TORONTO, April 08, 2019 (GLOBE NEWSWIRE) — World Class Extractions Inc. (CSE: PUMP) (“World Class” or the “Company”) is pleased to announce it has entered into an agreement to invest up to $3 million (the “Alkaline Financing”) by way of a private placement in Alkaline Spring Inc. (“Alkaline Spring”), a privately-held, Alberta-based natural alkaline water company. In connection with the closing of the first tranche of the Alkaline Financing today, World Class invested $2 million in consideration for 2,000 senior secured convertible debentures (“Alkaline Debentures”) of Alkaline Spring, 11,111,111 common share purchase warrants of Alkaline Spring (“Alkaline Warrants”), and acquired certain investor rights. World Class is also pleased to announce that it will be increasing its level of engagement with shareholders and potential retail and institutional investors, and has engaged investor relations firms to assist the Company with investor relations and shareholder communications services and effectively communicate its message to an increasingly broad range of shareholders and investors across Canada.
Terms of Investment
The Alkaline Debentures mature in two years, are priced at $1,000 per debenture, bear interest at 9% per annum, and are convertible into common shares of Alkaline Spring at an initial price of $0.18 per share, subject to downward adjustment in certain circumstances. The Alkaline Warrants are each exercisable into one further share at a price of $0.25 for a period of three years.
In addition to the Alkaline Debentures and Alkaline Warrants, World Class received, as part of the Alkaline Financing, certain rights as a substantial investor, including (i) a right of first refusal to supply any cannabis or hemp extracts required in Alkaline Spring’s business; (ii) the exclusive right to license future formulations of Alkaline Spring’s planned cannabis and hemp infused waters and to market and sell, on a white label basis, its products in certain markets other than Canada; and (iii) the right to appoint two directors to the board of Alkaline Spring.
“This is a strategic investment into the foundation of what will become an important part of the cannabis-based beverage industry in the future. Any drink begins with water and water has been the source of incredible brands such as Coors, Grey Goose and Fiji. We intend to supply cannabis concentrates to Alkaline Spring going forward which is an important part of ensuring that we have relationships with value added distribution channels that utilize what we produce. We see tremendous value in the rare water export license that Alkaline Spring’s property possesses,” stated Mike McCombie, Chief Executive Officer of World Class.
Capital Markets Communications Strategy
Hybrid Financial Ltd. (“Hybrid”) and Ascension Millionaires Club Inc. (“Ascension”) will each play a key role in assisting the Company to enhance its market awareness and foster productive, continuing dialogues with shareholders and other market participants.
Hybrid’s engagement is for an initial term of six (6) months, during which Hybrid will assist in all aspects of a marketing campaign for the Company. In consideration for its services, the Company will pay to Hybrid a monthly fee of $15,000, and grant to Hybrid common share purchase options (the “Hybrid Options”) to purchase 350,000 common shares of the Company (“WCE Shares”) at a price equal to $0.17, at any time on or before April 8, 2024. The Hybrid Options are subject to a vesting schedule, with 175,000 Hybrid Options vesting immediately and the balance of 175,000 Hybrid Options vesting three (3) months thereafter.
Ascension’s engagement is for a term of twelve (12) months, during which Ascension will provide investor relations and communication services to the Company. In consideration for its services, the Company will pay to Ascension a monthly fee of $10,000, and grant to Ascension WCE Share purchase options (the “Ascension Options”) to purchase 300,000 WCE Shares at a price of $0.17, at any time on or before April 8, 2021.
Issuance of Securities to Consultant
The Company also issued 1,400,000 WCE Share purchase options (the “Consultant Options”) to an arm’s length consultant. The Consultant Options are exercisable at a price of $0.13 during a period of five (5) years from the date of issuance, and are subject to a vesting schedule, with 500,000 Consultant Options vesting immediately and the balance to vest in 100,000 increments each month during the term of the consultant’s engagement.