TerrAscend to Close Acquisition of Gage Cannabis on Thursday March 10th
Combines Strong Leadership Teams, a Portfolio of Powerful Brands and Operations Delivering Quality at Scale
Expanded Footprint Includes 7 Cultivation Facilities and 25 Retail Locations with Operations in 5 States and Canada
TORONTO,March 9, 2022/CNW/ - TerrAscend Corp. ("TerrAscend" or the "Company") (CSE: TER) (OTCQX: TRSSF), a leading North American cannabis operator, and Gage Growth Corp. ("Gage") (CSE: GAGE) (OTCQX: GAEGF), a leading high-quality premium cannabis brand and operator inMichigan, today announced that they intend to close the previously announced acquisition of Gage by TerrAscend by way of a court-approved plan of arrangement under theCanada Business Corporations Act (the "Transaction") onMarch 10, 2022, subject to satisfaction or waiver of all remaining closing conditions.
Upon completion of the Transaction, TerrAscend will have an expanded footprint with owned and managed operations in California, Michigan, Maryland, New Jersey, Pennsylvania, and Canada, including 7 cultivation and processing facilities and 25 operating dispensaries serving medical and adult-use cannabis markets in the U.S. andCanada.
"This is a defining moment for TerrAscend as we combine two leading vertically integrated operators with proven cultivation and manufacturing expertise, deep portfolios of proprietary flower strains, and top-selling brands across our core markets," said Jason Wild, Executive Chairman of TerrAscend. "I look forward to working with the talented Gage team as we integrate and align our cultivation, retail, and operational practices to continue providing our patients and customers with best-in-class product offerings and retail experiences."
"We are thrilled to join forces with TerrAscend to create one of North America's most prominent cannabis companies," said Fabian Monaco, CEO of Gage. "With our shared core philosophies and complementary areas of expertise, we can't wait to execute on our collective vision."
Key Transaction Highlights and Benefits
The Transaction is anticipated to result in the following benefits:
- Leadership in a Top State: Gage has established itself as a leader in Michigan, which is the third largest cannabis market in the U.S. with reported cannabis sales of $168 million in the month of December 2021, representing an annualized market size of over $2.0 billion1.
- Premium Brands: The Transaction provides access to Gage's sought-after brand and pheno-hunting capabilities as well as Gage's exclusive licensing partnerships in Michigan with Cookies, Blue River, Pure Beauty, Khalifa Kush, and others.
- Efficient Operating Model: The combined company will operate or manage 7 cultivation facilities, including 3 facilities in Michigan, in addition to Gage's multiple contract grow agreements.
- Deep Market Penetration in Attractive Core Markets: The combined company will have a platform poised for significant growth and deep market penetration in its key markets. Gage's highly coveted brands and proprietary product lines are expected to accelerate the performance of TerrAscend's existing brand portfolio.
- Expanding Retail Footprint: The combined company's retail network is expected to reach 40 stores by the end of 2022. This includes 25 currently open dispensaries across 5 states with Gage managing 11 dispensaries in Michigan and 1 Cookies dispensary in Canada, in addition to TerrAscend's 13-store footprint in key markets including California, New Jersey and Pennsylvania.
- A Leader in Experiential Retail:Gage dispensaries generate industry leading retail metrics, including strong average basket size and premium pricing for its flower products (50%+ relative to the Michigan market average price1). TerrAscend expects to leverage Gage's portfolio and flower expertise in addition to brand and marketing capabilities, across its retail network and geographies (subject to applicable regulatory approval).
- Expert Operating Teams: The Transaction combines management teams with similar core philosophies, strong track records of execution and operational expertise in building leading businesses in the most competitive cannabis markets. High quality products and experiences will remain a top priority while scaling the Company's operations across North America.
- Balance Sheet Strength: Gage's $72.3 million pro forma cash position, which includes gross proceeds from its recently closed $55 million senior secured debt financing, combined with TerrAscend's $103 million cash balance as of September 30, 2021, positions the combined company to execute on its growth plans. Both companies have prudently managed their debt and expense levels, while entering into minimal sale leaseback transactions. This provides the Company with financial flexibility which is expected to drive above average long-term margins and cashflow.
1Marijuana Regulatory Agency – State of Michigan –https://www.michigan.gov/mra/reports/marijuana-regulatory-agency-statistical-report
It is expected that the Gage shares will be halted after closing and the Canadian Securities Exchange will delist the Gage shares upon completion of the Transaction.
MIPA and Arrangement Agreement Amendments
In order to facilitate the closing of the Transaction for the benefit of both TerrAscend and Gage, the parties have agreed to certain amendments (the "Amendments") to the arrangement agreement governing the Transaction, and the membership interest purchase agreement (the "MIPA") entered into with the owner of the licenses that Gage supports in theState of Michigan(the "Licensed Operators").
The Amendments will permit the Transaction to close based on the regulatory approvals that have been, and are expected to be, received by the expected closing date. Following the closing, the parties will continue to work to obtain, and expect to receive, the requisite approvals for TerrAscend to ultimately acquire ownership of all of the Licensed Operators. Until such time, TerrAscend's wholly-owned subsidiary will operate the Gage business through existing service agreements with the Licensed Operators.
The disinterested directors of each of the TerrAscend and Gage boards determined that it is in the best interests of the respective companies to make the Amendments to facilitate closing of the Transaction at this time, given the strong approval obtained from the shareholders of both companies for the Transaction and the anticipated synergies and benefits to TerrAscend from the Transaction.
TerrAscend is a leading North American cannabis operator with vertically integrated operations inPennsylvania,New Jersey, andCalifornia, licensed cultivation and processing operations in Maryland and licensed production inCanada. TerrAscend operates The Apothecarium dispensary retail locations as well as scaled cultivation, processing, and manufacturing facilities on both the East and West coasts. TerrAscend's cultivation and manufacturing practices yield consistent, high-quality cannabis, providing industry-leading product selection to both the medical and legal adult-use markets. The Company owns several synergistic businesses and brands, including The Apothecarium, Ilera Healthcare, Kind Tree, Prism, State Flower, Valhalla Confections, and Arise Bioscience Inc. For more information, visit www.terrascend.com.
Gage is innovating and curating the highest quality cannabis experiences possible for cannabis consumers in the state of Michigan and Canada, and bringing internationally renowned brands to market. Through years of progressive industry experience, the firm's founding partners have successfully built and grown operations with federal and state licenses, including cultivation, processing and retail locations. For more information about Gage Growth Corp., visitwww.gagecannabis.com or www.gageinvestors.com.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This news release contains "forward-looking information" within the meaning of applicable securities laws. Forward-looking information contained in this press release may be identified by the use of words such as, "may", "would", "could", "will", "likely", "expect", "anticipate", "believe, "intend", "plan", "forecast", "project", "estimate", "outlook" and other similar expressions. Forward-looking statements in this press release include, but are not limited to, statements regarding the Company's goals regarding its financial position, value proposition, market position and business strategy. Forward-looking information is not a guarantee of future performance and is based upon a number of estimates and assumptions of management in light of management's experience and perception of trends, current conditions and expected developments, as well as other factors relevant in the circumstances, including assumptions in respect of current and future market conditions, the current and future regulatory environment, and the availability of licenses, approvals and permits.
Forward-looking statements in this news release include, but are not limited to: statements with respect to the anticipated completion of the Transaction and the timing for its completion; the satisfaction or waiver of remaining closing conditions which include, without limitation, approvals and closing conditions contained in the arrangement agreement and the MIPA (as amended); statements related to the combined company upon completion of the Transaction, including its retail footprint and cultivation facilities; statements related to the Amendments facilitating the closing of the Transaction; the anticipated delisting of Gage shares from the CSE; the acquisition of the Licensed Operators and the approvals related to same; and the operation of Gage's businesses pursuant to the services agreements in place with the Licensed Operators. Actual results and developments may differ materially from those contemplated by these statements.
Such forward-looking statements are based on certain assumptions regarding TerrAscend and Gage, including the successful completion of the Transaction, anticipated benefits from the Transaction, and expected growth, results of operations, performance, industry trends and growth opportunities. While each of TerrAscend and Gage considers these assumptions to be reasonable, based on information currently available, they may prove to be incorrect.
Among other things, there can be no assurance that the Transaction will be completed or that the anticipated benefits from the Transaction will be achieved. Readers are cautioned not to place undue reliance on forward-looking statements. Forward-looking information is subject to a variety of risks and uncertainties that could cause actual events or results to differ materially from those projected in the forward-looking information. Such risks and uncertainties include, but are not limited to, current and future market conditions; risks related to federal, state, provincial, territorial, local and foreign government laws, rules and regulations, including federal and state laws in the United States relating to cannabis operations in the United States; and with respect to TerrAscend, the risk factors described in TerrAscend's Registration Statement on Form 10 and other filings with the U.S. Securities and Exchange Commission, which are available at www.sec.gov, and other filings with Canadian securities regulators, including TerrAscend's management information circular datedOctober 4, 2021, and TerrAscend's most recently filed MD&A, both filed with the Canadian securities regulators and available under TerrAscend's profile on SEDAR at www.sedar.com; and with respect to Gage, the risk factors described in Gage's most recently filed MD&A, filed with the Canadian securities regulators and available under Gage's profile on SEDAR at www.sedar.com.
The statements in this press release are made as of the date of this release. Each of TerrAscend and Gage disclaim any intent or obligation to update any forward-looking information, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.
For further information: For more information regarding TerrAscend: Keith Stauffer, Chief Financial Officer, IR@terrascend.com; Rob Kelly, MATTIO Communications, 416-992-4539, email@example.com; For more information regarding Gage: Fabian Monaco, Chief Executive Officer, IR@gageusa.com; MATTIO Communications: firstname.lastname@example.org