TORONTO, July 13, 2021 /CNW/ - Aegis Brands Inc.,
("Aegis" or the "Company") (TSX: AEG) today announced that it has
entered into a strategic transaction with Kiaro Holdings Corp.
("Kiaro'"), a TSX-V-listed cannabis retailer and wholesale
distributor, pursuant to which it has agreed to sell Hemisphere
Cannabis Co. ("Hemisphere"), a wholly-owned subsidiary of Aegis, in
consideration for a substantial equity stake in Kiaro. In
consideration for 100% of Hemisphere's common shares, Kiaro will
issue 61,300,000 common shares to Aegis (having a current value of
$7,900,863, based on the five-day
volume weighted average price of Kiaro's common shares), plus
6,700,000 common share purchase warrants. Kiaro will issue an
additional 6,700,000 shares to Aegis upon the achievement of
certain commercial milestones during the first year following
closing. Upon completion of the sale transaction, Aegis
will hold approximately 25% of Kiaro's common shares and will
be Kiaro's largest individual shareholder. Aegis' CEO Steven Pelton will join the Kiaro Board of
Directors at closing.
"The retail cannabis space is changing rapidly in Canada. We recognize the need for scale to
ensure success in this sector. As such, we are thrilled to
transition ownership of Hemisphere, a premium supplier of cannabis
and cannabis accessories, to Kiaro in return for a substantial
equity interest in a larger company with aggressive growth plans.
This transaction will enable Kiaro to build a cannabis retailer
with a prominent nationwide presence and a clear path to
substantially increased revenues," said Steven Pelton, President and CEO of Aegis
Brands. "The sale of Hemisphere will provide Kiaro with two
likeminded Canadian brands, which we expect to elevate the customer
experience and bolster Kiaro's growth and profitability," said
Pelton.
Following completion of the transaction, Kiaro will operate 16
cannabis retail locations in multiple Canadian provinces and an
expected 18 locations by the end of Q1 2022. In addition to its
current retail presence in British
Columbia and Saskatchewan,
Kiaro also has wholesale business operations in Saskatchewan and an e-commerce platform
selling consumption accessories in Canada, U.S. and Australia. All Hemisphere retail locations are
in Ontario. The broader national retail footprint resulting
from the transaction is expected to provide Kiaro with significant
business synergies and organic growth opportunities,
while further growth is anticipated to be fuelled by
additional M&A activities. The transaction is expected to close
in mid-September.
In connection with the transaction, Jen
Juby, Vice President of Operations at Hemisphere, will join
the Kiaro team as Vice President of Retail. Ms. Juby will
contribute to the integration of the Hemisphere stores and will use
her expertise to continue the implementation of the retail
experience.
"The acquisition of Hemisphere is a transformational transaction
for Kiaro," said Daniel Petrov,
Chief Executive officer of Kiaro "By more than doubling
Kiaro's store count, and combining two premium cannabis retail
brands, we expect to achieve our objective of exponential revenue
and EBITDA growth. We look forward to working with the Aegis team
to bring our vision for this company to life in a compelling way
that meets the needs of consumers and their local communities."
The transaction will allow Aegis management to focus on growing
the Bridgehead Coffee brand and executing their acquisition
strategy. The Company continues to actively engage strong, proven
brands with great growth potential to add to its platform. "At
Aegis we believe in the entrepreneur. We believe in Daniel and his
team at Kiaro to grow and succeed in the cannabis industry and we
are seeking to align ourselves with similarly brilliant
restaurateurs to grow and succeed in the food service hospitality
space," said Pelton.
Kronos Capital Partners is acting as financial advisor to Aegis
in collaboration with Haywood Securities as financial advisor to
Kiaro.
About Aegis Brands Inc.
Aegis Brands Inc. owns and
operates a portfolio of brands currently consisting of Bridgehead
and Hemisphere Cannabis Co. For more information, please visit
www.aegisbrands.ca or find the Company on Facebook and
Twitter.
About Kiaro Brands Inc.
Based in Vancouver, British Columbia, Kiaro is an
independent, omni-channel cannabis retailer and distributor.
Through existing storefronts across British Columbia and Saskatchewan, a wholesale distribution
division servicing Saskatchewan,
and plans for national expansion, Kiaro is driven to introduce new
and experienced consumers to a lifelong exploration of cannabis.
With more than 40 years of collective retail-focused experience,
Kiaro's leadership team has a proven track record of growing retail
brands across North America and
plans to open multiple retail locations nationwide over the coming
years.
Cautionary Note on Forward Looking Statements
This press release contains forward-looking statements within
the meaning of Canadian securities laws. These forward-looking
statements contain statements of intent, belief or current
expectations of Aegis. Forward-looking information is often, but
not always identified by the use of words such as "anticipate",
"believe", "expect", "plan", "intend", "forecast", "target",
"project", "may", "will", "should", "could", "estimate", "predict"
or similar words suggesting future outcomes or language suggesting
an outlook.
The forward-looking statements included in this press
release, including statements regarding the potential issuance of
additional shares upon the achievement of certain commercial
milestones, potential future growth of Kiaro's revenues and
profitability, the number of retail stores expected to be operated
by Kiaro by Q1/2022, the broader national footprint and the
business synergies and organic growth expected to be realized as a
result of the transaction, further growth of Kiaro through
additional M&A activities, Kiaro's expectations regarding the
achievement of exponential revenue and EBITDA growth, the nature of
Aegis' growth strategy going forward and execution on any of its
potential plans (including with respect to the growth and
development of Bridgehead Coffee and identification of future
acquisition targets) are not guarantees of future results and
involve risks and uncertainties that may cause actual results to
differ materially from the potential results discussed in the
forward-looking statements. Aegis has made the forward-looking
statements and information included in this press release in
reliance on certain assumptions that it believes are reasonable at
this time, including the ability of Kiaro to integrate Hemisphere
into its operations, open new retail stores, realize the
anticipated synergies, continue to increase its growth of revenues
and profitability and realize on future M&A opportunities, and
the Company to manage the risks (economic, operational, financial,
and other risks) associated with the COVID-19 pandemic, the
ability of the Company to identify new acquisition opportunities
and to successfully integrate past and future acquisition targets
into the Company's business, and the Company's ability to generally
execute on its strategy going forward. Accordingly, readers should
not place undue reliance on the forward-looking statements and
information contained in this news release.
Risks and uncertainties that may cause such differences
include but are not limited to: risks that the transaction may have
a negative impact on the market price and liquidity of the common
shares; risks that the commercial milestones referenced above will
not be achieved; risks related to the Company's strategy going
forward; risks related to the COVID-19 pandemic; risks relating to
the ability of Kiaro to successfully integrate Hemisphere and
realize the expected synergies and revenue and EBITDA growth; and
other risks inherent in the industry in which Aegis and Kiaro
operate.
The risks associated with the COVID-19 pandemic include: the
ultimate extent, duration and severity of the pandemic itself and
the associated government restrictions; effects on consumer and
commercial behavior and other factors associated with or resulting
from such pandemic, including that the outbreak of the COVID-19
pandemic could continue to negatively impact the operations of our
Bridgehead coffee houses, a decrease in the willingness of guests
to patronize the Company's coffee houses, shortages of employees to
staff the Company's coffee houses; interruption of supplies from
third parties upon which the Company relies; the imposition of
governmental regulations that adversely impact the Company's
business; landlord willingness to consider the Company's requests
to amend or terminate certain coffee house leases; and that the
pandemic and the consumer, governmental and commercial response to
it could materially impact economic activity in general and
otherwise have a material adverse effect on the Company's business,
financial condition and results of operations. Such adverse effects
could be rapid and unexpected.
When relying on forward-looking statements to make decisions,
investors and others should carefully consider the foregoing
factors and other uncertainties and potential events. Readers are
cautioned that the foregoing list of factors is not exhaustive.
Additional information on these and other factors that could affect
Aegis' operations or financial results are included in reports on
file with applicable securities regulatory authorities and may be
accessed through the SEDAR website (www.sedar.com).
The forward-looking statements in this press release are made
as of the date it was issued and Aegis does not undertake any
obligation to update publicly or to revise any of the included
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by applicable law.
By their very nature, forward-looking statements involve inherent
risks and uncertainties, both general and specific, and risks that
outcomes implied by forward-looking statements will not be
achieved. Aegis cautions readers not to place undue reliance on
these statements.
SOURCE Aegis Brands Inc.