Strategic Transaction Opens New Sales Channel
Opportunity to Canada's Largest
Construction Labor Union
Highlights:
- Supply Agreement Expected to Generate up to $40mm in Revenue
and Make a Material Contribution to Profitability
- Sale Agreement of Non-Core Asset adds Non-Dilutive $7mm to
Balance Sheet
- Accelerates Previously Announced Consolidation, Improving
Operating Performance
TORONTO, Sept. 20, 2016 /CNW/ - Mettrum Health Corp.
("Mettrum" or the "Company") (TSXV:MT), a vertically
integrated provider of cannabis products, is pleased to announce
that it has entered into an agreement with Cannabis Care Canada
Inc. ("CCC") to sell to CCC its wholly-owned subsidiary Mettrum
(Bennett North) Ltd. ("Bennett Road
North"), which is licensed to produce and sell dried cannabis and
cannabis extracts for medical purposes. CCC is financially
backed by Laborers International Union of North America ("LiUNA"), North America's single largest construction
union with over 100,000 Canadian members. Under the terms of the
agreement, CCC will pay $7 million in
cash to acquire Bennett Road North and enter into a three-year
Supply Agreement that is expected to generate up to $40mm in
revenue for Mettrum over the next three years. As part of the
transaction, CCC will assume all outstanding obligations associated
with Bennett Road North.
Once the transaction is completed in the coming months, Bennett
Road North will be renamed Starseed Medicinal Inc. ("Starseed") and
will become a wholly-owned subsidiary of CCC, whose board members
include Mr. G. Edmund King (former
CEO and Chairman of Wood Gundy), Dr. Hugh
E. Scully (previously president of both the Ontario and Canadian Medical Associations),
and retired Major General Lewis
Mackenzie. Mettrum will supply Starseed with cannabis and
cannabis extracts to sell to members of LiUNA who have valid
medical documents to use cannabis for medical
purposes.
As previously announced, Mettrum will continue to consolidate
operations at its new facility and headquarters, at 314 Bennett
Road ("Bennett Road South"). Bennett Road South occupies 60,000
sq/ft on seven acres of land. Mettrum has begun construction to
double its total production capacity, currently at approximately
6,000 kg per year, to 12,000 kg before the end of its current
fiscal year ending March 31, 2017,
and plans to have total production capacity of approximately 25,000
kg by the end of the fiscal year ending March 31, 2018.
Divesting of Bennett Road North is not anticipated to have any
material impact on Mettrum's production, as the yearly production
at the facility is approximately 500 kg. As a result of the sale,
the Company is expecting to achieve material operational
efficiencies by streamlining and consolidating its operations.
Furthermore, the three-year Supply Agreement is expected to make a
material contribution to the Company's revenue and
profitability.
"Given the scale of our operations at Bennett Road South and
Creemore, it was very timely to
find a purchaser for Bennett Road North who is also a great
strategic partner," said Michael
Haines, Chief Executive Officer of Mettrum. "We are
extremely excited to enter into this agreement which does three
important things for Mettrum. First, it allows us to continue
to lower operating costs by streamlining and consolidating our
operations at our new headquarters. Second, it strengthens
our already robust balance sheet in a non-dilutive manner.
Lastly, and most importantly, it greatly enhances the scale of our
business through our supply agreement, and access to a new market,
with Cannabis Care Canada Inc."
Laborers International Union of North
America ("LiUNA"), North
America's single largest construction union with over
100,000 Canadian members, is a shareholder of Cannabis Care Canada
Inc. and will be working closely with Starseed on behalf of its
members. Mr. Joseph Mancinelli, VP
of LiUNA said, "We believe cannabis is a medicine able to treat
many ailments, including the management of pain. Working in
conjunction with Mettrum and Starseed, we want to make medicinal
cannabis treatment available to all of our members and their
families and will, in time, make it a paid benefit."
The transaction is expected to be completed by January, 2017 and
is subject to the completion of certain conditions of closing.
Neither the Exchange nor its Regulation Services Provider
(as that term is defined in the policies of the Exchange) accepts
responsibility for the adequacy or accuracy of this Press
release.
About Mettrum Health Corp.
Mettrum Health Corp. is a Tier 1 Industry Issuer listed on TSX
Venture Exchange. Mettrum Ltd., a wholly owned subsidiary of the
Company, is a Toronto-based
company and a licensed producer of medical cannabis under the
Access to Cannabis for Medical Purposes Regulations
(Canada) issued pursuant to
the Controlled Drugs and Substances Act (Canada) (the "ACMPR"), which came into
effect on August 24th,
2016. Mettrum received its first license from Health Canada under
the Marihuana for Medical Purposes Regulations (the
"MMPR") on November 1, 2013 and began
production of medical cannabis at its first production facility in
Bowmanville, Ontario. Mettrum
received its second license from Health Canada under the MMPR on
December 11, 2014 for its other
wholly-owned subsidiary, Agripharm Corp., at Mettrum Creemore
facility in Clearview,
Ontario. Mettrum received its
third license from Health Canada under the MMPR on December 17, 2015 for Mettrum Ltd. at its new
60,000 square foot production and distribution facility in
Bowmanville, Ontario. Mettrum is a
leading producer and vendor of medical cannabis under the ACMPR
system. In addition, through its wholly-owned subsidiary
Mettrum Hempworks, Mettrum also is a licensed producer and
distribution of industrial cannabis (hemp) products, including
Mettrum's functional food line, Mettrum Originals™, under the
Industrial Hemp Regulations (Canada) issued pursuant to the
Controlled Drugs and Substances Act (Canada).
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION:
This news release includes certain "forward-looking statements"
under applicable Canadian securities legislation, including,
without limitation, the estimated and anticipated impact on the
Company's operations, financial results and information,
efficiencies, access to markets, licenses and production
capacities, as well as the anticipated dates of completion and
impacts. 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, financial, operational,
competitive, regulatory, political and social uncertainties; delay
or failure to receive board, shareholder or regulatory approvals;
and the results of operations. 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
forward-looking statements. The Company expressly disclaims any
intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as required by law.
SOURCE Mettrum Health Corp.
