Mr. Martin Cooper reports
PELE MOUNTAIN RESOURCES ENTERS INTO LETTER OF INTENT WITH BHANG CORPORATION RELATING TO A PROPOSED REVERSE TAKE-OVER
Pele Mountain Resources Inc. has entered into a non-binding letter of intent with Bhang Corp., a privately held Nevada corporation, to acquire a 100-per-cent interest in Bhang through a business combination transaction that would constitute a reverse takeover and change of control of Pele. The final structure of the transaction will be determined by Bhang and Pele to accommodate tax considerations, accounting treatment, and applicable legal and regulatory requirements.
Bhang is a California-based intellectual property company that licenses rights to a full range of cannabis and hemp products, including chocolates, gums and oral sprays, isolates, vapes and vape cartridges, and accessories. Upon completion of the transaction, the combined entity will continue to carry on the business of Bhang. The closing of the transaction is subject to negotiating and executing definitive documentation, the satisfactory completion of due diligence, and the receipt of all necessary regulatory, shareholder and third party consents and approvals. If it proceeds, the transaction is expected to close some time this fall.
Scott J. Van Rixel, chief executive officer of Bhang, stated, "I look forward to the completion of this milestone transaction so that Bhang can further expand its business operations and grow its brand worldwide."
The letter of intent includes a typical mutual non-solicitation and exclusivity provision expiring on the earlier of Aug. 15, 2018, the date on which the partners enter into a definitive agreement; and the date of termination of the letter of intent. In partial consideration of this exclusivity with Pele, Bhang has made an initial payment of $25,000 to Pele and has committed to pay an additional $10,000 per month to meet Pele's working capital needs during the exclusivity period as well as agreeing to be responsible for all of Pele's reasonable costs and expenses associated with the letter of intent and transaction pending its completion.
"We believe that the proposed reverse takeover with Bhang Corp. represents an excellent opportunity for Pele to enhance value for our shareholders today. Bhang is an innovative company with an internationally recognized and leading premium brand, a very-well-defined strategic business plan in an emerging but rapidly expanding domestic and global market. Pele looks forward to playing a role in unlocking future value for its shareholders through this unique and timely opportunity," stated Martin Cooper, president and chief executive officer of Pele Mountain Resources.
About Bhang Corp.
Founded by professional chef and master chocolatier Scott Van Rixel, Bhang, headquartered in Miami, Fla., has been formulating and producing award-winning tetrahydrocannabinol-
and cannabidiol-infused products since 2010. What began as a cannabis-infused dark chocolate bar has now expanded to a widely recognized and awarded cannabis brand. Bhang's chocolate products expanded to include a premium collection of vapes, gums, mouth sprays and Bhang-branded merchandise. Through its licensees across the United States around the globe, from public companies to platinum recording artists and organic food companies, Bhang has mastered the art of harnessing mutually beneficial partnerships to put its products in consumers' hands. The winner of nine Cannabis Cups for best edible, Bhang continues to develop and enhance its intellectual property. From its first win in 2010 to its win for best edible in the world in Jamaica in 2014 to its Best of Burque win in 2018, Bhang continues to expand its industry dominance by bringing consistent, safe and delicious products to the world.
Further information and trading halt
Although the definitive terms have yet to be fully negotiated and agreed upon, the letter of intent contemplates:
Bhang completing a financing to raise between $7-million and $10-million, to close concurrently with the transaction, resulting in an enterprise value of Bhang of between $35-million and $45-million;
- The existing shareholders of Pele retaining approximately 4.75 per cent of the shares of the resulting issuer on a fully diluted basis, the balance to be held by the new subscribers participating in the concurrent financing of Bhang, together with the existing shareholders of Bhang;
Pele migrating from the TSX Venture Exchange to the Canadian Securities Exchange;
Pele completing a share consolidation on a ratio and basis to be agreed upon to achieve the foregoing ownership proportions in the shares of the resulting issuer;
Pele completing a reorganization prior to completion of the transaction to, among other things, transfer any remaining non-core mining and energy assets and to reduce its working capital deficiency to below $10,000, which may include completing additional shares-for-debt conversions.
Pele and Bhang will provide further details in respect of the transaction, including a summary of final agreed-upon material terms and conditions thereof once a definitive agreement has been fully negotiated and entered into. As the resulting issuer would not qualify for listing on the TSX-V, Pele will apply for a voluntary delisting of its shares from the TSX-V and will seek minority shareholder approval for this delisting prior to completion of the transaction. Trading in the common shares of Pele has been halted pursuant to the policies of the TSX-V, and the company expects that trading will remain halted pending the earlier of the delisting of Pele's shares from the TSX-V and the termination of the letter of intent. There can be no assurance that the definitive documentation will be successfully negotiated and signed or that the transaction will be completed as proposed or at all.
About Pele Mountain Resources Inc.
Pele is focused on the development of renewable energy projects in Northern Ontario and also holds mineral resource interests in Northern Ontario.
We seek Safe Harbor.
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