April 14, 2022 – Alpha Blue Ocean (“ABO”), is supporting the Company’s growth with this new CAD$5,950,000 financing arrangement. The Company entered into a subscription agreement with Global Tech Opportunities 14, that provides for the issuance of convertible debentures. The Company intends to use the proceeds to finance manufacturing of the Marley One brand for an existing purchase order and general working capital purposes. The Subscriber is an investment fund managed by Alpha Blue Ocean (“ABO”).
“As a publicly-traded psychedelics company offering psychedelics to guests in Jamaica and functional mushroom products across the U.S. and U.K., we welcome this transaction and the opportunity to work with Alpha Blue Ocean,” commented Douglas K. Gordon, Silo Wellness’s CEO. “This new capital will allow us to strengthen our balance sheet and focus on shareholder value creation through the expansion of our business model and, most directly, the growth of our Marley One line of functional mushroom products.”
“We are pleased to be Silo’s financing partner to help the team’s mission of providing psychedelic and functional mushrooms in Jamaica and beyond. With a strong brand such as Marley One, as well as access to capital through our facility, Silo can become an important global player in the functional mushroom market which saw a market value greater than USD 25 billion in 2020,” said Amine Nedjai, ABO’s CEO.
The Subscription Agreement provides a commitment to fund the Corporation up to $5,950,000 (the “Total Commitment”) by subscribing for $7,300,000 aggregate principal amount of Convertible Debentures, inclusive of the Commitment Fee (defined below), in twenty (20) tranches, each in the aggregate principal amount of $350,000 (each, a “Tranche”), convertible upon notice at the lower of (i) the closing price of the Common Shares on the CSE at the time of delivery of the relevant Conversion Notice to the Corporation (or, in the event of the automatic conversion of the Outstanding Principal upon the maturity of this Convertible Debenture, the Maturity Date); and (ii) $0.05 (five cents); the Convertible Debentures shall be subscribed for at a subscription price of eighty-five percent (85%) of the par value of the Convertible Debentures. 41,650,000 warrants exercisable at $0.05 shall be attached to the first Tranche.
In the event that the Conversion Price is greater than the lowest daily volume-weighted average price observed over a period of fifteen (15) trading days immediately preceding the date of the relevant conversion notice (or, where no conversion notice is given, the relevant maturity date of the Convertible Debentures) (the “Theoretical Conversion Price”), the Company will be required to pay the Subscriber a make whole amount to compensate the Subscriber for the difference between the actual conversion price and the Theoretical Conversion Price (each, a “Make-Whole Amount”).
In connection with the Subscription Agreement, the Company has agreed to pay the Subscriber a commitment fee of $300,000 (the “Commitment Fee”), where $150,000 shall be added to the principal amount of the Debentures issued in connection with each of the first two Tranches. Additionally, before the second tranche is funded, a number of free trading shares must be lent to the Subscriber by certain shareholders pursuant to Share Lending Agreements that have already been executed by the relevant parties, and the Company shall have completed a twenty to one consolidation of the Common Shares.
Upon the occurrence of certain events of default or a change of control, as set forth in the Subscription Agreement, the Convertible Debentures may, at the discretion of the Subscriber, be redeemed in cash prior to the maturity at price equal to 105% of the principal amount then outstanding. The Subscription Agreement also contains provisions preventing the Company from issuing Convertible Debentures if the issuance of such Convertible Debentures would result in the Subscriber holding beneficial ownership or control of greater than 19.9% of the Common Shares (issued and outstanding). This financing is in lieu of the previously announced transaction with Orthogonal Thinker which has been terminated.
Further information regarding the financing can be found in the Subscription Agreement, which will be posted to the Company’s SEDAR profile on www.sedar.com.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION: This news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking statements”) within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates, and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as “expects”, or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “budget”, “scheduled”, “forecasts”, “estimates”, “believes” or “intends” or variations of such words and phrases or stating that certain actions, events or results “may” or “could”, “would”, “might” or “will” be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements. Forward-looking information may relate to anticipated events or results including, but not limited to the issuance of Convertible Debentures, the payment of any Make-Whole Amount, the future payment of the Debenture Commitment Fee, and the Company’s future business plans. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general business, economic, competitive, regulatory, political and social uncertainties and the potential impact of COVID-19. Such risks and uncertainties include, among others, the risk factors included in Silo Wellness’s continuous disclosure documents available on www.sedar.com. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements.
Readers should not place undue reliance on the forward-looking statements and information contained in this news release. Silo Wellness assumes no obligation to update the forward-looking statements of beliefs, opinions, projections, or other factors, should they change, except as required by law.
NEITHER THE CANADIAN SECURITIES EXCHANGE NOR ITS REGULATION SERVICES PROVIDER ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
