Wayland Group has struck a deal to sell off its Canadian business, including its Langton, Ontario production facility, in a deal which values the sold company at C$230m.
Cryptologic Corp will acquired Wayland’s Canadian operation for an anticipated consideration of 57,500,000 Cryptologic common shares, at a deemed issue price of C$4.00 per share. This is expected to represent approximately 70% of the issued and outstanding Cryptologic common shares outstanding following closing, and the assumption by Cryptologic of liabilities relating to Wayland’s Canadian business.
That transaction values Wayland’s Canadian business at approximately C$230 million plus assumed liabilities.
It is contemplated that, upon and subject to closing of the proposed transaction, Cryptologic will be a single-purpose cannabis company with a cash balance of at least C$25 million (less amounts to be advanced under the bridge loan discussed below and any other amounts advanced by Cryptologic to Wayland).
Cryptologic has also committed to provide Wayland with a pre-signing $5 million subordinated bridge loan before their deal is finalized. Wayland has agreed to a binding exclusivity period until September 15, 2019, or such later date as each of Wayland and Cryptologic mutual agree.
At the same time, Wayland is set to sell off its international business (outside Canada) to ICC in exchange for common shares of the latter company. It is expected that under this proposed transaction, Wayland will effectively distribute the Cryptologic and ICC shares to be received by it to its shareholders upon completion of the transactions.
Wayland also announced the appointment of Matthew McLeod, Wayland’s President, as Chief Executive Officer of the company. Ben Ward has resigned as Chief Executive Officer and as a director of Wayland.
Paul Pathak, Chair of the Board, commented, “The transactions with Cryptologic and ICC represent the culmination of our strategic review and our careful consideration of a range of factors, opportunities and risks, including the Company’s recent operating performance and that of the industry as a whole and the views expressed by significant shareholders and other stakeholders of the Company.
“We want to take this opportunity to thank all of our shareholders and stakeholders for their patience throughout this process, we are very happy with the strategy we have going forward and believe it will provide the maximum value available for all involved.
“We believe that these transactions provide our shareholders and other stakeholders with exciting opportunities for ongoing exposure to strong businesses that will be geographically focused on the Canadian and international markets, respectively. Wayland expects that this bifurcation will help unlock the value embedded in Wayland’s worldwide business, which we believe has not been properly valued by the market in Wayland’s current configuration, and that this will benefit Wayland’s existing shareholders and other stakeholders, particularly since Wayland’s shareholders are expected to hold significant majority positions in both Cryptologic and ICC following closing of these transactions.
“We are also excited to have Matthew McLeod take on the Chief Executive Officer title following his appointment to the board last month – since joining the Company, Matthew has taken on positions of increasing responsibility that reflect his key role in helping Wayland navigate a difficult period in its development, and he has been instrumental in leading the development and negotiation of these transformative transactions for our Company. We look forward to his continued strong leadership in this new position.”
Wayland said that the bridge loan would provide “significant future liquidity to address both Wayland’s existing liabilities and the funding to fuel its growth in the future”.
It is expected that, following closing, Cryptologic will be led by a management team including Jordan Greenberg as Chief Executive Officer (currently Chief Financial Officer of Cryptologic) and Matthew McLeod as President of Cryptologic.
Greenberg was the former CFO of Nuuvera Inc., which raised over C$100 million in equity financing then completed several cannabis-related acquisitions, both in Canada and in international markets. Nuuvera Inc. completed its go-public process through the reverse takeover of a publicly traded shell, then achieved a successful exit through a plan of arrangement with Aphria Inc., valued in excess of C$500 million.
The management team will also include other senior members of the existing management teams of Cryptologic and Wayland. It is proposed that John Kennedy FitzGerald will resign as Chief Executive Officer of Cryptologic at closing.Cannabis Business Worldwide