CDN MSOLAR Corp. Announces Proposed Acquisition of Blueberries Cannabis Corp. and Related Financing Transaction
CDN MSOLAR Corp. (“CDNM”) announces that it has entered into a binding letter agreement (the “Letter Agreement”) with Blueberries Cannabis Corp., a privately held issuer existing under the laws of the Province of Ontario (“Blueberries”), which outlines the general terms and conditions pursuant to which CDNM and Blueberries have agreed to complete a transaction (the “Transaction”) that will result in a reverse take-over of CDNM by the current shareholders of Blueberries. The Letter Agreement was negotiated at arm’s length and is effective as of September 5, 2018.
Blueberries SAS, a wholly-owned subsidiary of Blueberries, is seeking to become a large scale producer of naturally grown premium quality cannabis with its primary operations well situated in the Bogotá savanna in central Colombia. Lead by a team with deeply specialized and proprietary expertise in agriculture, genetics, extraction, medicine, pharmacology and marketing, Blueberries SAS has received all the licenses required for the cultivation, production, domestic distribution and international export of cannabidiol (CBD) based medical cannabis. The License for domestic distribution and export has also been issued by the Health Department, which was the last formal requirement by the Justice Department for the issuance of the tetrahydrocannabinol (THC) permit which is in process. Blueberries SAS’ combination of leading scientific expertise, agricultural advantages, and distribution arrangements has positioned the company to become a leading international supplier of naturally grown, processed, and standardized medicinal-grade cannabis oil extracts and related products.
With deep local experience, relationships and access to excellent infrastructure, Blueberries SAS is also well positioned to continue the expansion of its operations and commence cultivation of medicinal grade cannabis on its three hectares of approved lands located in the Bogotá savanna, with the availability of 30 additional hectares for continued scalability.
Terms of the Transaction and Financing Matters
It is currently anticipated that the proposed Transaction will be effected by way of a three-cornered amalgamation or other similar form of transaction as is acceptable to the parties. There are currently outstanding an aggregate of 7,392,759 common shares in the capital of CDNM (each, a “CDNM Common Share”) and 100 common shares in the capital of Blueberries (each, a “Blueberries Share”); however, Blueberries has commitments to issue, prior to the completion of the Offering (as defined herein), an aggregate of 63,000,000 Blueberries Shares in conjunction with its organization and the acquisition of Blueberries SAS.
Pursuant to the proposed Transaction, the holders of the issued and outstanding Blueberries Shares shall receive one CDNM Common Share for each Blueberries Common Share held. As at the date hereof, no CDNM Shares or Blueberries Shares are reserved for issuance under any outstanding convertible securities of either party.
On or immediately prior to the completion of the proposed Transaction, it is anticipated that: (i) CDNM will affect the Name Change (as defined herein); and (ii) the board of directors of CDNM shall be reconstituted to consist of nominees of Blueberries and all existing officers of CDNM shall resign and be replaced by nominees of Blueberries, all as further described below.
Prior to the completion of the Transaction, it is anticipated that Blueberries will complete a non-brokered private placement of approximately 30,000,000 subscription receipts (the “Subscription Receipts”) at a price of C$0.25 per Subscription Receipt for gross proceeds of approximately C$7,500,000 (the “Offering”). Each Subscription Receipt shall entitle the holder to receive, upon satisfaction of certain escrow release conditions, and without payment of additional consideration, one unit in the capital of Blueberries (a “Unit”). Each Unit shall consist of one Blueberries Share and one-half of one Blueberries Share purchase warrant (each whole warrant, a “Warrant”), which Units shall be exchanged, without further consideration, for one Unit in the capital of the Resulting Issuer (as defined herein), upon the completion of the proposed Transaction. Following the exchange for Units of the Resulting Issuer, each Warrant of the Resulting Issuer (a “Resulting Issuer Warrant”) shall entitle the holder thereof to acquire one common share of the Resulting Issuer (a “Resulting Issuer Share”) at a price of C$0.40 per Resulting Issuer Share for a period of 24 months.
The net proceeds from the Offering will be used to expand the business of Blueberries, for working capital and for general corporate purposes. Further details regarding the Offering will be included in a subsequent news release once additional details become available.
Upon completion of the Transaction, and assuming the maximum gross proceeds in the Offering are raised, there will be 100,392,759 common shares of the combined entity (the “Resulting Issuer”) issued and outstanding, of which it is expected that the current shareholders of CDNM will hold approximately 7.4%, purchasers in the Offering will hold approximately 29.8%, and the former shareholders of Blueberries will hold approximately 62.8%.
The obligations of CDNM and Blueberries pursuant to the Letter Agreement shall terminate in certain specified circumstances, including in the event that the proposed Transaction is not completed by February 5, 2019. The proposed Transaction is subject to requisite regulatory approvals and standard closing conditions, including the approval of the directors of each of CDNM and Blueberries of a definitive agreement in respect of the Transaction (the “Definitive Agreement”), as well as the conditions described below. Upon completion of the Transaction, it is the intention of the parties that the Resulting Issuer will continue to focus on the current business and affairs of Blueberries SAS.
Insiders, Officers and Board of Directors of the Resulting Issuer
It is expected that upon completion of the Transaction, the Resulting Issuer will have the following officers:
- Christian Toro, the current Chief Executive Officer of Blueberries SAS, will serve as Chief Executive Officer and a Director of the Resulting Issuer.
- Chris Reid, the current interim Chief Financial Officer of Blueberries SAS, will serve as interim Chief Financial Officer of the Resulting Issuer.
- Camilo Villalba, the current Chief Operating Officer of Blueberries SAS, will serve as Chief Operating Officer of the Resulting Issuer.
- Pablo Santos, the current Chief Marketing Officer of Blueberries SAS, will serve as Chief Marketing Officer of the Resulting Issuer.
Set forth below is a description of the backgrounds of all persons who are currently expected to serve as directors and officers of the Resulting Issuer.
Christian Toro, Chief Executive Officer and a Director
Mr. Toro began his professional career at Publicidad Toro in 1978, a leading Colombian marketing and advertising firm, and was appointed Chief Executive Officer in 1982. Mr. Toro is also the founder of Manning Selvage & Lee (a public relations firm) and Arena (a media buying company).
Chris Reid, Interim Chief Financial Officer
Mr. Reid has served as the Chief Executive Officer and President of Petrodorado, a petroleum company with operations in Colombia, since January 2016 and as the Chairman since May 2016. Mr. Reid also served as the Interim Chief Executive Officer, Chief Financial Officer and Interim President of Petrodorado from February 2012 to January 2016, where he was involved in the turnaround of the company through a divestiture program. Additionally, Mr. Reid has been a director of Potash Ridge Corporation since June 1, 2016. Mr. Reid is a Chartered Professional Accountant whose career includes 12 years of experience in industry and international business. Mr. Reid is currently a director of First Cobalt Corp., Potash Ridge Corp., Integrated Energy Storage Corp. and Petrodorado. Mr. Reid is a member of the Institute of Chartered Accountants of Alberta and the Chartered Professional Accountants of Alberta. Mr. Reid holds a Bachelor of Business Administration from Saint Francis Xavier University.
Camilo Villalba, Chief Operating Officer
Mr. Villalba, a bilingual finance and foreign trade professional, was a founding partner in 2016 of Optim Holdings, a consulting firm focused on natural resources to assist companies in the development of investment projects along the value chain in oil and gas and mining industries. Mr. Villalba has considerable experience in oil and gas project evaluations, financial planning, budgeting and reporting, in addition to project structuring, promotion and execution of mineral exploration and oil trading operations. Mr. Villalba holds a Bachelor degree in Finance and International Trade from Universidad Sergio Arboleda in Bogotá, Colombia (2008), a Master in Business Administration from the London School or Business and Finance (2011), and a specialization in the oil and gas industry from Saint Vincent College (2014).
Pablo Santos, Chief Marketing Officer
Mr. Santos, has extensive sales experience in IT solutions in Colombia and Latin America. Since 2016, Mr. Santos has served as the Director of Business Development at NECSYS S.A.S, a Colombian telecommunications company focused on corporate IP telephony networks and unified communications for both the private and public sectors. Prior to joining NECSYS, Mr. Santos worked as Channel Manager for Huawei and Sales Engineer (Latin America) for NEC Corporation of America. Mr. Santos holds a Bachelor of Science in Electrical Engineering from Pontificia Universidad Javeriana in Bogotá, Colombia (1996) and a Masters in Business Administration (Marketing and Finance) from the Kelley School of Business at Indiana University (2002).
Andres Vidal, Independent Director
Mr. Vidal has developed several programs related to continuing medical education and the development of technical argumentation, has conducted sales force training, and collaborated in the development of visual aids for medical visits, and key opinion leader (KOL) development plans.
Fabio Capponi, Independent Director
Mr. Capponi has over 14 years of experience and a successful track-record in creating, structuring and selling natural resources companies worth over $5 billion working in Europe and both North and Latin America. Mr. Capponi is the founder of Western Atlas Resources, and was Co-Founder of CB Gold Inc. where he also served as President and CEO from 2009 to 2015 (CB Gold was acquired by Red Eagle Mining in December 2015). Prior to that Mr. Capponi was with Endeavour Financial and has held director and management positions with private companies. Mr. Capponi holds a master’s degree in economics and business administration from the LUISS Guido Carli University of Rome, Italy.
Francisco Sole, Independent Director
Mr. Sole is currently a member of the board of directors of Mapfre Seguros Generales de Colombia and has served in various capacities with Grupo Planeta, a Colombian publishing and media company, since 1989 and is currently the Chairman of the Board of Directors of Grupo Planeta in Colombia and the Hispano-Colombian Chamber of Commerce. He is an advisor to the General Directorate of Indra and General Director of Empresas; Inversiones Rasma, S.A.S. Begar Andina, S.A.S., Seralia Andina, S.A.S. and Andina Media de Inversiones, S.A.S. Mr. Sole has also been general Director for America of Grupo Planeta, Corporate President for the Andean Area of Grupo Planeta, Vice President of El Tiempo Publishing House and Member of the Board of Directors for CEET TV, El Tiempo Publishing House and Canal 3 Television in Colombia. From 1985-1989, he was General Director and Director of Administration at the oil refining company Lubricantes del Este de Espana (LUDESA) in Spain. He has also been Department Head, Accountant and Section Chief in the department of cost accounting at Novartis, a chemical and pharmaceutical company.
Andres Castañeda, Director and Advisor
Mr. Castañeda is the Chief Executive Officer and co-founder of Blueberries SAS, and has experience in managing blueberry cultivation in the Bogotá savanna, as one of the pioneers in the region. Mr. Castañeda formed a solid technical and administrative team that has made Blueberries SAS a success in blueberry cultivation and is expected to provide technical assistance and advice to the company as it transitions to cannabis cultivation. Mr. Castañeda is a Chartered Accountant specializing in international accounting with 12 years of experience leading the finance, logistics and marketing functions for various entities, and has experience in Canada and Bahamas where he has worked day-to-day in finance and accounting roles.
Paola Castañeda, Director and Advisor
Mrs. Castañeda is the Chief Financial Officer and co-founder of Blueberries SAS. Mrs. Castañeda has developed exceptional management and board skills, a strong knowledge of the international oil and gas sector, and financial reporting requirements. Mrs. Castañeda’s role at Blueberries SAS also includes developing and fostering strategic alliances with clients and suppliers and she will provide technical assistance and advice to the company as it transitions to cannabis cultivation and marketing. Mrs. Castañeda obtained her Bachelor’s Degree in Finance and a Masters of Banking and Finance from La Universidad de los Andes in Bogotá, Colombia, with a focus on international trade and marketing.
Patricio Villalba, Independent Director
Mr. Villalba has over 20 years of years of experience in Latin America in the mining, exploration, logistics, and trading of hydrocarbons, notably in Colombia and Mexico and has developed an extensive network in governmental and private organizations at both the local and international levels. Mr. Villalba has active presence in up-mid and downstream projects with important achievements in the development of integral logistics, achieving economic efficiencies, delivery times and commercialization, specifically in Mexico.
Conditions to Transaction
Completion of the Transaction is subject to a number of conditions of closing that are customary of a transaction of this nature, including, without limitation:
- CDNM shall obtain receipt of requisite shareholder approvals in connection with the following matters: (i) a change of name to “Blueberries Cannabis Corp.” or such other name as may be requested by Blueberries and acceptable to applicable regulatory authorities (the “Name Change”); (ii) the election of the directors of the Resulting Issuer to replace the current directors of CDNM immediately following the completion of the proposed Transaction; and (iii) the approval of the Transaction, if required by regulatory authorities.
- Completion of the Offering.
- CDNM and Blueberries entering into the Definitive Agreement.
- Receipt by Blueberries SAS of a cultivation license (THC) and processing and extraction license by the applicable Colombian regulatory authorities in form and substance satisfactory to CDNM and the required approval of any other third parties.
- The common shares of the Resulting Issuer having been approved for listing on the Canadian Securities Exchange (“CSE”).
CDN MSolar and Blueberries Cannabis Complete Business Combination to Form Blueberries Medical Corp; Shares to Commence Trading February 6, 2019 Under the Symbol “BBM”
Blueberries Medical Corp. (CSE: BBM) (the “Company” or "Blueberries") is pleased to announce the completion of its business combination with Blueberries Cannabis Corp. (the "Private Company"), a leading Colombia-based licenced producer of medicinal cannabis and cannabis-derived products (the "Transaction"). Trading in the common shares of Blueberries (the “Blueberries Shares”) is expected to commence on the Canadian Securities Exchange (the “CSE”) at market open on Wednesday, February 6, 2019 under the symbol “BBM”, following the issuance by the CSE of its final bulletin in respect of the Transaction, expected today.
“Our public listing in Canada marks the accomplishment of another important milestone for Blueberries as we continue to execute on our vision of becoming a leading producer of premium quality medicinal cannabis products internationally”, stated Christian Toro, Chief Executive Officer. “Combining Canadian leadership in the cannabis industry, strategic global relationships and Colombian passion and expertise, at Blueberries Medical we do things better.”
Operational and Corporate Update
Blueberries is continuing to advance its developments to become a large-scale producer of naturally grown premium quality cannabis with its primary operations well situated in the Bogotá savannah in central Colombia. Lead by a specialized team with proprietary expertise in agriculture, genetics, extraction, medicine, pharmacology and marketing, Blueberries has received all licenses required for the cultivation, production, domestic distribution, and international export of CBD (cannabidiol) and THC (tetrahydrocannabinol)-based medical cannabis. Blueberries’ combination of leading scientific expertise, agricultural advantages, and distribution arrangements has positioned the Company to become a leading international supplier of naturally grown, processed and standardized medicinal-grade cannabis oil extracts and related products.
Since the Transaction was initially announced on September 6, 2018, the Company has continued to execute on its strategic objectives. Key developments include:
- Receipt of cultivation license, making Blueberries fully licensed for cannabis cultivation, processing/extraction and export in Colombia and abroad.
- Completed a C$8,807,500 private placement, leaving the Company well capitalized to execute on its growth strategy (see “Subscription Receipt Financing” below).
- Pre-registration completed for 134 exclusive cannabis strains with high contents of CBD & THC.
- Commencement of cultivation in 107,000 ft2 open-air greenhouse facility with commercial production anticipated in Q4 2019.
- Significant international sale and distribution agreements have been put in place for current products and products under development.
- Entered into a binding letter of intent with Harmony and Life SAS, a leading wellness clinic in Colombia pursuant to which the clinic will collaborate with Blueberries on the research, development, commercialization and distribution of cannabis-based products.
- Continued to further strengthen the Company’s management and operational teams (See “New Board and Management” below).
Additional strategic milestones which the Company is continuing to pursue include:
- Expansion of the Company’s cultivation facility has begun with the goal of growing to approximately 861,000 ft2 by the end of 2019 to meet expected immediate demand. Blueberries has capacity to increase its cultivation capacity up to approximately 120 hectares (~13 million ft2) of total cultivation capacity.
- Engineering and design for a cannabis oil extract processing facility to provide for near-term oil production, with additional space to accommodate modular increases in production capacity as demand for the Company’s products grows.
- Continue to expand product portfolio.
- Negotiation of additional sales and distribution agreements.
Overview of the Transaction
Pursuant to the Transaction, the Company, formerly CDN MSolar Corp. (“CDNM”), acquired all of the issued and outstanding shares of Private Company through a three-cornered amalgamation of Private Company and a wholly-owned subsidiary of the Company, with the former shareholders of Private Company receiving one Blueberries Share for each share of Private Company held. Immediately prior to the completion of the Transaction, CDNM changed its name to “Blueberries Medical Corp.” The Transaction constitutes a reverse take-over as the former shareholders of Private Company now own (on a non-diluted basis) approximately 93.1% of the issued and outstanding Blueberries Shares immediately following the completion of the Transaction. On closing of the Transaction there were 106,622,772 Blueberries Shares issued and outstanding, with an additional 26,104,150 Blueberries Shares reserved for issuance upon the exercise of securities convertible into Blueberries Shares.
For further information with respect to the Transaction and the business of Blueberries, please refer to the
listing statement of Blueberries dated January 31, 2019 (the “Listing Statement”) and posted under Blueberries’ issuer profile on SEDAR at www.sedar.com.
Subscription Receipt Financing
Prior to the closing of the Transaction, Private Company completed a non-brokered private placement of subscription receipts (the "Subscription Receipts") at a price of C$0.25 per Subscription Receipt for gross proceeds of C$8,807,500 (the “Offering”). The proceeds from the Offering, less certain expenses, were placed into escrow on completion of the Offering. In connection with the completion of the Transaction, the Subscription Receipts were converted on a one-for-one basis into a total of 35,230,000 Blueberries Shares and 17,615,000 common share purchase warrants of Blueberries exercisable for a period of two years at C$0.40 per warrant (the “Blueberries Warrants”). The escrowed proceeds from the Offering, less a finder’s fee, and certain transaction fees and expenses, have been released from escrow to Blueberries. Outstanding finder warrants issued in connection with the Offering were also exchanged for comparable securities of Blueberries on a one-for-one basis.
New Board and Management
Upon closing of the Transaction, the board of directors and management of the Company were reconstituted as follows, in place of the previous officers and directors and officers of CDNM:
- Christian Toro, Chief Executive Officer and a Director;
- Chris Reid, Interim Chief Financial Officer;
- Camilo Villalba, Chief Operating Officer;
- Andres Castañeda, Country Manager;
- Paola Castañeda, Director;
- Andres Vidal, Director;
- Francisco Sole, Director;
- Patricio Villalba, Director;
- Catherine Lathwell, Director; and
- Matthew Bajurny, Director.
Biographical descriptions of each director and member of the senior management team of Blueberries is included in the Listing Statement.
CDN MSolar Corp. Announces Conditional Approval for Its Reverse Takeover, Completion of C$8.8 Million Financing, and Signing of Definitive Agreement With Blueberries Cannabis Corp. to Complete Business Combination
Further to its news release dated September 6, 2018, CDN MSolar Corp. ("CDNM") announces that the Canadian Securities Exchange (the "CSE") has conditionally accepted its proposed transaction (the "Transaction") with Blueberries Cannabis Corp. ("Blueberries"), which, upon completion, will result in a reverse take-over of CDNM by the shareholders of Blueberries. The Resulting Issuer Shares (as defined below) are expected to commence trading on the CSE under the stock symbol “BBM” on or about February 6, 2019, pending completion of the Transaction.
CDNM and Blueberries also announce that Blueberries has completed the previously announced private placement of subscription receipts (the "Subscription Receipts") raising gross proceeds of C$8.8 million (the "Offering"). The Offering was completed in multiple tranches, with Blueberries issuing an aggregate of 35,230,000 Subscription Receipts at a price of C$0.25 (the "Offering Price") per Subscription Receipt.
Each Subscription Receipt entitles the holder to receive, upon satisfaction of the Escrow Release Conditions (defined below) on or before the escrow release deadline, and without payment of additional consideration, one unit (a "Unit") in the capital of the resulting issuer arising from the Transaction (the "Resulting Issuer"), which is expected to be named "Blueberries Medical Corp." Each Unit shall consist of one common share of the Resulting Issuer (a "Resulting Issuer Share") and one-half of one Resulting Issuer Share purchase warrant (each whole warrant, a "Resulting Issuer Warrant"). Each Resulting Issuer Warrant shall entitle the holder thereof to acquire one Resulting Issuer Share at a price of C$0.40 for a period of 24 months following the completion of the Transaction. The proceeds from the Offering (the "Escrowed Funds"), have been placed into escrow pending satisfaction of the following conditions: (i) the completion of the Transaction, including, without limitation, the receipt of all required shareholder and regulatory approvals required in connection with the Transaction, and the conditional approval of the CSE for the listing of the Resulting Issuer Shares; and (b) CDNM and Blueberries having delivered a direction to the escrow agent of the Subscription Receipts confirming that the conditions set forth above in item (i) have been met or waived (collectively, the "Escrow Release Conditions"). With conditional approval from the CSE having been obtained, CDNM and Blueberries are expected to the close the Transaction next week at which time the Escrowed Funds will be released to the Resulting Issuer. Should the Escrow Release Conditions not be satisfied or waived on or before February 5, 2019, or if Blueberries announces to the public that it does not intend to satisfy the Escrow Release Conditions, the Subscription Receipts will be cancelled and the Escrowed Funds will be returned to subscribers (a "Refund Event"). To the extent there is any shortfall in the event of a Refund Event, Blueberries will provide sufficient funds to offset any such shortfall.
In connection with the Offering, a cash finder’s fee of $616,525, representing 7% of the gross proceeds of the Offering, will be paid to an eligible finder, and 2,466,100 finder warrants (the "Finder Warrants"), representing 7% of the number of Subscription Receipts sold, will be issued to an eligible finder on satisfaction of the Escrow Release Conditions. Each Finder Warrant will entitle the holder to acquire one Unit for $0.25 for a period of 24 months after the completion of the Transaction.
CDNM and Blueberries also announce that they have signed a definitive business combination agreement effective as of February 1, 2019 (the "Agreement") with a wholly-owned subsidiary of CDNM which outlines the terms and conditions pursuant to which CDNM and Blueberries will complete the Transaction. Upon completion of the Transaction, it is the intention of the parties that the Resulting Issuer will continue to focus on the cultivation, manufacturing and exporting of medical cannabis in Colombia.
Assuming the Escrow Release Conditions are satisfied, the net proceeds from the Offering shall be used by the Resulting Issuer to expand the business of the Resulting Issuer, and for working capital and general corporate purposes. Listing of the Resulting Issuer Shares is subject to CDNM fulfilling all listing requirements of the CSE. There can be no assurance that proposed Transaction will be completed as currently proposed or at all.