- The Board of Directors Unanimously Recommends that the Alcanna Shareholders Vote "FOR" the Arrangement
- Alcanna shareholders who have questions about the Arrangement or need assistance with voting their shares should contact
Laurel Hill Advisory Group by telephone at 1-877-452-7184 or by e-mail at assistance@laurelhill.com
SPECIAL MEETING ON
The Meeting is scheduled to be held at
The Arrangement Resolution must be approved by: (i) not less than 66⅔% of the votes cast by Alcanna Shareholders present in person (virtually) or represented by proxy at the Meeting; and (ii) a simple majority (greater than 50%) of the votes cast by Alcanna Shareholders present in person (virtually) or represented by proxy at the Meeting excluding votes cast in respect of Alcanna Shares which are required to be excluded pursuant to applicable Canadian Securities Laws. Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions.
The Consideration represents an acquisition price of approximately
BOARD RECOMMENDATION
The Alcanna Board of Directors, following the unanimous recommendation of a special committee of independent directors, unanimously recommends that Alcanna Shareholders vote "FOR" the Arrangement Resolution.
Your vote is important regardless of the number of Alcanna Shares you own. It is very important that you carefully read the Meeting Materials and vote your Alcanna Shares. You are eligible to vote if you were an Alcanna Shareholder of record at the close of business on
REASONS FOR AND BENEFITS OF THE ARRANGEMENT
In recommending that Alcanna Shareholders vote in favour of the Arrangement Resolution, the Alcanna Board of Directors considered a number of factors, including, but not limited to those listed below:
- Value Creation—The value offered to Alcanna Shareholders under the Arrangement represents a 104% increase from the Alcanna closing price of
$4.48 on the TSX onOctober 6, 2020 (one year prior to the date of the arrangement agreement, datedOctober 7, 2021 (the "Arrangement Agreement") between Sundial and Alcanna), crystallizing the value of the Alcanna Shares more favourably than might have resulted from other strategic alternatives available to Alcanna. - Significantly Enhanced Market Liquidity—The Sundial Shares have a high daily average trading value. During the 30 days ended
October 7, 2021 , the average daily trading value of the Sundial Shares was approximatelyUS$52.5 million on the NASDAQ Capital Market versus approximatelyC$1.1 million for Alcanna on the TSX, respectively. - A Larger,
More Diversified Company —As Alcanna Shareholders will receive Sundial Shares, the Arrangement offers Alcanna Shareholders the opportunity to participate in the future growth of Sundial, a leading cannabis business with significant growth opportunities associated with Sundial's substantial unrestricted cash position. The Arrangement is also expected to allow management of the consolidated entity to focus more effort on its rapidly expanding investment arm through theSunStream Bancorp Inc. joint venture. - Retail Expertise—Alcanna's business and brands are expected to be preserved and certain members of its leadership team will continue under the Sundial umbrella following completion of the Arrangement. It is currently expected that Alcanna's day-to-day liquor retail business operations will continue to be managed in a similar manner following the completion of the Arrangement. Additionally, Alcanna has the right pursuant to the Arrangement Agreement to nominate one individual for appointment, effective upon the completion of the Arrangement, as a director to the Sundial Board of Directors which will provide further continuity for Alcanna Shareholders. Alcanna's stable and growing cash flow profile and retail operations expertise are expected to further accelerate Sundial's retail growth strategy.
- Continued Growth—The Arrangement will represent immediate value creation for Alcanna Shareholders, who are expected to hold approximately 16% ownership in a large and rapidly growing diversified business upon completion of the Arrangement, which includes significant retail, production, branding and investment businesses. Alcanna's business will be able to pursue future growth with access to Sundial's substantial unrestricted cash position of approximately
C$628.2 million as ofOctober 7, 2021 . - Fairness Opinion—Paradigm Capital Inc. ("Paradigm") has provided the special committee of the Alcanna Board of Directors with its fairness opinion which states that, in the opinion of Paradigm, as of the date of the Arrangement Agreement, and subject to the assumptions, limitations, qualifications and other matters set forth in such, the Consideration to be received by the Alcanna Shareholders pursuant to the Arrangement is fair, from a financial point of view, to the Alcanna Shareholders.
- Significant Shareholder Support—Ace Liquor Corporation and all of the directors and executive officers of Alcanna who own Alcanna Shares (collectively, the "Supporting Shareholders"), have entered into agreements with Sundial (each, a "Support Agreement"), pursuant to which such Supporting Shareholders have agreed, on the terms and conditions specified in the Support Agreements, to vote their Alcanna Shares "FOR" the Arrangement Resolution. As of
October 7, 2021 , the Supporting Shareholders beneficially owned, or exercised control or direction over, an aggregate of 4,166,872 Alcanna Shares, representing approximately 12% of the issued and outstanding Alcanna Shares as of the date thereof on a non-diluted basis.
SHAREHOLDER QUESTIONS AND ASSISTANCE
If you have any questions or require assistance voting your Alcanna Shares, please contact Alcanna's proxy solicitation agent,
RECEIPT OF INTERIM ORDER
On
Alcanna Shareholders are urged to carefully review and consider the Meeting Materials, which contain important information concerning the Arrangement and the rights and entitlements of the Alcanna Shareholders in relation thereto and to consult with their financial, tax, legal or other professional advisors.
ABOUT
Alcanna is one of the largest private sector retailers of alcohol in
FORWARD-LOOKING STATEMENTS
This news release contains forward-looking statements or information (collectively "forward-looking statements") within the meaning of applicable securities legislation, relating to, among other things, the anticipated benefits of the Arrangement; the completion and timing of the Arrangement; the ability and expectation that following completion of the Arrangement, Sundial will continue to experience enhanced market liquidity and growth; the successful integration of the businesses of Alcanna and Sundial; that Alcanna's cash flow and retail operations expertise will accelerate Sundial's growth; the ability of the consolidated entity to focus more management effort on its investment arm; the ability of the parties to satisfy all of the closing conditions and the anticipated timing for closing of the Arrangement; the receipt of requisite approvals of the Alcanna Shareholders and the Court in connection with the Arrangement and the anticipated timing thereof; the expected pro forma ownership of Sundial Shares by Alcanna Shareholders; the preservation of Alcanna's business and brands and certain members of its leadership team upon completion of the Arrangement; operations of Alcanna's liquor retail business upon completion of the Arrangement; the appointment of a new director of Sundial by Alcanna upon completion of the Arrangement; and future growth of Alcanna's business. Forward-looking statements are typically identified by words such as "continue", "anticipate", "will", "should", "plan", "intend", and similar words suggesting future events or future performance. All statements and information other than statements of historical fact contained in this news release are forward-looking statements.
Readers should not place undue reliance on forward-looking statements included in this news release. Forward-looking statements are inherently subject to change and do not guarantee future performance and actual results may differ materially from those expressed or implied by the forward-looking statements. A number of risks, uncertainties and other factors that may cause actual performance and results to differ materially from any estimates, forecasts or projections, or could cause our current objectives, strategies and intentions to change.
The risk factors and uncertainties that could cause actual performance and results to differ materially from the anticipated results or expectations expressed in this new release include, among other things: risks related to the completion and the timing of the Arrangement; the ability to complete the Arrangement on the terms and timeline contemplated by the Arrangement Agreement, and other agreements, including the Support Agreements, or at all; the ability of the consolidated entity to realize the anticipated benefits from the Arrangement and the timing thereof; the inability of the parties to fulfill or waive any conditions precedent to the completion of the Arrangement Agreement, including obtaining required regulatory, Court and approvals of the Alcanna Shareholders; interloper or other stakeholder risk; risks related to new issuances of Sundial Shares that could affect the Alcanna Shareholders' pro forma ownership of Sundial; the risks and uncertainties related to the ability of the consolidated entity to successfully integrate the respective businesses, execute on the strategic opportunity, as well as the ability to ensure continued performance or market growth of its products; the duration and severity of the COVID-19 pandemic on the business, operations and financial condition of the consolidated entity; the risk that the consolidated entity will be unable to execute its strategic plan and growth strategy, including the capital allocation and retail cannabis strategy, as planned or at all; dependence on suppliers; potential delays or changes in plans with respect to capital expenditures and the availability of capital on acceptable terms; risks inherent in the liquor retail and cannabis industries; competition for, among other things, customers, supply, capital and skilled personnel; changes in labour costs and markets; inaccurate assessments of the value of acquisitions; general economic and provincial and national political conditions in
In addition, if the Arrangement is not completed, and each of the parties continues as an independent entity, there are risks that the announcement of the Arrangement and the dedication of substantial resources of each party to the completion of the Arrangement could have an impact on such party's business relationships, and could have a material adverse effect on the current and future operations, financial conditions and prospects of such party. Readers should refer to the discussion of risks set forth in the Circular under the heading "Risk Factors". A comprehensive discussion of other risks relating to Alcanna's business are contained under the heading "Risk Factors" in Alcanna's annual information form for the financial year ended
The forward-looking statements contained in this news release are made as of the date hereof. Except as expressly require by applicable securities legislation, Alcanna does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement.
FOR FURTHER INFORMATION
This news release is not intended to and does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy or an invitation to purchase or subscribe for any securities or the solicitation of any vote or approval in any jurisdiction, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law. This news release is being made in respect of the proposed Arrangement involving Alcanna and Sundial pursuant to the terms of the Arrangement Agreement.
Alcanna will file other relevant materials in connection with the Arrangement with the applicable securities regulatory authorities. Alcanna Shareholders are urged to carefully read the Circular (including any amendments or supplements to such documents), and other Meeting Materials, before making any voting decision with respect to the Arrangement because they contain important information about the Arrangement and the parties thereto. Copies of the Meeting Materials may be found on Alcanna's SEDAR profile at www.sedar.com and on Alcanna's website at https://www.alcanna.com/ALCANNA-Special-Meeting-Materials. Alcanna Shareholders can obtain additional information about Sundial, including materials incorporated by reference into the Circular, without charge, on the
SOURCE
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