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Savanna Capital Corp. Executes First Amendment to the Letter Agreement With Varianz Corp.

TORONTO, Aug. 19, 2019 (GLOBE NEWSWIRE) -- Savanna Capital Corp. (“Savanna”), a capital pool company as defined under Policy 2.4 – Capital Pool Companies (the “CPC Policy”) of the TSX Venture Exchange (the “Exchange”), today announces that effective August 15, 2019, it has executed a first amendment (the “First Amendment”) to the Amended and Restated Letter of Intent dated July 26, 2019 (the “Amended LOI”) between Savanna and Varianz Corp. (“Varianz Corp”) in order to provide Varianz Corp with the opportunity to engage in and conclude negotiations regarding the Potential Acquisition (as defined below) of a complementary business. 

On June 5, 2019 (the “June Press Release”), Savanna announced it had entered into a binding letter of intent dated May 30, 2019 (the “LOI” and, together with the Amended LOI and First Amendment, collectively the “Letter Agreement”) with Varianz Corp, that would constitute Savanna’s “Qualifying Transaction” (as the term is defined in Exchange Policy 2.4 – Capital Pool Companies) if completed (the “Transaction”).

On July 26, 2019 (the “July Press Release”), Savanna announced it had entered into the Amended LOI with Varianz Corp.

The amendments made pursuant to the First Amendment are summarized below and the key terms of the Letter Agreement are more particularly described under the heading “The Transaction”. All capitalized terms used, but not defined herein, shall have the same meaning as ascribed to them in the June Press Release and July Press Release.

FIRST AMENDMENT

  1. Varianz anticipates receiving a bona fide third-party offer to combine its business with another entity in the Colombian cannabis industry (the “Potential Acquisition”). Accordingly, the parties have agreed to extend the date to enter into the Definitive Agreement until August 29, 2019 (the “Definitive Agreement Deadline”) in order to provide Varianz with an opportunity to negotiate and review the Potential Acquisition as well as present it to Savanna to consider including the Potential Acquisition as part of the Transaction (the “Proposal”). The Closing Date remains unamended and all conditions of the Transaction shall be satisfied on or before November 30, 2019 (the “Closing Date”).

  2. The parties have negotiated and agreed to a break fee in the amount of $175,000 (the “Break Fee”), which shall be payable to Savanna within two business days following the termination of the Transaction in the event the Transaction is not completed for the following reasons:

    1. Savanna refuses to include the Potential Acquisition in the Transaction and Varianz Corp decides to terminate the Letter Agreement and pursue the Potential Acquisition;

    2. the Proposal is not delivered to Savanna on or prior to the Definitive Agreement Deadline and Varianz Corp decides to terminate the Letter Agreement and pursue the Potential Acquisition; or

    3. Savanna and Varianz Corp fail to close the Transaction (regardless of whether Savanna agrees to the Potential Acquisition) on the Closing Date, other than as a result of default or fault of Savanna or due to a failure of the Exchange to approve the Transaction.

BACKGROUND ON VARIANZ CORP. AND ITS SUBSIDIARIES

Varianz Corp.

Varianz Corp is a Colombia-based privately held corporation existing under the laws of the Province of Ontario. Varianz Bio Lab S.A.S (“Varianz Bio Lab”), a wholly-owned subsidiary of Varianz Corp (Varianz Bio Lab and Varianz Corp. are collectively referred to hereinafter as “Varianz”), is a biotechnology company focused on the medicinal cannabis industry, with headquarters in Bogotá, Colombia. Varianz intends to establish a vertically integrated operation to control a broad-scope value chain process from planting to processing cannabis, and ultimately producing high-quality medical cannabis oil extracts and other derivative products with rich CBD content.

Varianz Bio Lab has obtained from the Colombian Ministry of Justice and the Colombian Agricultural Institute, as applicable, licenses that:

  1. recognize Varianz Bio Lab as a cannabis seed producer in Colombia;
  2. allow Varianz Bio Lab to trade cannabis seeds; and
  3. allow Varianz Bio Lab to harvest non-psychoactive cannabis for: (i) seed production for crops; (ii) production of non-psychoactive cannabis derivatives (including sowing, transformation and disposition); (iii) industrial sale of non-psychoactive cannabis derivatives (excluding third party disposition and storage); and (iv) scientific disposition of non-psychoactive cannabis derivatives (excluding third party disposition and storage). 

Varianz Bio Lab has also applied, and is awaiting approval, for a transformation license, which will allow Varianz Bio Lab to manufacture, produce, commercialize and export psychoactive and non-psychoactive cannabis derivatives for national, international and research purposes (the “Transformation License”). The Transformation License is a pre-requisite to Varianz Bio Lab receiving its Psychoactive Crop License (as defined below).

As of the date hereof, Varianz Bio Lab has received conditional approval of a psychoactive crop license that will allow Varianz Bio Lab to harvest psychoactive cannabis for: (a) seed production for crops; (b) production of psychoactive cannabis derivatives (including sowing, production of clones, storage, trading, distribution, exportation and final sale to third parties); (c) industrial sale; and (d) scientific disposition (the “Psychoactive Crop License”). Varianz Bio Lab anticipates that it will receive the Psychoactive Crop License and the Transformation License in August of 2019.

Relevant unaudited financial information for Varianz Bio Lab is summarized below:

AS AT DECEMBER 31, 2018*

Assets  
Current  
Cash and cash equivalents 1,632.03  
Trade debtors and other payables 16,945.00  
Total current assets 18,577.07  
Non-current  
Property, plant and equipment 6,120.28  
Intangibles (Licences) 44,358.94  
Total non-current assets 50,468.41  
Total assets 69,050.65  
   
Liabilities  
Trade and other payables 80,716.05  
Total current liabilities   80,716.05  
   
Total non-current liabilities 0  
Total liabilities 80,716.05  
   
Equity  
Share Capital 1,631.72  
Income for the period (13,306.30 )
Total equity (11,674.42 )
Total liabilities and equity 69,050.65  

*Converted to Canadian Dollars from Colombian Pesos using exchange rate of COP 2456.81259 to CDN $1.00 effective on July 8, 2019.

About Savanna

Savanna is a Capital Pool Company (as defined in the policies of the Exchange) listed on the Exchange.

Further Information

For further information regarding the proposed Transaction, please contact:

Savanna Capital Corp.
Kenny Choi
Tel: (416) 861-2262
E-mail: Kenny.choi@fmresources.ca

Varianz Corp.
Alejandro Jimenez
Tel: (+57) 314 220-5410
Email: IR@varianz.co  

Certain statements in this release are forward-looking. Forward-looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations or intentions regarding the future. Such statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the statements. No assurance can be given that any of the events anticipated by the forward-looking statements will occur or, if they do occur, what benefits the Company will obtain from them. These forward-looking statements reflect management's current views and are based on certain expectations, estimates and assumptions which may prove to be incorrect. A number of risks and uncertainties could cause our actual results to differ materially from those expressed or implied by the forward-looking statements, as well as other factors beyond the Company's control. The Company does not undertake to update any forward looking information, except in accordance with applicable securities laws. 

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 RELEASE.