Breaking News: GTEC HOLDINGS SIGNS BINDING LETTER OF INTENT FOR 240,000 SQ. FT. EXPANSION SITE IN BC

On June 10, 2018, GTEC Holdings Ltd. (TSX-V: GTEC) entered into an exclusive binding letter of intent with F-20 Developments Corp. to develop a 240,000-square-foot indoor cultivation facility located in Vernon, B.C.

F-20, a privately held corporation whose principals have been involved in the financing and construction of licensed cultivation facilities in Canada and the United States, has secured a property with an existing 60,000-square-foot building that will be retrofitted as part of the first phase of construction to allow for the cultivation of cannabis (phase 1). A second phase of the project will see the construction of a secondary purpose-built building to be 180,000 square feet in size. Phase 1 construction is expected to commence immediately upon the parties finalizing the definitive and ancillary agreements and upon GTEC and F-20 incorporating a new company (NewCo).

F-20 has committed to finance the large majority of the phase 1 project costs up to $9-million, with GTEC committing to finance the final $1-million toward the estimated $10-million budget to complete phase 1. As consideration for F-20 entering into this arrangement, upon execution of the definitive agreements, GTEC shall issue to F-20 common shares equivalent to $2.5-million at a deemed price equal to the 10-day volume-weighted average trading price of such shares, where the consideration shares are subject to performance milestones related to the construction of phase 1. GTEC will have an option to acquire all of F-20’s issued and outstanding shares of NewCo at a predetermined valuation metric based on annual production capacity. NewCo will also have an option to purchase the property at its fair market value pursuant to the terms of its lease subject to a predetermined floor and ceiling price.

F-20 will be the project manager and be responsible for the project’s phase 1 construction and building retrofit, supported with oversight and guidance from GTEC’s operations and regulatory team.

“This project with F-20 further increases our production capacity in B.C., which positions the company one step closer to realizing our objectives,” said Norton Singhavon, chairman and chief executive officer of GTEC Holdings. “The property is ideally located to maximize synergies with GTEC’s existing production and laboratory facilities. The ability to utilize F-20’s financial capacity and construction expertise will allow for GTEC to maintain focus on building and operating our existing facilities while leveraging our expertise to further foster the company’s growth strategy.”

Closing will be subject to a number of conditions, including completion of due diligence by GTEC, execution by NewCo of a lease for the property, a shareholder agreement for NewCo, and an initial supply agreement between NewCo and GTEC and/or its subsidiaries, as applicable, as well as GTEC board of directors and regulatory approval.

 

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