Alcanna Inc. announces that all regulatory requirements under applicable provincial liquor and cannabis legislation have been satisfied for completion of the previously announced plan of arrangement with Sundial Growers Inc. under section 192 of the Canada Business Corporations Act pursuant to the terms of the arrangement agreement between Alcanna and Sundial dated October 7, 2021, as amended by the amending agreement dated January 6, 2022. Sundial and Alcanna have mutually agreed to extend the outside date for closing of the Arrangement to March 31, 2022. Completion of the Arrangement remains subject only to customary closing conditions as further described in the Arrangement Agreement. If the Arrangement is completed on March 31, 2022, the Alcanna Shares are expected to be de-listed from the Toronto Stock Exchange on or about April 4, 2022.
Pursuant to the Arrangement Agreement and the amended terms of the plan of arrangement attached thereto, Sundial has agreed to acquire all of the issued and outstanding common shares in the capital of Alcanna (the “Alcanna Shares”) from the holders of Alcanna Shares (“Alcanna Shareholders”). Pursuant to the Arrangement Agreement, each Alcanna Shareholder will be entitled to receive, in exchange for each Alcanna Share held: (i) 8.85 common shares (each whole share, a “Sundial Share”) in the capital of Sundial (the “Share Consideration”); and (ii) $1.50 in cash (together with the Share Consideration, the “Revised Consideration”).
SUNDIAL FILING OF ANNUAL DISCLOSURE
Sundial has announced a delay in filing its audited consolidated financial statements for the year ended December 31, 2021, annual management’s discussion and analysis for the same period and management certifications of annual filings (collectively, the “Sundial Filings”) beyond the deadline of March 31, 2022 prescribed by Canadian securities laws. Sundial has announced that it expects to file its Annual Report on Form 20-F within the applicable U.S. filing deadline and to report fourth quarter and full year 2021 earnings on or before April 14, 2022.
Sundial’s press release stated the following with respect to the delay of the Sundial Filings:
The principal reason for the delay is the significant amount of additional work and in-depth procedures required to be performed by the Company and its external auditor as 2021 is the first year that [Sundial] is required to have an auditor attestation report on its internal controls over financial reporting under Section 404(b) of the Sarbanes-Oxley Act of 2002 (“SOX”). This requirement to be SOX compliant is a function of the rapid growth in scale and level of corporate activity Sundial has achieved over the last two years. SOX compliance requires heightened levels of corporate controls and processes that will ultimately benefit Sundial shareholders through best practices in risk management.
[Sundial]’s auditor is completing its external audit and will be unable to issue an audit opinion before the end of March 2022 as previously expected. [Sundial] believes that there will be no restatement of previously released financial statements of Sundial.
[Sundial] has informed the staff of the Alberta Securities Commission (the “ASC”) about its anticipated delay of the Filings and has applied to the ASC pursuant to Part 4 of National Policy 12-203 – Management Cease Trade Orders (“NP 12-203”) for a Management Cease Trade Order (“MCTO”) pending the release of the Filings. If an MCTO is issued, Sundial intends to satisfy the provisions of the “alternative information guidelines” set out in NP 12-203, including the requirement to file bi-weekly status reports in the form of news releases containing prescribed updating information, until the Filings are made. An MCTO would not generally affect the ability of persons who are not directors, officers, or insiders of [Sundial] to trade in securities of [Sundial].
Alcanna Shareholders are encouraged to read the full text of Sundial’s press release in respect of the Sundial Filings.
SUBMISSION OF AMENDED AND RESTATED LETTER OF TRANSMITTAL
Following completion of the Arrangement, each Alcanna Shareholder will cease to be an Alcanna Shareholder and to have any rights in respect of their Alcanna Shares other than to receive the Revised Consideration payable to such Alcanna Shareholder pursuant to the Plan of Arrangement.
As previously announced, Alcanna has mailed an amended and restated letter of transmittal to registered Alcanna Shareholders to receive the Revised Consideration upon completion of the Arrangement. The amended and restated letter of transmittal is also available under Alcanna’s profile on SEDAR at www.sedar.com and on Alcanna’s website at https://www.alcanna.com/ALCANNA-Special-Meeting-Materials.
The amended and restated letter of transmittal is for use by registered Alcanna Shareholders. Alcanna Shareholders that do not have their Alcanna Shares registered in their name (rather, such Alcanna Shares are registered in the name of a broker or other intermediary) should contact their broker or other intermediary for instructions and assistance regarding receipt of the Revised Consideration to which they are entitled upon completion of the Arrangement.
In order to receive the Revised Consideration under the Arrangement, registered Alcanna Shareholders must complete the amended and restated letter of transmittal and submit it to Odyssey Trust Company, the depositary, in accordance with the instructions set out in the amended and restated letter of transmittal. If Alcanna Shareholders have questions about submitting the amended and restated letter of transmittal, please contact Odyssey Trust Company by email at corp.actions@odysseytrust.com or at 1-587-885-0960.
NASDAQ LISTING OF SUNDIAL SHARES
On August 12, 2021, Sundial disclosed that it was notified by the NASDAQ Capital Market (“NASDAQ”) on August 9, 2021 that the bid price for the Sundial Shares did not meet the NASDAQ minimum bid price requirement of US$1.00 per Sundial Share for the 30 consecutive business days from June 25, 2021 to August 6, 2021. At that time, the NASDAQ required Sundial to regain compliance by February 7, 2022. On February 8, 2022, Sundial announced that it had received an extension of 180 calendar days to meet this requirement of the NASDAQ. The extension will allow Sundial to regain compliance if the bid price for the Sundial Shares closes at or above US$1.00 per share for a minimum of 10 consecutive trading days before August 8, 2022. Sundial has disclosed that it intends to monitor the closing bid price of the Sundial Shares and will, if necessary, implement available options to regain compliance with the NASDAQ minimum bid price requirement, including a reverse stock split.
The Arrangement Agreement, including further information on the conditions precedent to completion of the Arrangement, are described in the management information circular and proxy statement of Alcanna dated November 9, 2021 (collectively, the “Circular”), and the material change report of Alcanna dated January 6, 2022, copies of which have been filed on SEDAR at www.sedar.com and are available on Alcanna’s website at https://www.alcanna.com/ALCANNA-Special-Meeting-Materials.
ABOUT ALCANNA INC.
Alcanna is one of the largest private sector retailers of alcohol in North America and the largest in Canada by number of stores – operating locations in Alberta and British Columbia. The Company’s strategic partner, Nova Cannabis Inc. (TSX: NOVC), also operates 78 cannabis retail stores in Alberta, Ontario, and Saskatchewan. Alcanna Shares trade on the TSX under the symbol “CLIQ”. Additional information about Alcanna is available on SEDAR at www.sedar.com and the Company’s website at www.alcanna.com.
