TORONTO, ONTARIO--(Marketwired - Sept. 6, 2016) - Abba Medix Group Inc. ("Abba" or the "Company") (CSE:ABA) has completed its previously announced offering (the "Offering") pursuant to which it has issued and sold on a subscription receipt basis, 19,001,000 Equity Units (the "Equity Unit Subscription Receipts") and 1,275 Debenture Units (the "Debenture Unit Subscription Receipts", and together with the Equity Unit Subscription Receipts, the "Subscription Receipts") at a subscription price of $0.25 per Equity Unit Subscription Receipt and $1,000 per Debenture Unit Subscription Receipt for aggregate gross proceeds of $6,025,000. The Offering was completed in connection with the previously announced acquisition by Abba of Marijuana for Trauma Inc. and The Longevity Project (the "Acquisition") and was carried out on a brokered private placement basis through Mackie Research Capital Corporation ("Mackie Research"), which acted as sole agent in connection with the Offering.
Each Equity Unit Subscription Receipt purchased in the Offering entitles the holder thereof to receive, for no additional consideration and without further action on the part of the holder thereof, upon satisfaction of the Escrow Release Conditions (as defined below), a unit comprised of (i) one common share of Abba (each an "Equity Unit Share") and (ii) one common share purchase warrant of Abba (each an "Equity Unit Warrant"). Each Equity Unit Warrant shall be exercisable into one common share of Abba (each a "Equity Unit Warrant Share") at an exercise price of $0.40 for a period of twenty-four (24) months from the issuance of the Equity Unit Warrant.
Each Debenture Unit Subscription Receipt purchased in the Offering entitles the holder thereof to receive, for no additional consideration and without further action on the part of the holder thereof, upon satisfaction of the Escrow Release Conditions, a unit comprised of (i) $1,000 principal amount of 8.5% secured convertible debentures in the capital of Abba with a maturity date ("Maturity Date") of 48 months from the date of issuance (a "Convertible Debenture") and (ii) 1,000 detachable common share purchase warrants of Abba (each, a "CD Warrant"). Each Convertible Debenture shall be convertible at the holder's option into fully-paid common shares of Abba (each, a "CD Share") at any time prior to the Maturity Date at a conversion price of $0.40 per CD Share, being a ratio of 2,500 CD Shares per $1,000 principal amount of Convertible Debentures. Each CD Warrant shall be exercisable into one common share of Abba (each a "CD Warrant Share") at a price of: (a) $0.40 per CD Warrant Share between the date the Escrow Release Conditions are met (the "Escrow Release Date") and the date that is 24 months from the Escrow Release Date; (b) $0.75 per CD Warrant Share between the date that is 24 months from the Escrow Release Date and the date that is 36 months from the Escrow Release Date; and (c) $1.00 per CD Warrant Share between the date that is 36 months from the Escrow Release Date and the Maturity Date.
The following are conditions precedent (the "Escrow Release Conditions") to the conversion of the Subscription Receipts: (i) the completion, satisfaction or waiver of all conditions precedent to the Acquisition (other than payment of the purchase price); (ii) the receipt of all required shareholder and regulatory approvals and third party consents required for the Acquisition; (iii) satisfaction of Mackie Research that the holders of the Convertible Debentures will have a first lien security interest on the assets of Abba; (iv) the receipt of a certificate of amendment issued by the Director (as defined in the Canada Business Corporations Act) giving effect to the previously announced 1.5:1 share consolidation of Abba; (v) the conditional approval of the Canadian Securities Exchange for the Acquisition, subject only to the satisfaction of the usual listing conditions; (vi) Abba not being in material breach or default of its covenants or obligations contained in the Agency Agreement, except those breaches or defaults that have been waived in writing by Mackie Research; and (vii) the subscription receipt agent for the Subscription Receipts (the "Subscription Receipt Agent") receiving notice from the Company and Mackie Research confirming that the Escrow Release Conditions have been satisfied or waived.
The total gross proceeds of the Offering, less 50% of the cash commission payable to Mackie Research in connection with the Offering and certain expenses, have been deposited in escrow (the "Escrowed Proceeds") with the Subscription Receipt Agent pending notice being given by Abba and Mackie Research to the Subscription Receipt Agent that the Escrow Release Conditions have been satisfied. Following the delivery of such notice to the Subscription Receipt Agent, the Escrowed Proceeds shall be released to the account of Abba, and the Subscription Receipts will convert into the applicable underlying securities (as described above).
If the Escrow Release Conditions are not satisfied prior to 5:00 p.m. (Toronto time) on October 31, 2016, or if Abba announces to the public by news release that it does not intend to satisfy the Escrow Release Conditions, then (i) the Subscription Receipt Agent shall return the Escrowed Proceeds to the holders of the Subscription Receipts in an amount equal to the aggregate subscription price for the Subscription Receipts held by such holder, together with a pro rata portion of the interest earned on the Escrowed Proceeds, and (ii) the Subscription Receipts shall be cancelled with no further force or effect. Abba shall be responsible to the holders of the Subscription Receipts for any shortfall in the returnable subscription price.
Abba intends to use the proceeds from the Offering to fund the cost of the Acquisition and for working capital and general corporate purposes.
All securities issued pursuant to the Offering are subject to a hold period that will expire on January 3, 2017, which is four months and one day from the closing date of the Offering, in accordance with applicable securities laws in Canada.
Unless otherwise expressed, all references herein to securities issuable in the Offering and corresponding subscription prices are made on a post 1.5:1 consolidation basis.
The Acquisition is subject to a number of conditions, including shareholder and CSE approval, and is anticipated to close shortly following the annual and special meeting of Company shareholders scheduled for October 14, 2016. Further details concerning the Acquisition and related matters will be included in the shareholder meeting circular.
Trading in Abba shares remains halted pursuant to CSE rules relating to "fundamental acquisitions" and is expected to resume following the filing of draft shareholder meeting materials with the CSE later this month.
For more information about Abba Medix, please go to http://www.abbamedix.com.
About Abba Medix
Abba Medix Group Inc. (CSE:ABA) is the parent company of Abba Medix Corp., an applicant for a production and sale license under the ACMPR striving to become a purveyor of fine medical marijuana in Canada. In compliance with Health Canada's regulations, the company's goal is to become a marketplace leader through strategic partnerships, mergers, and acquisitions to create a fully integrated medical marijuana marketplace. Abba's mission is to find, acquire or create joint venture opportunities in patient focused medical marijuana related companies, products, organizational events, sponsorships, educational training, and research and development within medical marijuana sector. For more information please visit www.abbamedix.com.
Cautionary Statements Regarding Forward-Looking Information
Certain statements within this press release relating to the Company constitute "forward-looking statements", within the meaning of applicable securities laws, including without limitation, statements regarding the escrow arrangements with respect to the proceeds of the Offering, the completion of the Acquisition, the satisfaction of the Escrow Release Conditions, future estimates, business plans and / or objectives, sales programs, forecasts and projections, assumptions, expectations, and/or beliefs of future performance, are "forward-looking statements". Such "forward-looking statements" involve known and unknown risks and uncertainties that could cause actual and future events to differ materially from those anticipated in such statements. These risks and uncertainties relate to, among other things, the ability of the Company to complete the Acquisition, the Company's historical experience with medical marijuana operations, regulatory changes, timeliness of government approvals for the granting of permits and licenses, changes in medical marijuana prices, actual operating performance of facilities, risks associated with completion of the acquisition, including the availability of sufficient financing to complete the acquisition and fund the business of the combined company, other risks relating to the roll-out and intended expansion of a clinical wellness business, business integration risks, competitive risks, and other risks relevant to the medical marijuana and clinical wellness industries in general and to the Company in particular. Certain of these risks are disclosed in the Company's public filings at www.sedar.com and/or will be disclosed in the information circular to be filed in connection with the Company's anticipated special meeting of shareholders. The Company assumes no responsibility to update or revise forward-looking information to reflect new events or circumstances unless required by law. There can be no assurance that Abba Medix's medical marijuana license application will be approved by Health Canada, nor that the proposed acquisition will be successfully completed on the terms or within the timeline contemplated above or at all. Neither the CSE nor its Regulation Services Provider (as that term is defined in the policies of the CSE) accepts responsibility for the adequacy or accuracy of this release.