Choom Files for Relief Under the Companies' Creditors Arrangement Act and Obtains Interim Financing
Vancouver, British Columbia--(Newsfile Corp. - April 22, 2022) - Choom Holdings Inc. (CSE: CHOO) (OTCQB: CHOOF) ("Choom"), announces today that Choom and certain of its subsidiaries (Choom BC Retail Holdings Inc., 2151414 Alberta Ltd., 2688412 Ontario Inc., and Phivida Holdings Inc., herein the "Subsidiaries", and together with Choom, the "Companies") have obtained an order (the "Initial Order") of the Supreme Court of British Columbia providing the Companies protection from their creditors pursuant to the Companies' Creditors Arrangement Act (Canada) ("CCAA").
As part of the Initial Order, the Companies are authorized to enter into an interim financing term sheet (the "Interim Financing") with Aurora Cannabis Inc. (the "Lender") pursuant to which the Lenders has agreed to advance to the Companies up to an aggregate of $0.8 million to fund the Companies' ongoing operations and CCAA proceedings.
CCAA Proceedings
The Companies have obtained CCAA protection for an initial period of 10 days, expiring on May 2, 2022 and the Court has set a further hearing date of May 2, 2022 at which time an extension of the protection under the CCAA will be sought. Pursuant to the Initial Order, Ernst & Young Inc. has been appointed as monitor in the Companies' CCAA proceeding (in that capacity, the "Monitor").
While under CCAA protection, creditors and others are stayed from pursuing any claims or enforcing any rights against the Companies. The Companies are seeking creditor protection under the CCAA in order to permit the Companies to conduct a sale and investment solicitation process ("SISP") and facilitate a transaction that will allow the Companies to address their liquidity issues and stabilize operations. The Companies intend to operate in the ordinary course throughout the CCAA proceedings and while conducting the SISP. Management of the Companies will remain responsible for the day-to-day operations of the Companies, under the general oversight of the Monitor. The Companies' day-to-day obligations to employees and key suppliers of goods and services, from and after the filing date, is expected to continue to be met.
All inquiries regarding the CCAA proceeding should be directed to the Monitor (Philippe Mendelson, 604-891-8491). Information about the Companies' CCAA proceeding, including all court orders and the Monitor's reports, will be available on the Monitor's website at www.ey.com/ca/choom.
Interim Financing
In order to fund the CCAA proceedings, the SISP and other short term working capital requirements, the Companies have executed a term sheet with the Lenders, pursuant to which the Lenders will advance an interim financing loan in the aggregate amount of $0.8 million (the "Loan"). A portion of the Loan is available immediately, with the balance available if approved by the Court following the May 2, 2022 hearing. The Loan accrues interest at a rate of 12% per annum, and matures, at the latest, on August 31, 2022. The Loan is secured against all assets of the Companies pursuant to the Initial Order.
Aurora Cannabis Inc. ("Aurora") is a significant shareholder of Choom and is the Lender in connection with the Interim Financing. Each of the aforementioned parties is a "related party" of Choom and, accordingly, the Interim Financing constitutes a "related party transaction" of Choom under MI 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101"). Related party transactions under MI 61-101 require a formal valuation and minority shareholder approval unless exemptions from these requirements are available. Choom will rely on the exemption from the formal valuation requirement contained in Section 5.5(b) of MI 61-101 (Issuer Not Listed on Specified Markets) in respect of the Interim Financing and the exemption from minority approval requirement contained in Section 5.7(d) of MI 61-101 (Bankruptcy , Insolvency, Court Order) in respect of the Interim Financing. Choom did not file a material change report more than 21 days before the expected closing of the Interim Financing transaction, as the details of the transaction were not finalized until immediately prior to the closing and Choom wished to close the transaction as soon as practicable for sound business reasons.
About ChoomTM
ChoomTM is a retail cannabis company that has established an extensive store network across Canada. ChoomTM is focused on delivering an elevated customer experience through high quality service. The Choom brand is inspired by Hawaii's "Choom Gang"-a group of friends in Honolulu during the 1970s who loved to have fun and smoke weed-or as the locals called it, "Choom". Evoking the spirit of the original Choom Gang, our brand caters to the Canadian market with the ethos of 'cultivating good times'.
For additional information contact:
Chris Bogart, President and Director
Telephone: 604-683-2509
Cautionary Statement on Forward-looking information
This news release contains forward-looking information relating to Choom's proposed activities and other statements that are not historical facts, including the successful completion of the SISP. Choom's intention to operate in the ordinary course during CCAA proceedings and the expectation that Choom's day-to-day obligations to employees and key suppliers of goods and services will continue to be met. Forward-looking information relates to management's outlook and anticipated events or results and includes statements or information regarding the future or prospects of Choom. When used in this news release, words such as "will", "hope", "could", "plan", "estimate", "expect", "intend", "may", "potential", "believe", "should" and similar expressions, are forward-looking statements. Although management of Choom has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. These factors include risks and uncertainties associated with or arising as a result of delays in obtaining or an inability to obtain required regulatory approvals, access to sufficient quantities of cannabis, the actions of third parties, the results of negotiations with third parties, developments in the cannabis sector, the ability to access sufficient capital from internal and external sources, reliance on key personnel, regulatory risks and delays and other risks and uncertainties discussed in the management discussion and analysis section of Choom's interim and most recent annual financial statement or other reports and filings, including those made with the CSE and applicable Canadian securities regulators. There can be no assurance that such forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information.
NEITHER THE CANADIAN SECURITIES EXCHANGE NOR ITS REGULATION SERVICES PROVIDER HAS REVIEWED OR ACCEPTED RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/121405