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Theia Announces Proposed Acquisition of CNX Holdings Inc.

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VANCOUVER , July 9, 2018 /CNW/ - Theia Resources Ltd. (THH:TSXV) (the "Company" or "Theia") is pleased to announce that it has entered into an Amalgamation Agreement dated June 29, 2018 (the "Amalgamation Agreement") with CNX Holdings Inc. ("CNX") and Flower One Corp. ("Subco"), a wholly‑owned subsidiary of the Company, pursuant to which the Company will acquire all of the outstanding shares of CNX in exchange for common shares of the Company (the "Proposed Transaction").

About CNX

CNX is currently a privately held, Ontario based company with strategic investments in the cannabis sector through its wholly-owned subsidiaries.  The company's wholly-owned subsidiaries are located in Nevada where it is currently converting the largest commercial scale greenhouse in the State. The 430,000 square foot facility will be used for cannabis cultivation as well as the processing, production and high-volume packaging of cannabis oils, concentrates and infused products.

CNX, through one of its wholly-owned subsidiaries, is currently overseeing an intensive conversion of a greenhouse to prepare it for large-scale hydroponic cannabis cultivation, processing and production. The 430,000 square foot greenhouse is strategically positioned and within close proximity to the lucrative, tourism-driven Las Vegas adult-use and medical cannabis market. To date, more than 4,700 hours of construction and renovation work have been completed on the greenhouse. Planting in the facility will begin late 2018 and will be fully operational in early 2019. The Las Vegas Convention and Visitors Authority cites more than 55 million tourists are forecasted to visit the city in 2018.

Financings

Prior to or concurrently with completion of the Proposed Transaction, CNX intends to complete one or more private placement financings (the "CNX Private Placement") to raise gross proceeds of up to US$50 million by the sale of its Class A common voting shares, on terms and conditions acceptable to each of Theia, CNX and the TSX Venture Exchange (the "TSXV").

Prior to completion of the Proposed Transaction, CNX will subscribe by way of a non-brokered private placement or bridge-loan financing (the "Theia Financing"), at the sole discretion of CNX, for gross proceeds to Theia of $250,000 , subject to the acceptance of the TSXV. The proceeds of the Theia Financing will be used to pay the existing and proposed fees of Theia's professional advisors.

Board and Management of Theia after the Proposed Transaction

It is anticipated that upon completion of the Proposed Transaction, all of the directors and officers of Theia will resign and will be replaced with nominees of CNX.  

The Transaction

The principal terms of the Proposed Transaction are as follows:

  1. Theia will complete a 10:1 share consolidation (the "Consolidation").  The effect of the proposed Consolidation will be to reduce the number of common shares issued and outstanding from 21,547,750 pre-consolidated common shares to 2,154,775 post-consolidated common shares.

  2. Theia will change its name to "Flower One Holdings Inc." in conjunction with the proposed Consolidation.

  3. The Proposed Transaction will be structured as a triangular amalgamation.  Under the terms of the Amalgamation Agreement, CNX will amalgamate with Subco and as part of the amalgamation, Theia will acquire all of the outstanding shares of CNX in exchange for post–consolidation common shares of Theia ("Theia Shares") on a one for one basis.  It is contemplated that Theia will also acquire all outstanding options of CNX in exchange for equivalent Theia options, adjusted for the applicable exchange ratio.

  4. On or before completion of the Proposed Transaction, Theia will seek to delist from the TSXV and will apply to relist the Theia Shares on the Canadian Securities Exchange (the "CSE").

  5. Concurrently with completion of the Proposed Transaction, Theia will be required to relinquish all claim to its mining assets, in exchange for a release of all claims and liabilities whatsoever related to the mining assets.

  6. On or prior to completion of the Proposed Transaction, Theia intends to complete a settlement of outstanding indebtedness owed by Theia in the amount of approximately $950,000 by way of issuing 250,000 Theia Shares, subject to TSXV approval, to the creditors owed such debt (the "Debt Settlement").


Upon completion of the Proposed Transaction, Theia will have approximately 143,183,975 Theia Shares outstanding (assuming completion of the Consolidation, the Amalgamation and the Debt Settlement, but prior to completion of the CNX Private Placement).

Trading in the Theia Shares on the TSXV is halted at present. Unless the Proposed Transaction fails to close, Theia does not expect its shares will resume trading again until listing has been accepted by the CSE.

The Proposed Transaction is an arms-length transaction.

Other Transaction Details

Shareholder Approval

Theia and CNX intend to seek shareholder approval for the Proposed Transaction and related matters to the extent required.  Theia does not intend to seek shareholder approval for the Proposed Transaction itself, unless required by applicable regulatory authorities.  Theia's annual and special meeting (the "Theia Meeting") of its shareholders (the "Theia Shareholders") is scheduled for August 17, 2018.  CNX's special meeting (the "CNX Meeting") of its shareholders (the "CNX Shareholders") is scheduled for August 17, 2018 .

Conditions to the Proposed Transaction

The completion of the Proposed Transaction will be subject to certain conditions precedent, including the following:

(a)

Theia shall have completed the Consolidation;



(b)

the approval of the TSXV to delist the Theia Shares therefrom;



(c) 

the approval of the CSE, subject to the CSE's usual conditions, for the listing of Theia Shares existing at the time of the Proposed Transaction, issuable pursuant to the Proposed Transaction and upon exercise of any Theia options convertible or exercisable into Theia Shares;



(d) 

the name of Theia will have changed to "Flower One Holdings Inc." or such other name  requested by CNX;



(e)

receipt by CNX of a written resignation effective as at the time of the Proposed Transaction from each of the current directors and officers of Theia; and



(f) 

completion of the Debt Settlement.

 

Closing of the Proposed Transaction

The Proposed Transaction is expected to close on approximately August 21 , 2018.  The Proposed Transaction is an arm's length transaction.

ON BEHALF OF THE BOARD

Raj Kang
Chief Financial Officer

Completion of the Proposed Transaction is subject to a number of conditions, including TSX Venture Exchange acceptance and shareholder approval. The Proposed Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Proposed Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the transaction, any information released or received with respect to the Proposed Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of Theia should be considered highly speculative.

The TSX Venture Exchange has in no way passed upon the merits of the Proposed Transaction and has neither approved nor disapproved the contents of this press release.

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.

Forward-Looking Statements

This news release may contain forward-looking statements that are based on the Company's current expectations and estimates. Forward-looking statements are frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate", "suggest", "indicate" and other similar words or statements that certain events or conditions "may" or "will" occur, and include, without limitation, statements regarding the Company's current plans. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause actual events or results to differ materially from estimated or anticipated events or results implied or expressed in such forward-looking statements. Such forward-looking statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations, including that the Proposed Transaction contemplated herein is completed. Forward-looking statements are based on a number of assumptions which may prove to be incorrect, including, but not limited to: the ability of Theia and CNX to obtain necessary shareholder approval to complete the Proposed Transaction or to satisfy the requirements of the TSXV with respect to the Proposed Transaction. The cautionary statements qualify all forward-looking statements attributable to Theia and CNX and persons acting on their behalves. Any forward-looking statement speaks only as of the date on which it is made and, except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any forward- looking statement, whether as a result of new information, future events or results or otherwise. Forward-looking statements are not guarantees of future performance and accordingly undue reliance should not be put on such statements due to the inherent uncertainty therein.

The securities referred to in this news release have not been, and will not be, registered under the United States Securities Act of 1933, as amended, or any state securities laws, and may not be offered or sold in the United States unless pursuant to an exemption therefrom. This press release is for information purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities of Theia or CNX in any jurisdiction.

SOURCE Theia Resources Ltd.


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