/NOT FOR DISTRIBUTION TO
- The markets for cannabidiol ("CBD") and delta-9-tetrahydrocannabinol ("THC") products are expected to exceed
US$20 billion andUS$60 billion , respectively, in global sales by 2030.1 - Through its exclusive multi-year partnerships, Craft Global aims to capture what management believes is a once-in-a-generation opportunity to build the first globally recognized and trusted CBD brand.
- Craft Global has entered into exclusive long-term strategic licensing rights partnerships ("Strategic Partnerships") for all cannabinoids with leading global organizations including the
World Boxing Council , Moto GP, Maserati Venturi/Formula E ,Premiere League football teams and the leading collegiate intellectual property ("IP") agency, with a significant pipeline of additional sporting, celebrity and corporate partnership opportunities in negotiation. - By focusing its initial partnerships on CBD, Craft Global avoids many of the difficulties facing THC-driven companies, including onerous taxes and limits on moving products across state and country lines.
- Data-driven approach to identifying partners provides highly engaged consumer audience with global scale and anticipated high conversion rates, driving a low customer acquisition cost.
- Asset light approach provides speed to market and leverage to financial performance and profitability by using existing infrastructure and expertise.
- A
US$100M equity investment, which is a condition to closing of the Business Combination (as defined below) is expected to provide sufficient liquidity for operations (the "Craft Investment "). Craft Global is also in negotiations with the investor to provide aUS$100M committed credit facility. - Craft Global expects over
US$201 million of revenue andUS$72 million of EBITDA in 2023 as their partnerships are launched, and overUS$542 million of revenues andUS$314 million in EBITDA in 2024, the first year when all partnerships will be live for 12 months.2 - Vertical cannabis operations in recreational-legal
New Mexico provides Craft Global the testing ground for future expansion of THC products on a national and global scale as regulations permit.
"After spending the past decade refining our products and approach to the burgeoning cannabinoid industry, we are excited about the inflection point we find ourselves at and believe this combination with BGP will help support the growth of the Craft 1861 brand on a global scale", said
- BGP will issue 430,000 proportionate voting shares ("Proportionate Voting Shares") (convertible into 43,000,000 subordinate voting shares) to Craft Global shareholders in upfront equity consideration, complemented by an earn-out of an additional 100,000 Proportionate Voting Shares (convertible into 10,000,000 subordinate voting shares) based on certain trading price milestones.
- New Craft (as defined below) will be fully-funded for its business plan at closing, with over
US$167.8 million in cash3 (assuming no redemptions of Class A Restricted Voting Shares) and a committed and undrawn credit line forUS$100 million (assuming completion of ongoing negotiations). - Craft Global shareholders are rolling 100% of their equity, resulting in a pro forma market capitalization of approximately
US$580 million .
"We couldn't be happier to announce this combination with Craft Global. When we first met with Robert and his team almost a year ago, we were immediately impressed by their passion for their products and their unique and refreshing approach to the industry. Since that time we have watched them execute time and again by signing leading international entities under their Strategic Partnerships and delight us with their high quality and effective products. With the current macro-economic backdrop and a particularly challenging cannabis capital market, we feel very fortunate to be in a position to announce such a strong qualifying transaction and we have confidence in the Craft Global team to make this company into a global leader" said
Craft Global is a minority-led,
Craft Global operates within the non-psychoactive, hemp-derived CBD space with consumer-packaged goods containing zero THC. Craft Global is also a vertically integrated cannabis company with cultivation, production and dispensary operations in the state of
Since its inception, Craft Global has been focused on ensuring the highest levels of compliance with all applicable standards, which allowed Craft Global in 2019, at the
Craft Global has taken a deliberate and targeted approach to its CBD operations. As a result of the relative consistency in Federal and State-level regulation, the CBD market provides substantially greater freedom than the THC market to centralize operations and ship on a national and global scale. The CBD industry also has a growing number of sizeable, accredited, specialized, and experienced manufacturers and distributors with global reach with whom to partner, as is often done in other CPG industries. Craft Global will continue to focus on leveraging its operational partners' expertise and scale to facilitate production, manufacturing, marketing, and shipping of finished CBD goods on a global basis where legally permitted. This has provided Craft Global with the ability to use its growth capital historically, and going forward, to create market-leading products and secure exclusive multi-year Strategic Partnerships.
Craft Global's growth strategy is primarily based on its ability to enter into multi-year global wellness Strategic Partnerships that are exclusive for all cannabinoids, with a number of the largest global athletic organizations, celebrities and other well-respected hospitality and CPG companies. Craft Global's approach to selecting Strategic Partnerships is based on analyzing potential
Craft Global also operates a vertically-integrated cannabis operation in the state of
Currently, 1861 Market operates an 87,120 sq ft cultivation facility that has capacity to produce 16,200 lbs of high-quality cannabis per year. 1861 Market has over 20 strains in its genetics library across its mood-based PM, Relax, Create and Uplift offerings. It cultivates a core eight strains on a consistent basis and leverages a rotational program of an additional 10 strains throughout the year based on cultivation yields and consumer preferences. 1861 Market also operates one adult-use cannabis retail dispensary , with an additional retail dispensary expected to open in Q4 2022. 1861 Market also operates one legacy adult-use cannabis retail dispensary that will be rebranded to 1861 Market in the fourth quarter of 2022.
Pursuant to the terms of the Business Combination Agreement, the transaction will be structured between BGP,
Following closing, BGP will continue to operate the business of Craft Global and intends to rename itself CRAFT 1861
In connection with the Business Combination, (i) the Corporation's class A restricted voting shares (the "Class A Restricted Voting Shares") not required to be redeemed will convert into subordinate voting shares (the "Subordinate Voting Shares") on a one for one basis, and (ii) the Class
Proportionate Voting Shares, including fractions thereof, may at any time, subject to certain conditions, at the option of the holder, be converted into Subordinate Voting Shares at a ratio of 100 Subordinate Voting Shares per Proportionate Voting Share with fractional Proportionate Voting Shares convertible into Subordinate Voting Shares at the same ratio. Prior to the conversion, each Proportionate Voting Share carries 100 votes per Proportionate Voting Share (compared to one vote per Subordinate Voting Share) and is entitled to dividends and liquidation distributions in an amount equal to 100 times the amount distributed in respect of each Subordinate Voting Share. The Subordinate Voting Shares may at any time, at the option of the holder and with the consent of New Craft, be converted into Proportionate Voting Shares at a ratio of one Proportionate Voting Share for 100 Subordinate Voting Shares.
It is anticipated that following the closing of the Business Combination and assuming aggregate redemption levels of the Class A Restricted Voting Shares of 25% and 75%:4
- the holders of the Class A Restricted Voting Shares, which consist of BGP's current public shareholders, will retain an ownership interest of approximately 15.7% or 5.8%, respectively;
- the founders, being the Sponsor,
Ruth Epstein ,Don Jennings ,Brian Kabot ,Lisa Sergi Trager ,Erik Ott andScott Riley , will retain an ownership interest of approximately 6.1% or 6.8%, respectively; - the holders of the issued and outstanding shares in the capital of Craft Global immediately prior to the Business Combination will own approximately 78% or 87.1%, respectively; and
- there will be 5,960,000 warrants to acquire Subordinate Voting Shares outstanding (the "BGP Warrants").5
The Business Combination remains subject to the satisfaction or waiver of certain customary conditions, including, among other things, completion of the Craft Financing, receipt of all required third party consents and regulatory approvals (including that of the NEO Exchange and the conditional approval of the NEO Exchange to list the Subordinate Voting Shares and the continued trading of the BGP Warrants, which will be exercisable for Subordinate Voting Shares following closing of the Business Combination). The NEO Exchange has not yet approved the Business Combination or conditionally approved the listing of the Subordinate Voting Shares or the continued trading of the BGP Warrants, and there can be no assurance that it will.
The boards of directors of each of BGP and Craft Global have approved the Business Combination and determined that the transaction is in the best interests of their respective companies. In connection with the Business Combination, the Corporation is preparing and will file a non-offering long-form prospectus with the Canadian securities regulatory authorities in each of the provinces and territories of
Holders of Class A Restricted Voting Shares have been previously advised of their right to redeem their shares in connection with BGP's proposal to extend the permitted timeline to
Following closing of the Business Combination,
Robert Aranda ,New Mexico ,United States – Chief Executive Officer of Craft Global.Ruth Epstein ,California ,United States – Chief Executive Officer of BGP.Shelly Lombard ,New York, New York – Wall Street Veteran.Ryan Boone ,Tennessee ,United States – Technology Leader.Harvey Schiller ,New York, New York – American Sports Executive.
BGP's capital markets advisor for this transaction is
This press release is not an offer of securities for sale in
Craft Global is a minority led,
This press release may contain forward–looking information within the meaning of applicable securities legislation, which reflects the Corporation's current expectations regarding future events, including the proposed Business Combination. The words "target", "expect", "anticipate", "believe", "foresee", "could", "estimate", "goal", "intend", "plan", "seek", "will", "may", "should", "is positioned", "assumes", "would", "might", "will be taken", "be achieved", "occur" and similar expressions or words suggesting future outcomes are often intended to identify forward-looking information, although not all forward-looking information contains these identifying words. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances contain forward-looking statements. Forward-looking statements are not historical facts, nor guarantees or assurances of future performance but instead represent management's current beliefs, expectations, estimates and projections regarding future events and operating performance. Specific forward-looking information contained in this press release includes, but is not limited to statements concerning: the completion and proposed terms of, and matters relating to, the Business Combination; the completion of the
In addition, the financial forecasts and estimates contained in this press release, including forecasted revenue and EBITDA, constitute "forward-looking information" and "financial outlook" within the meaning of applicable securities laws. Such information is being provided to demonstrate the potential benefits of the Business Combination and may not be appropriate for other purposes, and should not be relied upon as necessarily being indicative of future financial results. The purpose of disclosing this information is to show readers the financial results that Craft Global's management currently believes are achievable based on Craft Global's growth strategies. Such financial targets are generally based on the following assumptions: (A) management's best expectations for the future based on: (i) signed Strategic Partnerships and in-negotiation Strategic Partnerships, (ii) contracted costs for production of finished CBD products, (iii) precedent advertisement-to-purchase rates associated with other entities engaged with the
Forward-looking statements reflect management's current beliefs, expectations and assumptions and are based on information currently available to management, management's historical experience, perception of trends and current business conditions, expected future developments and other factors which management considers appropriate. With respect to the forward-looking statements included in this press release, BGP and Craft Global have made certain assumptions with respect to, among other things: the anticipated receipt of any required regulatory approvals and consents (including the final approval of the NEO Exchange); the expectation that each of BGP and Craft Global will comply with the terms and conditions of the Business Combination Agreement; the expectation that Craft will be able to close the
Forward–looking information is based on a number of assumptions, opinions, and estimates and is subject to a number of risks and uncertainties, many of which are beyond the Corporation's control, that could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking information. Such risks and uncertainties include, but are not limited to: limited long-term data with respect to the efficacy, side effects and safety of cannabis products; uncertainties regarding
If any of these risks or uncertainties materialize, or if the opinions, estimates or assumptions underlying the forward-looking information prove incorrect, actual results or future events might vary materially from those anticipated in the forward-looking information. Accordingly, undue reliance should not be placed on forward-looking information, which speaks only as of the date made. The forward-looking information contained in this news release represents the Corporation's expectations as of the date of this news release, and are subject to change after such date. The Corporation does not undertake any obligation to update such forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law.
This press release makes reference to certain non-IFRS measures. These measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of Craft Global's results of operations from management's perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of Craft Global's financial information reported under IFRS.
Craft Global uses non-IFRS measures including "EBITDA", which may be calculated differently by other companies. "EBITDA" is defined as earnings before interest, taxes, depreciation and amortization. Non-IFRS measures and metrics are used to provide investors with supplemental measures of Global's operating performance and liquidity and thus highlight trends in the business that may not otherwise be apparent when relying solely on IFRS measures. Craft Global also believes that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of companies in similar industries. Management also uses non-IFRS measures and metrics in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts and to determine components of execute compensation.
A reconciliation of non-IFRS measures used in this press release to the most directly comparable IFRS measures will be included in BGP's prospectus, to be filed in connection with the Business Combination, which is forward-incorporated herein by reference.
The NEO Exchange does not accept responsibility for the adequacy or accuracy of this press release.
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1 Source: | |
2 Estimated revenue and EBITDA for 2023 and 2024 constitute forward-looking information and are based on numerous assumptions and subject to significant risks and uncertainties. See "Forward-Looking Statements" below for a discussion of such risks and uncertainties. A reconciliation of Craft Global's 2021 EBITDA to net income will be included in BGP's long form prospectus, which will be filed in connection with the Business Combination. | |
3 Includes the | |
4 Pro forma ownership figures assume completion of the | |
5 Assumes the issuance of 20,000 warrants on conversion of BGP's convertible debt, although conversion of such debt is at the holder's option. | |
SOURCE
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