Mr. Malcolm Davidson reports
SPEAKEASY ANNOUNCES TERM SHEET FOR UP TO $3 MILLION CONVERTIBLE DEBENTURE FINANCING AND SHARES FOR DEBT TRANSACTION
Speakeasy Cannabis Club Ltd. has entered into a binding term sheet with an arm's-length party pursuant to which it will issue a secured convertible debenture in the minimum aggregate principal amount of $2-million and up to a maximum principal amount of $3-million.
If the financing is completed as contemplated in the term sheet, the convertible debenture will mature 24 months from the date of issuance and bear interest at a rate of 18 per cent per annum. The outstanding principal amount and accrued interest thereon will be convertible into common shares of the company at the option of the holder at any time prior to the maturity date at a conversion price of 52 cents per common share.
In accordance with the term sheet, the company will cause the grant to the holder of a first mortgage over the company's property in Rock Creek, B.C., and a first-ranking general security agreement over the present and after-acquired personal property of the company and its subsidiaries. The term sheet contemplates the payment of a termination fee of $100,000 in certain circumstances if either the company or the holder determines not to proceed with the financing.
The company intends to use the net proceeds of the financing to finance current and proposed financial commitments and for general corporate purposes. Completion of the financing is expected to occur on or about Feb. 15, 2021, and is subject to certain conditions, including, but not limited to, the entering into of a definitive documentation and all security documentation, the granting of the security, and the receipt of all necessary regulatory and stock exchange approvals, including the approval of the Canadian Securities Exchange.
The company also announces the issuance of 211,420 common shares in settlement of a bona fide debt owed to an arm's-length creditor in the amount of $82,453.70. The common shares will be subject to restrictions on resale in accordance with applicable securities laws. These restrictions will expire four months plus a day from the date of issuance. The shares-for-debt transaction is subject to final acceptance by the Canadian Securities Exchange.
Speakeasy holds a cultivation, processing and sales licence issued by Health Canada under the Cannabis Act. Speakeasy owns 290 acres of land in Rock Creek, B.C., and leverages five generations of farming experience in British Columbia, as well as its favourable location to grow and process high-quality cannabis products at a low cost. Speakeasy cultivates small-batch, high-quality, craft cannabis at scale in its 63,200-square-foot indoor cannabis complex and has completed its first harvest of its 60-acre outdoor field. Total yearly production of cannabis flower and biomass is projected to be in excess of 100,000 kilograms per year.
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