NEW YORK, May 8, 2017 /PRNewswire/ -- Atlantic
Alliance Partnership Corp. ("AAPC") (NASDAQ: AAPC) and Kalyx
Development Inc., a private real estate investment trust focused on
owning and operating commercial real estate facilities leased to
cultivators, processors and/or distributors in the regulated U.S.
cannabis industry ("Kalyx"), today announced that they have entered
into a merger agreement under which, subject to certain closing
conditions, Kalyx will merge with and into AAPC (the
"Merger").
With the terms of the Merger, AAPC attributed the current,
pre-transaction value of Kalyx at approximately $60 million and a post-transaction market
capitalization of approximately $75
million (subject to certain assumptions and
variables). The surviving public company, which is expected
to be organized as a Maryland
corporation, will be re-named Kalyx Properties Inc. ("KPI").
Kalyx is a fully-integrated commercial real estate company which
acquires and owns properties leased to, or currently occupied by,
state-licensed operators of regulated cannabis businesses in states
in which such activities are legal under state law. Based in
New York and operating as a
private real estate investment trust, Kalyx owns and operates nine
commercial properties comprising an aggregate of 653,000 square
feet located in Arizona,
Colorado, Oregon and Washington State and is one of the leading
multistate providers of commercial real estate to state-licensed
operators in the regulated cannabis industry. Kalyx's
management team combines commercial real estate experience,
cannabis industry expertise and a knowledge and understanding of
the relevant state and local regulatory requirements that it
leverages to source and acquire new commercial properties
consistent with its strategy.
"We are excited about merging into AAPC and believe the
transaction will provide Kalyx with an efficient path to a public
listing on a U.S. stock exchange," said George M. Stone, Kalyx's Chief Executive
Officer. "Once this transaction is complete, we will have a
stream-lined capital structure which will allow for regular access
to public capital, thus enabling better-paced growth as well as the
ability over time to attract institutional investors to strengthen
and diversify KPI's shareholder base."
Iain H. Abrahams, Chief Executive
Officer of AAPC, stated "Since meeting George Stone and the other members of the Kalyx
management team, our team has been impressed with their grasp of
the dynamics of the regulated U.S. cannabis industry and the needs
of cannabis operator tenants. We believe that giving the
Kalyx team the ability to access public capital is the right way to
build out the business and help Kalyx achieve its full
potential."
In connection with and as a condition to the closing of the
Merger, AAPC expects to offer its common stock to accredited
investors in a private placement (the "PIPE"). As a further
condition to the closing of the Merger, the proceeds of the PIPE,
when combined with cash currently in AAPC's trust account (subject
to potential AAPC shareholder redemptions), will be required to
equal or exceed $15 million in
capital. The new capital is anticipated to be used by KPI to
make additional real estate acquisitions and for general working
capital purposes.
Summary of Transaction
Pursuant to the Merger, all shareholders of Kalyx will receive
shares of KPI based on AAPC's aggregate pre-money equity valuation
of Kalyx of approximately $60
million, with the shares to be issued by KPI being valued at
$10 per share and holders of Kalyx
warrants who do not elect to exchange such warrants for shares of
Kalyx common stock (as described in the merger agreement) will have
their warrants assumed by KPI (subject to a minimum threshold of
such warrants being amended (as described in the merger
agreement)). AAPC shareholders who do not elect to redeem
their AAPC ordinary shares will receive a stock dividend
immediately prior to the closing based on the difference between
the trust liquidation value per share at the closing of the Merger
and the $10 per share price.
AAPC's sponsor, AAP Sponsor (PTC) Corp, has agreed to forfeit a
portion of the KPI shares that it would receive in the Merger for
its founder shares.
Ellenoff Grossman & Schole LLP is serving as legal advisor
to AAPC. Sandler O'Neill + Partners, L.P. is serving as
financial advisor, Reitler Kailas & Rosenblatt LLC as legal
advisor and Dentons as REIT counsel to Kalyx.
The description of the Merger contained herein is only a
summary and is qualified in its entirety by the reference to the
definitive agreements relating to the transaction, copies of which
will be filed by AAPC with the Securities and Exchange Commission
in a Current Report on Form 8-K.
About Kalyx Development Inc.
Kalyx is a leading real estate investment trust in the regulated
cannabis industry in the U.S. By retrofitting underutilized real
estate assets, Kalyx accommodates the need of tenants in the
cultivation, processing and/or distribution of cannabis and
cannabis products. At the forefront of a new real estate vertical,
Kalyx owns interests in nine properties totaling approximately
653,000 square feet in regulated cannabis markets within
Colorado, Washington, Oregon and Arizona of which approximately 77% was
occupied as of March 31, 2017.
Among Kalyx's 23 tenants are many well established operators
including Medicine Man, Dixie
Brands, Golden Leaf, Health
for Life and Strainwise. Kalyx is not a cannabis operator.
It neither owns, nor does it intend to own, a financial
interest in a cannabis business.
About AAPC
AAPC is a public investment vehicle incorporated in January 2015 in the British Virgin Islands for the purpose of
engaging in initial business combination with one or more operating
businesses. It is led by sponsors and management comprised of
Iain Abrahams, Jonathan Mitchell, Mark
Klein, and AAP Sponsor (PTC) Corp. AAPC has $7.48 million of capital in trust which includes
the net proceeds raised in its initial public offering in
May 2015. AAPC's ordinary
shares are listed on the Nasdaq Capital Market (NASDAQ: AAPC).
Contacts
For further information please contact:
Atlantic Alliance
Partnership Corp
|
|
Iain H. Abrahams,
CEO
|
+44 (0)
203.675.7720
|
Jonathan Mitchell,
CFO
|
212.409.2434
|
Kalyx Development
Inc.
|
|
George M. Stone,
CEO
Potter Polk,
President & Co-Founder
|
646.368.6939
646.368.6920
|
|
|
Sandler O'Neill +
Partners, L.P.
Thomas S. Howland,
Managing Director
|
212.466.7977
|
|
|
Reitler Kailas
& Rosenblatt LLC
David Boillot,
Esq.
Scott H. Rosenblatt,
Esq.
|
212.209.3058
212.209.3040
|
|
|
Where You Can Find More Information
This communication may be deemed to be solicitation material
regarding the proposed Merger of Kalyx and AAPC, including the
issuance of the common stock of KPI, the surviving public company.
In connection with the proposed Merger, AAPC expects to file
a registration statement on Form S-4 (the "Form S-4") and
accompanying proxy materials with the Securities and Exchange
Commission ("SEC"). INVESTORS AND SECURITY HOLDERS OF AAPC AND
KALYX ARE URGED TO READ THESE MATERIALS, INCLUDING ANY AMENDMENTS
OR SUPPLEMENTS THERETO, AND ANY OTHER RELEVANT DOCUMENTS IN
CONNECTION WITH THE MERGER THAT AAPC WILL FILE WITH THE SEC WHEN
THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT AAPC, KALYX AND THE PROPOSED MERGER. The
preliminary proxy statement, the definitive proxy statement, and
Form S-4 registration statement/prospectus, in each case as
applicable, and other relevant materials in connection with the
Merger (when they become available), and any other documents filed
by AAPC with the SEC, may be obtained free of charge at the SEC's
website at www.sec.gov. In addition, investors and security
holders may obtain free copies of the documents filed with the SEC
by contacting AAPC in writing at 590 Madison Ave, New York, NY, 10022.
Participants in the Merger
AAPC, Kalyx, and their respective directors and executive
officers may be deemed to be participants in the solicitation of
proxies from the shareholders of AAPC in connection with the
Merger. Information regarding the officers and directors of
AAPC is set forth in AAPC's annual report on Form 10-K for the year
ended December 31, 2016, which was
filed with the SEC on March 15,
2017. Additional information regarding the interests of such
potential participants will also be included in the Form S-4 (and
accompanying proxy materials) and other relevant documents filed
with the SEC.
Cautionary Note Regarding Forward-Looking Statements
This communication may include "forward-looking statements"
within the meaning of the "safe harbor" provisions of the United
States Private Securities Litigation Reform Act of 1995.
Forward-looking statements may be identified by the use of words
such as "anticipates", "believes", "continue", "expects",
"estimates", "intends", "may", "outlook", "plans", "potential",
"projects", "predicts", "should", "will", or, in each case, their
negative or other variations or comparable terminology. Such
forward-looking statements with respect to the timing of the
proposed merger, as well as the expected performance, strategies,
prospects and other aspects of the businesses of the parties to the
Merger and the combined company after completion of the proposed
merger, are based on current expectations that are subject to risks
and uncertainties.
A number of factors could cause actual results or outcomes to
differ materially from those indicated by such forward-looking
statements. These factors include, but are not limited to: (1) the
occurrence of any event, change or other circumstances that could
give rise to the termination of the Merger (including the failure
to consummate the PIPE); (2) the outcome of any legal proceedings
that may be instituted against AAPC, Kalyx or others following
announcement of the merger and the transactions contemplated
therein; (3) the inability to complete the transactions
contemplated by the Merger due to the failure to obtain approval of
the shareholders of AAPC or Kalyx or other conditions to closing in
the Merger; (4) the risk that we may be unable to secure a U.S.
national exchange listing for KPI; (5) the risk that the proposed
transaction disrupts current plans and operations as a result of
the announcement and consummation of the Merger and the
transactions described herein; (6) the ability to recognize the
anticipated benefits of the Merger, which may be affected by, among
other things, competition, the ability of the combined company to
grow and manage growth profitably, maintain relationships with
tenants and retain its key employees; (7) costs related to the
proposed Merger; (8) changes in applicable laws or regulations or
their interpretation or application (including, notably, federal
and state laws related to the use, cultivation and distribution of
cannabis-based products); (9) the possibility that AAPC or Kalyx
may be adversely affected by other economic, business, and/or
competitive factors; (10) future exchange and interest rates; (11)
delays in obtaining, adverse conditions contained in, or the
inability to obtain necessary regulatory approvals or complete
regulatory reviews required to complete the Merger; and (12) other
risks and uncertainties indicated in the proxy statement to be
filed by AAPC with the SEC, including those under "Risk Factors"
therein, and other filings with the SEC by AAPC or Kalyx.
These factors are not intended to be an all-encompassing list
of risks and uncertainties.
The forward-looking statements contained in this communication
are based on our current expectations and beliefs concerning future
developments and their potential effects on AAPC and Kalyx.
Future developments affecting AAPC and Kalyx may not be those
that we have anticipated. These forward-looking statements involve
a number of risks, uncertainties (some of which are beyond our
control) and other assumptions that may cause actual results or
performance to be materially different from those expressed or
implied by these forward-looking statements. Should one or more of
these risks or uncertainties materialize, or should any of our
assumptions prove incorrect, actual results may vary in material
respects from those projected in these forward-looking statements.
We undertake no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as may be required under applicable securities
laws.
By their nature, forward-looking statements involve risks and
uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future. We caution
you that forward-looking statements are not guarantees of future
performance and that our actual results of operations, financial
condition and liquidity, and developments in the industry in which
we operate may differ materially from those made in or suggested by
the forward-looking statements contained in this release. In
addition, even if our results or operations, financial condition
and liquidity, and developments in the industry in which we operate
are consistent with the forward-looking statements contained in
this communication, those results or developments may not be
indicative of results or developments in subsequent periods.
Disclaimer
This communication shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be
any sale of securities in any jurisdiction in which the offer,
solicitation or sale would be unlawful prior to the registration or
qualification under the securities laws of any such
jurisdiction.
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SOURCE Ellenoff Grossman and Schoel LLP