Aurora Cannabis Inc. (“Aurora“) (TSX:ACB) and Liquor Stores N.A. Ltd. (“Liquor Stores“) (TSX:LIQ) (collectively, the “Corporations“) announced today the closing of the previously announced strategic investment by Aurora in Liquor Stores by way of a non-brokered private placement (the “Private Placement“).
Liquor Stores intends to use the net proceeds from the Private Placement to establish and launch a leading brand of cannabis retail outlets, whereby it will convert some number of Liquor Stores’ existing retail locations into cannabis retail stores and establish new cannabis retail stores. Liquor Stores will also use a portion of the proceeds to continue to strengthen its existing liquor retail brands by renovating current liquor store locations, and also for general corporate purposes.
“We are very pleased to be invested in Liquor Stores, one of Alberta’s most recognizable retail brands,” said Terry Booth, CEO of Aurora. “Liquor Stores’ infrastructure, logistics and capacity to build and operate a large network of retail outlets provides a great opportunity for the cannabis industry to service what is anticipated to be a strong growth market. We look forward to playing our part in this partnership, and help establishing a new customer experience for adult consumers.”
“Aurora has established itself as a global leader in the cannabis sector, based in our shared home province of Alberta,” said James Burns, CEO of Liquor Stores. “Combining Aurora’s expertise, insight and strong execution with Liquor Stores’ operational excellence in the retail of adult use controlled substances is huge win not only for our companies’ shareholders, but also for ensuring that the public policy objectives for legalizing consumer use of cannabis are met responsibly.”
Terms of the Private Placement
In connection with the Private Placement, Liquor Stores has issued an aggregate of 6.9 million common shares (the “Shares“) at a price of $15.00 per Share for gross proceeds of $103.5 million (the “Initial Investment“). As a result of the Initial Investment, Aurora now owns approximately 19.9% of the Shares (on a non-diluted basis).
In addition, Aurora has subscribed for 2.3 million subscription receipts of Liquor Stores (the “Subscription Receipts“) at a price of $15.00 per Subscription Receipt for aggregate proceeds of $34.5 million. Following approval from Liquor Stores’ shareholders (other than Aurora, its associates and affiliates) at its next annual general meeting and the satisfaction of the other escrow release conditions, the proceeds from the sale of Subscription Receipts will be released to Liquor Stores and Aurora will increase its ownership of Shares to approximately 25% (on a non-diluted basis).
Liquor Stores has also issued to Aurora, for no additional consideration, two classes of Share purchase warrants: (1) 10,130,000 warrants at an exercise price of $15.75 per Share to allow Aurora to increase its pro rata equity interest in Liquor Stores to approximately 40% on a fully diluted basis (the “Sunshine Warrants“); and (2) up to 1,750,000 warrants exercisable by Aurora at an exercise price of $15.00 upon any conversion of any of the outstanding 4.70% convertible unsecured subordinated debentures of Liquor Stores to allow Aurora to maintain its pro rata equity interest in Liquor Stores (the “Pro Rata Warrants“, and together with the Subscription Receipts and the Sunshine Warrants, the “Additional Investment“). The exercise of each of the Sunshine Warrants and the Pro Rata Warrants will be conditional upon the approval of Liquor Stores shareholders (other than Aurora and its associates or affiliates) at the next annual general meeting of Liquor Stores. Completion of the Additional Investment remains subject to the receipt of required approvals under the Competition Act (Canada).
Early Warning Report
Prior to the completion of the Initial Investment Aurora did not hold any Shares. After giving effect to the Initial Investment, Aurora holds 6,900,000 Shares, representing approximately 19.88% of the issued and outstanding Shares (on a non-diluted basis). As of the closing of the Initial Investment, Liquor Stores has 34,709,259 Shares issued and outstanding. If the conditions are met to convert the 2,300,000 Subscription Receipts into Shares, Aurora will hold a total of 9,200,000 Shares, representing approximately 24.86% of the 37,009,959 issued and outstanding Shares (on a non-diluted basis). On the exercise of the 10,130,000 Sunshine Warrants, Aurora will hold approximately 40% of the issued and outstanding Shares (on a fully diluted basis). The exercise of the Pro Rata Warrants allows Aurora to maintain its pro rata equity interest in Liquor Stores upon the conversion of any of the outstanding 4.70% convertible unsecured subordinated debentures of Liquor Stores and therefore will not increase Aurora’s ownership interest in Liquor Stores.
Aurora acquired the securities for investment purposes. Aurora will evaluate its investment in Liquor Stores from time to time and may, based on such evaluation, market conditions and other circumstances, increase or decrease its shareholdings as circumstances require through the exercise of the Pro Rata Warrants or Sunshine Warrants, market transactions, private agreements, or otherwise. A copy of the Early Warning report will be filed by Aurora in connection with the Private Placement and will be available on LIQ’s SEDAR profile. In order to obtain a copy of the early warning report, please contact Nilda Rivera, Aurora’s Vice President, Finance, at telephone number: 604-362-5207. Aurora’s registered office is located at 1500 – 1199 West Hastings St. Vancouver, British Columbia, V6E 3T5.
About Aurora Cannabis Inc.
Aurora’s wholly-owned subsidiary, Aurora Cannabis Enterprises Inc., is a licensed producer of medical cannabis pursuant to Health Canada’s Access to Cannabis for Medical Purposes Regulations (“ACMPR“). The Company operates a 55,200 square foot production facility in Mountain View County, Alberta, known as “Aurora Mountain”, a 40,000 square foot production facility known as “Aurora Vie” in Pointe-Claire, Quebec, and an 800,000 square foot production facility, known as “Aurora Sky”, at the Edmonton International Airport. Aurora is also completing a fourth facility of 48,000 square feet in Lachute, Quebec, and will shortly begin construction on a 1,000,000 square foot production facility in Odense, Denmark, to be known as “Aurora Nordic”, via a joint venture with Alfred Pedersen & Søn ApS.
Aurora also owns Berlin-based Pedanios GmbH, the leading wholesale importer, exporter, and distributor of medical cannabis in the European Union. The Company offers further differentiation through its wholly owned subsidiaries BC Northern Lights Ltd. and Urban Cultivator Inc., industry leaders, respectively, in the production and sale of proprietary systems for the safe, efficient and high-yield indoor cultivation of cannabis, and in state-of-the-art indoor gardening appliances for the cultivation of organic microgreens, vegetables and herbs in home and professional kitchens.
In addition, the Company holds approximately 17.23% of the issued shares in leading extraction technology company Radient Technologies Inc., and has a strategic investment in Hempco Food and Fiber Inc., with options to increase ownership stake to over 50%. Aurora is also the cornerstone investor in two other licensed producers, with a 22.9% stake in Cann Group Limited, the first Australian company licensed to conduct research on and cultivate medical cannabis, and a 17.62% stake in Canadian producer The Green Organic Dutchman Ltd., with options to increase to majority ownership.
Aurora’s common shares trade on the TSX under the symbol “ACB”.
About Liquor Stores N.A. Ltd.
Liquor Stores operates 231 retail liquor stores. Liquor Stores’ common shares and convertible subordinated debentures trade on the Toronto Stock Exchange under the symbols “LIQ” and “LIQ.DB.B”, respectively.