Kanabo Group hails Hellenic Dynamics’ reverse takeover deal
In a statement released today (KNB ) noted a new agreement secured by the cash shell U.K. SPAC which will see it become a European medical cannabis cultivation firm.
Kanabo, a medicinal cannabis firm which made its debut on London’s main market in February 2021, has reaffirmed a binding sale and purchase agreement agreed upon by Hellenic Dynamics S.A ("Hellenic Dynamics") and U.K. SPAC ("UK SPAC") this morning.
Under the terms of the deal, UK SPAC will acquire 100% of Hellenic Dynamics, a cultivation company which entered into a memorandum of understanding with Kanabo in May 2021.
In addition to the MOU, Kanabo also acquired an interest over £0.750 million worth of shares in Hellenic Dynamics which the Company will receive as part of the proposed listing of Hellenic Dynamics at a minimum 30% discount to the Prospective RTO listing price.
Today’s announced reverse takeover deal is for a total consideration of £45.2 million, with some 9.5 billion new shares to be issued to the vendors at a price of 0.472p per share.
The proposed transaction is expected to value UK SPAC at a minimum of £11.76m at the issue price, assuming the minimum net cash balance of £3.92m on completion is achieved.
U.K. SPAC shares will now be suspended, prior to a readmission of the enlarged group which will hold a market capitalisation of more than £50m as a standard listing on the main market.
Founded in March 2019, Hellenic is based in a 200,000 square meter facility in Northern Greece and plans to grow, manufacture, process and sell THC-dominant dried medicinal
cannabis flowers and related extracted oils for export initially into the German market.
While Hellenic is aiming to provide a medicinal cannabis oil extract product for the envisaged domestic Greek market, it also intends to secure further export markets elsewhere in Europe.
According to a report published by ResearchAndMarkets.com, the European medicinal cannabis market was worth £2.5bn in 2019 and is expected to reach £26.4bn by 2027.
The Company said the final installation phases of cultivation equipment are currently taking place at the facility and that it expects to cultivate and sell its first products in 1Q22.
Hellenic has signed two term sheets for off-take agreements with two licensed distributors in Germany, which cover the total first year's production of dried medicinal cannabis flowers.
Hellenic’s Vice President Davinder Rai commented, “This is a major step forward for Hellenic as we look to establish ourselves as a leading cultivator of THC dominant medical cannabis in Europe and develop specialist strains of cannabis specific to individual medical ailments.”
He added: “With patient demand for medical cannabis increasing and a willingness among governments to regulate and open up this important market we are very optimistic about our future as a listed company. "
In response to the proposed listing, Kanabo said it believes the acquisition will help Hellenic to work towards its goal of becoming “a major cultivator of medicinal cannabis in Europe.”
“We look forward to working with Hellenic Dynamics to finalise the supply agreement for Cannabis flowers pursuant to the MoU between the companies,” Kanabo highlighted.
Under the MOU, Kanabo will buy up to 1000kg per year of EU GMP certificated cannabis flowers with pre-defined THC or CBS contents, subject to customary regulatory approvals.
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