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28 Red Capital Announces Letter of Intent to Acquire Borealys Biotech

MONTREAL, QUEBEC / TheNewswire / May 16, 2019 - 28 Red Capital Inc. (the "Corporation") is pleased to announce that it has signed a binding letter of Intent (the "LOI") with Borealys Biotech Inc. ("Borealys"), a corporation incorporated under the Canada Business Corporations Act, which outlines the general terms and conditions pursuant to which the Corporation and Borealys have agreed to complete a transaction (the "Transaction") by way of a reverse take-over by the Corporation of Borealys which will result in Borealys becoming a wholly-owned subsidiary of the Corporation (the "Resulting Issuer") and the subsequent listing of the Resulting Issuer on the Canadian Securities Exchange (the "CSE") as of the effective time of the Transaction.

The Transaction is expected to result in the securityholders or Borealys exchanging all securities of Borealys for shares of the Corporation. The Transaction will be structured by way of a share exchange, merger, amalgamation, plan of arrangement or other similar form of transaction, as determined following a review of all relevant legal, regulatory, tax and accounting matters.

The LOI contemplates the Corporation and Borealys entering into a definitive agreement (the "Definitive Agreement") on or before June 30, 2019 (or such other date as may be agreed by the parties). The LOI may be terminated in certain circumstances, including if the Definitive Agreement in not executed on or before June 30, 2019. The Transaction is subject to requisite regulatory approvals, including the approval of the CSE, and such other terms and conditions as are customary for transactions of this nature, as well as the conditions more fully described below.

Terms of the LOI and Conditions to the Transaction

The LOI provides that completion of the Transaction is subject to a number of conditions, Including without limitation:

  • Each of the parties completing due diligence investigations and entering into a Definitive Agreement in respect of the Transaction on or before June 30, 2019;

  • A concurrent private placement financing of up to $9 million the net proceeds of which will be utilized to finance the activities of Borealys;

  • The obtaining of all requisite securityholder and director approvals;

  • The obtaining of all necessary approvals, consents and acceptances, including all necessary approvals from the applicable securities regulatory authorities, including the CSE;

  • The preparation of a listing statement or information circular in accordance with the policies of the CSE, the meeting of the minimum listing requirements of the CSE and the listing of the shares of the Resulting Issuer on the CSE ; and

  • Borealys being the rightful applicant with Health Canada of a fully-compliant licence to grow medicinal marijuana to be delivered by Health Canada and having a registered application number with the Cannabis Tracking and Licensing System.

It is a further term of the LOI that upon completion of the Transaction, the Resulting Issuer's officers and directors shall consist of six such persons nominated by Borealys and one such person nominated by the Corporation.

About Borealys

Borealys, through its wholly-owned subsidiary, Les Herbes De Beaumont Inc., has applied for and is currently proceeding through the approval process to obtain a cannabis production licence from Health Canada. Once approved, Borealys will produce, manufacture and distribute cannabis under the Cannabis Act and its regulations. Borealys' aim is to establish a premium brand with the development of carefully selected and developed strains in line with the medicinal requirements of targeted patients. Borealys has developed its plans in order to achieve: low product and facility contamination risk; high-quality, consistent product; high yield; and low production cost. Borealys, facility, which is designed to adhere to GMP certification standards, is designed to provide an ideal growing environment to produce a top-quality plant with minimal risk of contamination. Following receipt of its licence, Borealys forecasts an initial annual production of approximately 29,200,000 grams of cannabis.

The board of directors of Borealys currently consists of the following members:

  • Guy Martineau- Mr. Martineau is the President and Chairman of the Board of Borealys. Mr. Martineau has worked in the investment industry for more than 30 years during which he recommended and managed strategic investments for both institutional and retail clients. He has also had extensive corporate experience as the Chief Financial Officer of both public and private companies.

  • Christian Paradis - Mr. Paradis graduated from the University of Sherbrooke in civil law and holds a graduate degree in corporate law from Universite Laval. He was a Member of the Parliament of Canada from 2006 to 2015, and he served as a federal Cabinet Minister in various portfolios from 2007 to 2015.

  • Francois L'Heureux - Me L'Heureux is a litigation attorney with 37 years of practice and a vast experience in constitutional law, governmental affaires, election legislation, lobbying & corporate governance, First Nations law & economic development, planning & zoning, expropriation, municipal law and agricultural zoning.

  • Colonel (Ret.) Francois Martineau - Col. Martineau has over 34 years of leadership experience stemming from his career in the Royal Canadian Air Force where he served in various command positions culminating as Commander of 436(T) Squadron. He has participated in and led both combat and humanitarian operations across the globe.

  • Norbert McMullen, Ph.D. - Dr. McMullen has worked for 30 years a Professor at the Faculty of Pharmacy and Institute of Biomedical Engineering at the University of Montreal where he has developed an expertise in controlled release forms, microencapsulation / spherization and biodegradable polymers.

  • Michel Lebeuf, Jr. - Me Lebeuf is a partner at Dunton Rainville LLP where he practices primarily in securities, particularly in the areas of natural resources, institutional and corporate financing and public and private mergers & acquisitions. He provides strategic advice on access to public capital markets, securities and structures products. He also specializes in transactions such as reverse take-overs on the CSE and TSX Venture Exchange.

More information about Borealys will be made available in future press releases.

For further information please contact:

Robert Rosner, President and CEO