Hempco to be Fully Acquired by Aurora
Cannabis
TSX-V: HEMP
VANCOUVER, April 24, 2019 /CNW/ - Hempco Food and Fiber
Inc. (TSX.V: HEMP) ("Hempco" or the "Company")
is pleased to announce Q2 2019 results for the period ending
February 28, 2019.
Q2 2019 and Subsequent Operational and Strategic
Highlights
- Acquisition by Aurora Cannabis Inc. ("Aurora") (NYSE:
ACB) (TSX: ACB) (Frankfurt: 21P;
WKN: A1C4WM) Acquisition: On April
16, 2019, Aurora Cannabis Inc. (Aurora) and Hempco announced
the companies had entered into a binding letter agreement (the
"Letter Agreement") for Aurora to acquire all of the remaining
issued and outstanding common shares of Hempco ("Hempco Shares")
not already owned. In consideration of the transaction, Aurora has
agreed to pay C$1.04 per Hempco
Share, payable in common shares of Aurora, reflecting a valuation
of approximately C$63.4 million on a
fully diluted basis. The full release is available under the
Company's SEDAR profile at www.sedar.com. Hempco's board of
directors has recommended Hempco shareholders vote in favour of the
transaction as they believe that full integration of Hempco with
Aurora's global hemp assets will enable accelerated growth,
generating additional shareholder value.
- Revenues: 104% year over year revenue growth to
$0.6 million from $0.3 million for Q2 2018 was driven by execution
of the Company's five prong strategy with focus on tri-crop
utilization.
- Nisku facility: Hempco
is in the process of commissioning production at its new,
state-of-the-art Nisku facility, a
56,000 square foot, 2.9 million kg-per-year hemp processing
facility. Nisku will be GFSI
(Global Food Safety Initiative) Certified when it comes fully
online. In anticipation of production coming online, the Company
has managed to secure a first LOI for the processing of 300 tonnes
of hurd.
- Diversification: The Company's commitment to innovation
continued strong this quarter with the introduction of its new
organic protein smoothie product line extension for its PLANET HEMP
SUPERFOOD™ brand. As well, the Retail Council of Canada voted PLANET HEMP SUPERFOODS™
Super-Seeds a finalist for the 2019 Canadian Grand Prix New
Products Award.
- Sales Channel Development: execution of the Company's
commercial strategy saw continued traction with the development of
new global sales channels, that include:
-
- Two new distributors in Ontario and Quebec for the PLANET HEMP SUPERFOOD™
brand
- Expansion of its national distribution network subsequent to
the quarter through agreements for the grocery, and health and
wellness segments in Western
Canada and Quebec;
- Securing Metro Quebec and QF Foods listings for PLANET HEMP
SUPERFOOD™;
- PRAISE HEMP™'s market penetration to over 300 retail store
locations across Canada;
- A significant first order shipment to a large importer in
New Zealand;
- The launch of its new PLANET HEMP SUPERFOOD™ e-commerce site at
www.planethemp.ca;
- Continued development of international brand recognition of its
PLANET HEMP SUPERFOOD™ and PRAISE HEMP™ brands, resulting in 84%
revenue growth in the U.S. and 99% growth in Canada.
Management Commentary
"This is an exciting time for
Hempco with the prospect of becoming the latest addition to
Aurora's global network of hemp assets, intended to serve both the
rapidly growing industrial hemp market and be an important part of
Aurora's global CBD-from-hemp infrastructure. As part of the Aurora
group of companies, Hempco gains invaluable access to Aurora's
expanding infrastructure – its industry-leading science; global
distribution channels, and innovation capabilities," said
Diane Jang, CEO. "We believe that
full integration into Aurora will enable accelerated growth for
Hempco and generate additional shareholder value. As we execute on
our strategy, leveraging Aurora's assets and capabilities will
assist the production ramp up at our Nisku facility and accelerate product
development, allowing us to advance our vision to be the leading
Tri-Crop hemp company."
Financial Review
A more detailed discussion of
financial results is provided in the Company's Management
Discussion and Analysis, filed on www.sedar.com
- Revenues for the quarter ended February
28, 2019, increased 104% to $0.6
million, as compared to $0.3
million for the three-month period ended February 28, 2018, driven by growth of the
Company's PLANET HEMP SUPERFOOD™ and PRAISE HEMP™ brands across a
growing network of domestic and international sales channels.
- Net loss for the quarter increased by $0.7 million to $1.6
million, driven by investments in organizational
infrastructure to drive and carry growth, as well as increased
market development.
- The cost of sales for the three-month period ended February 28, 2019 was $0.6
million, resulting in a gross profit of $0.01 million, an improvement of $0.1 million. While inventory write downs
affected gross margins in the period, margins are expected to
increase as sales continue to gain momentum and as the higher
margin PLANET HEMP SUPERFOOD™ and PRAISE HEMP™ sales start making a
larger contribution to overall sales.
Outlook
Management sees continued positive momentum
for Hempco as reflected by its strong 104% year-over-year growth in
Q2 revenues. Going forward, the Company will continue to execute on
its Five-Prong Strategy, announced in Q1 to advance its Tri-Crop
Strategy, grow existing and expand into new markets, as well as
develop new product innovations. This solid foundation has
positioned the Company for future growth, recently recognized by a
joint Letter Agreement between Aurora and Hempco announcing
Aurora's intention to acquire all the remaining issued and
outstanding common shares not already owned by Aurora.
Aurora and Hempco expect to execute a Definitive Agreement on,
or before, May 15, 2019. The proposed acquisition will
require shareholder approval from two-thirds of the votes cast by
the minority shareholders (non-Aurora shareholders) of Hempco
Shares at a Special Meeting of Shareholders, to be held at a future
date, to consider the proposed Transaction. In addition to
shareholder approval, the proposed Transaction will be subject to
applicable regulatory and court approvals and the satisfaction of
other customary conditions. Upon completion of the Transaction,
Hempco will become a wholly owned subsidiary of Aurora and Hempco's
shares will be de-listed from the TSX Venture Exchange.
Hempco's Board of Directors recommend their shareholders vote in
favour of the Transaction. (Full details of the Transaction
are available in the release under the Company's SEDAR profile at
www.sedar.com.
About Hempco
For more than 12 years Hempco has been a trusted and respected
pioneer, innovator and provider of quality hemp-based foods, hemp
fiber and hemp nutraceuticals. Hempco produces and markets the
brands PLANET HEMP SUPERFOOD™ and PRAISE HEMP™,
hemp-based foods and nutritional supplements for people and
animals. Hempco is expanding its processing ability to meet
global demands in a 56,000 sq. ft. facility located
at Nisku, Alberta. Hempco's common shares trade on the
TSX Venture Exchange under the symbol "HEMP".
The TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
This news release includes
statements containing certain "forward-looking information" within
the meaning of applicable securities law ("forward-looking
statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect",
"project", "intend", "believe", "anticipate", "estimate", "may",
"will", "potential", "proposed" and other similar words, or
statements that certain events or conditions "may" or "will" occur.
Forward-looking statements in this press release include the
Company's anticipation of further growth. These statements are only
predictions and are not guarantees of future performance;
therefore, undue reliance should not be placed on them. Such
forward-looking statements necessarily involve known and unknown
risks and uncertainties, which may cause actual performance and
financial results in future periods to differ materially from any
projections of future performance or result expressed or implied by
such forward-looking statements. Various assumptions were used
in drawing the conclusions or making the projections contained in
the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates
of management at the date the statements are made, and are subject
to a variety of risks and uncertainties and other factors that
could cause actual events or results to differ materially from
those projected in the forward-looking statements. The Companies
are under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise,
except as expressly required by applicable law.
On behalf of the Board of Directors,
HEMPCO FOOD AND FIBER INC.
Diane Jang
CEO
SOURCE Hempco Food and Fiber Inc.