EDMONTON and CALGARY, AB, March 22,
2021 /CNW/ - Alcanna Inc. ("Alcanna") (TSX: CLIQ) and
YSS Corp. ("YSS") (TSX-V: YSS; WCN: A2PMAX; and OTCQB:
YSSCF) are pleased to announce the completion of their business
combination (the "Transaction") previously announced on
January 18, 2021, which resulted in a
reverse take-over of YSS pursuant to the policies of the TSX
Venture Exchange (the "TSXV") and a name change (the
"Name Change") of YSS to "Nova Cannabis Inc."
("Nova"). The common shares of Nova ("Nova Shares")
are expected to begin trading on the TSXV under the ticker symbol
"NOVC" on or about March 24, 2021.
Reverse Takeover
Pursuant to the terms of the business combination agreement
dated January 18, 2021 (the
"Agreement"), Alcanna sold all of the equity securities of
its wholly-owned subsidiaries, Alcanna Cannabis Stores GP Inc.
("ACS GP") and Alcanna Cannabis Stores Limited Partnership
("ACS LP" and together with ACS GP, the "ACS
Entities"), which carry on Alcanna's cannabis retail business,
to YSS. Pursuant to the Agreement, the common shares of YSS
("YSS Shares") were consolidated (the
"Consolidation") on the basis of a ratio of approximately
0.05449-to-one, such that, after completion of the Consolidation,
the holders of YSS Shares ("YSS Shareholders") held an
aggregate of 7,583,353 post-Consolidation YSS Shares. In
consideration for the purchase of the equity securities of the ACS
Entities, YSS issued an aggregate of 35,750,000 post-Consolidation
YSS Shares to Alcanna (the "Consideration Shares") at a
deemed price of $3.00 per YSS
Share.
As previously announced on February 11,
2021, Alcanna Cannabis Stores Finance Ltd. ("ACS
FinCo"), a wholly owned subsidiary of ACS LP, closed the
sale of an aggregate of 13,334,000 subscription receipts (the
"Subscription Receipts") at a price of $3.00 per Subscription Receipt, for aggregate
gross proceeds $40,002,000 (the
"Concurrent Financing"). Each Subscription Receipt converted
into one common share of ACS FinCo (each, a "FinCo Share")
and was subsequently exchanged for a Nova
Common Share pursuant to an amalgamation of ACS FinCo with a
wholly-owned subsidiary of YSS (the "Amalgamation").
Following completion of the Transaction and the Amalgamation,
Alcanna holds approximately 63%, former YSS Shareholders and former
holders of Subscription Receipts hold approximately 13% and 24%,
respectively, of the Nova Shares (calculated on a basic basis).
The net proceeds of the Concurrent Financing are expected to be
used for Nova's go-forward business plan, including the
development, construction and acquisition of additional cannabis
retail locations and conversion of existing cannabis retail
locations to the "Value Buds" banner, including capital
expenditures, inventory, and other general corporate and working
capital purposes.
Exchange Matters and Trading Halt
The TSXV has provided conditional approval for the Transaction
and listing of the Nova Shares. In accordance with TSXV policies,
the Nova Shares will remain halted for trading until the TSXV
issues the final bulletin in respect of the Transaction. Nova will
continue as a Tier 1 Life Sciences issuer on the TSXV and the Nova
Shares are expected to commence trading on or about March 24, 2021. The total number of Nova Shares
issued and outstanding at listing will be 56,685,666.
In connection with the graduation to a Tier 1 listing, all
securities of YSS which were subject to a Tier 2 escrow release
schedule pursuant to the value security escrow agreement dated
January 2, 2019 will be subject to a
Tier 1 release schedule, resulting in the immediate release from
escrow of all such securities.
Governance and Management
Alcanna and Nova have entered into an investor rights agreement
(the "Investor Rights Agreement") providing for customary
rights based on Alcanna's equity interest in Nova. Alcanna has
agreed to a two-year lockup period in respect of the Consideration
Shares, subject to certain conditions. Pursuant to the Investor
Rights Agreement, Alcanna appointed four nominees to the board of
directors of Nova: James Burns,
Darren Karasiuk, Ross Sinclair, and Thomas Bitove. Ron
Hozjan, an independent director of YSS, will continue as a
director of Nova.
The board of directors of Nova is expected to make the
following appointments: James Burns
as Chair; Thomas Bitove as Lead Director; Darren Karasiuk
as President and Chief Executive Officer; David Gordey as Chief Financial Officer;
Marcie Kiziak as Chief Operating
Officer; and Matthew Hewson as
Corporate Secretary. Other than Ron
Hozjan, the existing directors and executive officers of YSS
resigned. Brief biographies of each of the directors and executive
officers of Nova are below. Darren
Karasiuk has resigned from the Alcanna board of directors,
effective March 20, 2021.
Darren Karasiuk, Director,
President and Chief Executive Officer (Toronto, Ontario)
Mr. Karasiuk served as Chief Commercial Officer of Aurora
Cannabis Inc. ("Aurora") where he had oversight of key
customer facing and revenue driving functions, including sales,
marketing, consumer insights and analytics. During his tenure, he
helped Aurora achieve leadership in the Canadian recreational and
medical cannabis markets, as well as Europe. Mr. Karasiuk joined Aurora through the
acquisition of MedReleaf Corp., where he served first as
Vice-President, Strategy and later as Senior Vice-President and
General Manager of the Recreational business. Prior to joining
MedReleaf, Mr. Karasiuk was Vice-President, Insights and Advisory
at Deloitte. Mr. Karasiuk has served on Alcanna's board since 2019
and holds an MA from Western University
as well as an MBA from Kellogg-Schulich. Mr. Karasiuk resigned from
the Alcanna board on closing of the Transaction.
James Burns, Chair
(Edmonton, Alberta)
Mr. Burns has been Vice-Chair and Chief Executive Officer of
Alcanna since December 2017 after
joining the board in June 2017 and
being named lead director and placed in charge of developing
Alcanna's cannabis strategy. Throughout a 45-year career, he has
been: a partner at Gordon Capital Corporation and Gordon Investment
Corporation in their private equity business; co-owner, director
and CFO at Scott's Restaurants and
priszm brandz; Managing Director at CIBC Capital Markets; and Chief
of Staff to the Deputy Prime Minister of Canada and Chair of the Chiefs of Staff
Committee. Mr. Burns holds a B. Comm. (Honours) from Queen's
University School of Business and a Master of Science (Mark of
Distinction) in Politics of the World Economy from the London School of Economics.
Thomas Bitove, Director
(Toronto, Ontario)
Mr. Bitove has worked in many aspects of multi-unit operations
for his entire career. Just a few of the businesses he has owned
and operated include: Hard Rock Café; a 32 store Big Boy chain; 35
separate restaurants and concessions at Toronto Pearson airport;
and 17 Travel Centres along the 401 and 400 in Ontario. Mr. Bitove is the exclusive
distributor of Red Bull Energy Drink in Ontario and British
Columbia and owner of ColdHaus Direct Inc, a major
distributor of beer and wine in Ontario. Mr. Bitove served 12 years on the
board of Intrinsyc Technologies, a TSX-listed public company. Mr.
Bitove was invested into the Order of Ontario, Ontario's highest honour for a citizen. The
award recognizes his charitable contributions to the people of
Ontario and Canada as well as his business successes.
Ross Sinclair, Director
(Toronto, Ontario)
Mr. Sinclair was a partner with PricewaterhouseCoopers LLP
("PwC") and has more than 25 years of experience as a
partner. Mr. Sinclair retired from PwC on June 30, 2020. He has had extensive experience
with clients across several industries including consumer products,
retail, real estate, health care and private equity. Mr. Sinclair
has served many clients advising on critical business issues,
transactions and restructurings in addition to his experience as a
lead audit partner on both public and private enterprises. Mr.
Sinclair's experience includes PwC Canada leadership roles as
Income Trust and IPO Services Group Leader, as well as Retail &
Consumer Products National and GTA Industry Leader. Mr. Sinclair
has significant experience working with clients on their capital
markets projects and needs, including numerous equity, debt and
initial public offering and RTOs. Mr. Sinclair has also served as
the overall audit engagement leader on several Canadian retailers
and other public companies including both US GAAP, SEC, OSC and
IFRS reporting responsibilities. Mr. Sinclair was a designated
Trustees on the Continuum REIT IPO in the fall of 2019 and is an
Advisory Board member and investor in Arch Corporation.
Ron Hozjan, Director
(Calgary, Alberta)
Mr. Hozjan has served as a director of YSS since June 2018 and is currently a member of YSS' audit
committee and corporate governance and compensation committee.
Since January 2020, Mr. Hozjan has
held the role of Vice President, Finance and Chief Financial
Officer of Aureus Energy Services Inc. Prior thereto, he served as
Vice President, Finance and Chief Financial Officer of Tamarack
Valley Energy Ltd. (TSX: TVE) from June
2010 until January 2020. Mr.
Hozjan has also served as a director of Aloha Brands Inc. since
April 2019.
Marcie Kiziak, Chief Operating
Officer (Edmonton,
Alberta)
Ms. Kiziak, currently President of Alcanna's cannabis division,
has led the retail cannabis business since she took over in
July 2018. Ms. Kiziak was Alcanna's
lead executive in designing and executing the strategy to launch
the Nova brand, starting with 5 stores at legalization day. Ms.
Kiziak has led the growth in the business to Nova's current 34
stores. Ms. Kiziak joined Alcanna in February 2018 as Senior Vice President, Human
Resources and continues in that role concurrently with running
Nova. Prior to joining Alcanna, Ms. Kiziak was the Vice President
of Human Resources and Safety for Corrosion and Abrasion Solutions
Ltd. from 2013 until 2017 which included a secondment into
operations to lead a business transformation. Ms. Kiziak also spent
15 years in the oil and gas and construction sectors focused on
senior HR Leadership, M&A and Integration. Ms. Kiziak holds a
Bachelor of Management Degree with a Major in Human Resources and
is a Chartered Professional in Human Resources.
David Gordey, Chief Financial
Officer (Edmonton,
Alberta)
Mr. Gordey will act as Chief Financial Officer of Nova and will
also continue in his position of Executive Vice President,
Corporate Services and Chief Financial Officer of Alcanna.
Mr. Gordey assumed the role of Executive Vice President, Corporate
Services and Chief Financial Officer of Alcanna in April 2018. Mr. Gordey served as Chief Operating
Officer, Liquor from July 2016 to
April 2018, and Senior Vice President
and Chief Financial Officer from May
2014 to July 2016, after
joining Liquor Stores N.A. Ltd. in March
2012 as Vice President, Finance. Mr. Gordey is a Chartered
Professional Accountant, formerly of KPMG LLP (Edmonton).
Matthew Hewson, Corporate
Secretary (Edmonton,
Alberta)
Mr. Hewson is Alcanna's General Counsel, Senior Vice President,
Regulatory Affairs & HR and Corporate Secretary. Mr. Hewson
joined Alcanna in 2013 and assumed the role of General Counsel in
2016. Prior to joining Alcanna, Mr. Hewson worked as a
corporate/commercial lawyer at a national law firm.
Additional Information for YSS Shareholders
Registered holders of pre-Consolidation YSS Shares will receive
a letter of transmittal by mail, from the transfer agent of
Nova, Odyssey Trust Company, advising of the completion of the
Consolidation, the Name Change and the Transaction, and providing
instructions to exchange share certificates or DRS statements
representing pre-Consolidation YSS Shares for their entitlement to
Nova Shares. Non-registered shareholders holding YSS Shares through
an intermediary (a securities broker, dealer, bank or financial
institution) should be aware that the intermediary may have
different procedures for processing the Consolidation and the Name
Change than those that will be put in place for registered
shareholders. If shareholders hold their YSS Shares through
intermediaries and have questions in this regard, they are
encouraged to contact their intermediaries. Further details
regarding the Concurrent Financing, the Transaction, the Name
Change, the Consolidation, and the Amalgamation are set out in the
management information circular of YSS dated February 12, 2021, which is available on SEDAR
(www.sedar.com) under Nova's issuer profile.
About Nova
Immediately upon completion of the Transaction, Nova will have
53 cannabis retail locations in Alberta, Saskatchewan and Ontario. These cannabis retail locations range
in size from 1,200 to 5,600 square feet and are operated under the
"Nova Cannabis", "Deep Discount Cannabis", "Value Buds", "YSS", and
"Sweet Tree" brands. Nova has more than 20 additional cannabis
retail locations in development for 2021. The majority of Nova's
cannabis retail locations (including locations previously operated
by YSS) are expected to be re-branded as "Value Buds" and will
target the value-conscious consumer, an under-served segment of the
market that is estimated to account for approximately 70% of total
recreational cannabis market in Canada (both legal and illicit).
Alcanna will provide management and administrative services to
Nova, at a cost that is anticipated to be far less than a
stand-alone company could achieve, until Nova reaches the critical
size to bring those services in-house. Alcanna and Nova expect to
enter into a management and administrative services agreement for
an initial two-year term. Alcanna will also provide lease
guarantees for Nova and make available to Nova an operating line of
credit without standby fees for up to $10
million at prime plus 2.75% for growth, including new store
builds, acquisitions and general corporate and working capital
purposes. The operating line of credit will be drawable at Nova's
sole discretion and will be secured by a charge on all of the
personal property of Nova. A copy of the Investor Rights Agreement
will be available on Nova's SEDAR profile at www.sedar.com.
In connection with the Transaction, PricewaterhouseCoopers LLP
is anticipated to be appointed as the auditors of Nova following
the release of the audited financial statements of YSS for the year
ended December 31, 2020.
About Alcanna
Alcanna is one of the largest private sector retailers of
alcohol in North America and the
largest in Canada by number of
stores – operating 196 locations in Alberta and British
Columbia. Alcanna is incorporated under the laws of
Canada, and its common shares and
convertible subordinated debentures trade on the Toronto Stock
Exchange under the symbols "CLIQ" and "CLIQ.DB", respectively.
Additional information about Alcanna is available at www.sedar.com
and www.alcanna.com.
Prior to the Transaction, Alcanna did not hold any securities of
YSS. An early warning report will be filed by Alcanna in respect of
Nova in accordance with applicable Canadian securities
laws. As of the date of this news release, neither Nova nor
Alcanna are aware of any plans nor have any future intentions which
would relate to or result in any of the matters contemplated by
Item 5 of Form 62-103F1 Required Disclosure Under the Early
Warning Requirements. To obtain a copy of the early
warning report, see the contact information below for Darren Karasiuk.
Advisors
Eight Capital acted as exclusive financial advisor to Alcanna
with respect to the Transaction. Cormark acted as financial advisor
to YSS with respect the Concurrent Financing. Bennett Jones LLP
acted as legal advisor to Alcanna and the ACS Entities. Stikeman
Elliott LLP acted as legal advisor to YSS.
Neither the TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in the policies of the
TSX Venture Exchange) accepts responsibility for the adequacy or
accuracy of this news release.
NOTE REGARDING FORWARD-LOOKING INFORMATION
This press release contains certain "forward-looking
information" and certain "forward-looking statements" within the
meaning of applicable securities laws, such as statements and
information concerning anticipated future events, results,
circumstances, performance or expectations that are not historical
facts or information or current condition, but instead represent
only the parties beliefs regarding future events, plans or
objective, many of which, by their nature, are inherently uncertain
and outside of the Alcanna or Nova's control. Use of words such as
"may", "will", "expect", "plans", "could", "would", "might",
"believe", "intends", "likely", or other words of similar effect
may indicate a "forward-looking" statement. The forward-looking
information and forward-looking statements contained herein may
include, but are not limited to: expectations regarding the
issuance of the final bulletin of the TSXV in respect of the
Transaction and timing thereof; timing for the commencement of
trading of Nova Shares on the TSXV; Nova's ability to meet the TSX
original listing requirements and listing of the Nova Shares on the
TSX; expectations regarding the management and administrative
services agreement between Alcanna and Nova; the cost of management
and administrative services by Alcanna; the pro forma
business plan of Nova, including plans to convert cannabis retail
stores to the "Value Buds" banner; growth of Nova; the roll-out the
"Value Buds" banner across Ontario
through new builds and acquisitions; and use of the net proceeds
from the Concurrent Financing; Alcanna providing lease guarantees
and other financial support to Nova; and the pledge of the assets
of Nova to secure the operating line of credit provided by Alcanna
to Nova. These statements are not guarantees of future performance
and are subject to numerous risks and uncertainties, including
those described in the publicly filed documents of Alcanna or Nova
(available on SEDAR at www.sedar.com).
Among the key risks and uncertainties that could cause actual
results to differ materially from those projected in the
forward-looking information and statements include, but not are
limited to, the following: the potential impact of the Transaction
on relationships, including with regulatory bodies, employees,
suppliers, customers and competitors; changes in general economic,
business and political conditions, including changes in the
financial markets; risks relating to the COVID-19 pandemic,
governmental responses thereto, measures taken by Alcanna or Nova
in response thereto and the impact thereof on the global economy,
capital markets, the cannabis retail industry and Alcanna or Nova;
the ability of Nova's management to successfully integrate the
operations of the cannabis retail businesses of the ACS Entities
and YSS; the ability to realize the benefits anticipated by the
Transaction; changes in regulation and legislative developments
affecting the cannabis retail industry; the ability of Alcanna to
provide financial support to Nova; and the successful execution of
Nova's business plan; and the ability of Nova to secure additional
capital to execute its business plan on economic terms. For
additional information with respect to these factors and
assumptions underlying the forward-looking statements in this news
release concerning the cannabis retail business of Nova upon
completion of the transaction, see the management information
circular of YSS dated February 12,
2021 in respect of the Transaction, which is available on
Nova's issuer profile on SEDAR at www.sedar.com.
These statements are made as of the date of this news release
and, except as required by applicable law, neither Alcanna nor Nova
undertake any obligation to publicly update or revise any
forward-looking statement, whether as a result of new information,
future events or otherwise. Additionally, neither Alcanna nor Nova
undertake an obligation to comment on analyses, expectations or
statements made by third parties in respect of Alcanna or Nova, or
their respective financial or operating results or its securities.
Alcanna and Nova do not assume any obligation to update or revise
any forward-looking statements, whether written or oral, that may
be made from time to time by the Alcanna or Nova on the behalf of
Alcanna or Nova, except as required by applicable law.
Readers are cautioned that the foregoing lists of factors are
not exhaustive. Additional information on these and other factors
that could affect operations or financial results of Alcanna and
Nova are included in reports on file with applicable securities
regulatory authorities and may be accessed through the SEDAR
website (www.sedar.com). These forward-looking statements are made
as of the date of this press release and Alcanna and Nova disclaim
any intent or obligation to update publicly any forward-looking
information, whether as a result of new information, future events
or results or otherwise, other than as required by applicable
securities laws.
This press release contains future-oriented financial
information and financial outlook information (collectively,
"FOFI") about Nova's pro forma expected market
capitalization and growth, which are subject to the same
assumptions, risk factors, limitations, and qualifications as set
forth in the above paragraphs. The actual results of operations of
Nova and the resulting financial results will likely vary from the
amounts set forth in this presentation and such variation may be
material. Alcanna, Nova and their respective management believe
that the FOFI has been prepared on a reasonable basis, reflecting
management's best estimates and judgments. However, because this
information is subjective and subject to numerous risks, it should
not be relied on as necessarily indicative of future results.
Except as required by applicable securities laws, Alcanna and Nova
undertake no obligation to update such FOFI. FOFI contained in this
press release was approved by management of Alcanna and Nova,
respectively, as of the date of this press release and was provided
for the purpose of providing further information about Nova's
anticipated future business operations. Readers are cautioned that
the FOFI contained in this press release should not be used for
purposes other than for which it is disclosed herein.
SOURCE YSS Corp.
