Copyright cbj
The Transaction involves a proposed US$5 million investment by the Company in Global South for 10% of Global South’s equity interests based on a post-investment valuation of US$50,000,000. As a component of the proposed Transaction, RAMM will be granted a call option to acquire up to an additional 15% equity interest in Global South, which would increase its total ownership to 25% at a future post-money valuation of US$400,000,000. The call option will have a term of five years commencing upon the successful completion of the of the initial US$5 million investment by the Company. The Company is seeking minority approval for the Transaction because the Transaction is considered a “related party transaction” under Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”) due to Global South being wholly owned by Jackie Peter Burnett, CEO, Chairman and control person of the Company. As a result, Mr. Burnett will be excluded from voting on the Transaction. Mr. Antonio Caruso, President of the Management Board of Hempoland Sp. Z o.o., the Company’s Polish subsidiary, will also be excluded from voting on the Transaction because of his material interest in the Transaction as a result of him being expected to become a senior officer of Global South following completion of the Transaction. Collectively, Messrs. Burnett and Caruso own, or exercise control or direction over, 26,945,416 common shares (“Shares”) in the capital of the Company, representing approximately 22.57% of the issued and outstanding Shares. Mr. Ayrton Augereau-Burnett, Director of Medic Plast S.A., the Company’s Uruguayan subsidiary, is also expected to become a senior officer of Global South following completion of the Transaction. Augereau-Burnett does not own any Shares. Further, the Company notes that while Mr. Daniel Augereau , a director of the Company, recused himself from voting on the Transaction at the Board level due to his potential conflict of interest as a result of his personal relationship with Mr. Burnett, his Shares will not be excluded from being voted to approve the Transaction as he is not considered a “related party” for the purposes of considering the Transaction under MI 61-101. The Company does not currently have sufficient funds to complete the Transaction, but intends to monetize certain of its assets, either through selling assets or obtaining financing, to obtain the capital necessary to complete the Transaction. Irrespective of when funds are raised by the Company (either through the potential asset sale proceeds or obtaining new debt) to finance the investment, Global South and Mr. Burnett have committed to ensuring that the Company will be able to receive its 10% interest once it is able to raise the necessary funds. The Company notes that if the value of Global South decreases or increases before the completion of the Transaction, the US$5 million purchase price to acquire the 10% interest in Global South would be unchanged as there is no downward or upward price adjustment mechanism contemplated as part of the Transaction. The Company expects to be in a position to complete the Transaction within the next nine months; however, there can be no assurances as to the timing of completion of the Transaction or if it will be completed at all. The completion of the Transaction will be subject to the negotiation of definitive documentation relating to the Transaction, which will have certain customary closing conditions, and receipt of all applicable shareholder and regulatory approvals. For additional information regarding the Transaction, please see “Business of the Meeting – Description of The Proposed Investment” in the Circular.
