business operations will continue to be
managed in a similar manner following the completion of the
Arrangement. Additionally, Alcanna has the right pursuant to the
Arrangement Agreement to nominate one individual for appointment,
effective upon the completion of the Arrangement, as a director to
the Sundial Board of Directors which will provide further
continuity for Alcanna Shareholders. Alcanna's stable and growing
cash flow profile and retail operations expertise are expected to
further accelerate Sundial's retail growth strategy.
- Continued Growth—The Arrangement will
represent immediate value creation for Alcanna Shareholders, who
are expected to hold approximately 16% ownership in a large and
rapidly growing diversified business upon completion of the
Arrangement, which includes significant retail, production,
branding and investment businesses. Alcanna's business will be able
to pursue future growth with access to Sundial's substantial
unrestricted cash position of approximately C$628.2 million as of October 7, 2021.
- Fairness Opinion—Paradigm Capital Inc.
("Paradigm") has provided the special committee of the
Alcanna Board of Directors with its fairness opinion which states
that, in the opinion of Paradigm, as of the date of the Arrangement
Agreement, and subject to the assumptions, limitations,
qualifications and other matters set forth in such, the
Consideration to be received by the Alcanna Shareholders pursuant
to the Arrangement is fair, from a financial point of view, to the
Alcanna Shareholders.
- Significant Shareholder Support—Ace Liquor
Corporation and all of the directors and executive officers of
Alcanna who own Alcanna Shares (collectively, the "Supporting
Shareholders"), have entered into agreements with Sundial
(each, a "Support Agreement"), pursuant to which such
Supporting Shareholders have agreed, on the terms and conditions
specified in the Support Agreements, to vote their Alcanna Shares
"FOR" the Arrangement Resolution. As of October 7, 2021, the Supporting Shareholders
beneficially owned, or exercised control or direction over, an
aggregate of 4,166,872 Alcanna Shares, representing approximately
12% of the issued and outstanding Alcanna Shares as of the date
thereof on a non-diluted basis.
SHAREHOLDER QUESTIONS AND ASSISTANCE
If you have any questions or require assistance voting your
Alcanna Shares, please contact Alcanna's proxy solicitation agent,
Laurel Hill Advisory Group at 1-877-452-7184 toll-free in
North America, or call collect
outside North America at +1 416
304-0211, or by e-mail at assistance@laurelhill.com.
RECEIPT OF INTERIM ORDER
On November 9, 2021, the Court of
Queen's Bench of Alberta (the
"Court") granted an interim order (the "Interim
Order") in connection with the proposed Arrangement and
providing for certain matters in respect of the Meeting. The
hearing date for the final order (the "Final Order") of the
Court in respect of the Arrangement has been scheduled for
December 16, 2021. Subject to
obtaining the Final Order, the required approvals of Alcanna
Shareholders, and satisfaction of the other conditions precedent to
completion of the Arrangement, including receipt of all required
regulatory approvals, it is anticipated that the Arrangement will
be completed before December 31, 2021
or in the first quarter of 2022.
Alcanna Shareholders are urged to carefully review and consider
the Meeting Materials, which contain important information
concerning the Arrangement and the rights and entitlements of the
Alcanna Shareholders in relation thereto and to consult with their
financial, tax, legal or other professional advisors.
ABOUT ALCANNA INC.
Alcanna is one of the largest private sector retailers of
alcohol in North America and the
largest in Canada by number of
stores – operating locations in Alberta and British
Columbia. The Company's majority-owned subsidiary, Nova
Cannabis Inc. (TSX: NOVC), also operates approximately 70 cannabis
retail stores in Alberta,
Ontario, and Saskatchewan. The Alcanna Shares trade on the
TSX under the symbol "CLIQ". Additional information about Alcanna
Inc. is available on SEDAR at www.sedar.com and the Company's
website at www.alcanna.com.
FORWARD-LOOKING STATEMENTS
This news release contains forward-looking statements or
information (collectively "forward-looking statements") within the
meaning of applicable securities legislation, relating to, among
other things, the anticipated benefits of the Arrangement; the
completion and timing of the Arrangement; the ability and
expectation that following completion of the Arrangement, Sundial
will continue to experience enhanced market liquidity and growth;
the successful integration of the businesses of Alcanna and
Sundial; that Alcanna's cash flow and retail operations expertise
will accelerate Sundial's growth; the ability of the consolidated
entity to focus more management effort on its investment arm; the
ability of the parties to satisfy all of the closing conditions and
the anticipated timing for closing of the Arrangement; the receipt
of requisite approvals of the Alcanna Shareholders and the Court in
connection with the Arrangement and the anticipated timing thereof;
the expected pro forma ownership of Sundial Shares by
Alcanna Shareholders; the preservation of Alcanna's business and
brands and certain members of its leadership team upon completion
of the Arrangement; operations of Alcanna's liquor retail business
upon completion of the Arrangement; the appointment of a new
director of Sundial by Alcanna upon completion of the Arrangement;
and future growth of Alcanna's business. Forward-looking statements
are typically identified by words such as "continue", "anticipate",
"will", "should", "plan", "intend", and similar words suggesting
future events or future performance. All statements and information
other than statements of historical fact contained in this news
release are forward-looking statements.
Readers should not place undue reliance on forward-looking
statements included in this news release. Forward-looking
statements are inherently subject to change and do not guarantee
future performance and actual results may differ materially from
those expressed or implied by the forward-looking statements. A
number of risks, uncertainties and other factors that may cause
actual performance and results to differ materially from any
estimates, forecasts or projections, or could cause our current
objectives, strategies and intentions to change.
The risk factors and uncertainties that could cause actual
performance and results to differ materially from the anticipated
results or expectations expressed in this new release include,
among other things: risks related to the completion and the timing
of the Arrangement; the ability to complete the Arrangement on the
terms and timeline contemplated by the Arrangement Agreement, and
other agreements, including the Support Agreements, or at all; the
ability of the consolidated entity to realize the anticipated
benefits from the Arrangement and the timing thereof; the inability
of the parties to fulfill or waive any conditions precedent to the
completion of the Arrangement Agreement, including obtaining
required regulatory, Court and approvals of the Alcanna
Shareholders; interloper or other stakeholder risk; risks
related to new issuances of Sundial Shares that could affect the
Alcanna Shareholders' pro forma ownership of Sundial;
the risks and uncertainties related to the ability of the
consolidated entity to successfully integrate the respective
businesses, execute on the strategic opportunity, as well as the
ability to ensure continued performance or market growth of its
products; the duration and severity of the COVID-19 pandemic on the
business, operations and financial condition of the consolidated
entity; the risk that the consolidated entity will be unable to
execute its strategic plan and growth strategy, including the
capital allocation and retail cannabis strategy, as planned or at
all; dependence on suppliers; potential delays or changes in plans
with respect to capital expenditures and the availability of
capital on acceptable terms; risks inherent in the liquor retail
and cannabis industries; competition for, among other things,
customers, supply, capital and skilled personnel; changes in labour
costs and markets; inaccurate assessments of the value of
acquisitions; general economic and provincial and national
political conditions in Canada,
and globally; industry conditions, including changes in government
regulations; fluctuations in foreign exchange or interest rates;
unanticipated operating events; failure to obtain regulatory and
third–party consents and approvals when required; changes in tax
and other laws that affect us and our security holders; the
potential failure of counterparties to honour their contractual
obligations; stock market volatility; and risks associated with
existing and potential future lawsuits, shareholder proposals and
regulatory actions.
In addition, if the Arrangement is not completed, and each of
the parties continues as an independent entity, there are risks
that the announcement of the Arrangement and the dedication of
substantial resources of each party to the completion of the
Arrangement could have an impact on such party's business
relationships, and could have a material adverse effect on the
current and future operations, financial conditions and prospects
of such party. Readers should refer to the discussion of risks set
forth in the Circular under the heading "Risk Factors". A
comprehensive discussion of other risks relating to Alcanna's
business are contained under the heading "Risk Factors" in
Alcanna's annual information form for the financial year ended
December 31, 2020 dated March 25, 2021. Additional information regarding
risks and uncertainties relating to Sundial's business are
contained under "Item 3D Risk Factors" in Sundial's Annual Report
on Form 20-F, which was filed with the Securities and Exchange
Commission (the "SEC") on March
17, 2021. Readers are cautioned that this list of risk
factors should not be construed as exhaustive.
The forward-looking statements contained in this news release
are made as of the date hereof. Except as expressly require by
applicable securities legislation, Alcanna does not undertake any
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise. The forward-looking statements contained in this news
release are expressly qualified by this cautionary statement.
FOR FURTHER INFORMATION
This news release is not intended to and does not constitute an
offer to sell or the solicitation of an offer to subscribe for or
buy or an invitation to purchase or subscribe for any securities or
the solicitation of any vote or approval in any jurisdiction, nor
shall there be any sale, issuance or transfer of securities in any
jurisdiction in contravention of applicable law. This news release
is being made in respect of the proposed Arrangement involving
Alcanna and Sundial pursuant to the terms of the Arrangement
Agreement.
Alcanna will file other relevant materials in connection with
the Arrangement with the applicable securities regulatory
authorities. Alcanna Shareholders are urged to carefully read the
Circular (including any amendments or supplements to such
documents), and other Meeting Materials, before making any voting
decision with respect to the Arrangement because they contain
important information about the Arrangement and the parties
thereto. Copies of the Meeting Materials may be found on Alcanna's
SEDAR profile at www.sedar.com and on Alcanna's website at
https://www.alcanna.com/ALCANNA-Special-Meeting-Materials.
Alcanna Shareholders can obtain additional information about
Sundial, including materials incorporated by reference into the
Circular, without charge, on the SEC's website at www.sec.gov or
from Sundial's profile on SEDAR at www.sedar.com.
SOURCE Alcanna Inc.