Sugarbud Announces Second Tranche Closing of Convertible Debenture Units

·9 min read
Sugarbud Craft Growers Corp.
Sugarbud Craft Growers Corp.


CALGARY, Alberta, May 27, 2022 (GLOBE NEWSWIRE) -- Sugarbud Craft Growers Corp. (TSXV: SUGR, SUGR.WT, SUGR.WS, SUGR.WR, SUGR.DB) (OTCQB: SBUDF) ("Sugarbud" or the "Company") is pleased to announce the closing of the second and final tranche of its previously-announced marketed public offering (the "Offering") of convertible debenture units (each, a "Debenture Unit") for aggregate gross proceeds of $438,000. The aggregate gross proceeds to the Company from the first and second tranche closing of the Offering is approximately $1.286 million. Net proceeds from the Offering will be used for additional processing and production equipment purchases, facility upgrades and other corporate purposes.

Research Capital Corporation (the "Agent") was the sole agent and sole bookrunner in connection with the Offering.

Each Debenture Unit issued under the Offering consists of: (i) one 12.0% secured convertible debenture (each, a "Debenture"); and (ii) 1,000 common share purchase warrants of the Company (each, a "Warrant"). Each Warrant will entitle the holder thereof to purchase one Common Share at an exercise price of $1.00 for a period of five (5) years following the closing of the Offering.

The Debentures will bear interest at a rate of 12.0% per annum from the date of issue, payable on a semi-annual basis, such interest being payable: (i) in-kind in Common Shares based on the daily volume weighted average trading price for the 20 trading days preceding the date of interest payment; or (ii) in cash at the Company's option. The Debentures will mature five (5) years from the closing of the Offering (the "Maturity Date") and the principal amount of the Debentures will be repaid in cash only. The principal amount of each Debenture will be convertible into Common Shares at the option of the holder at a conversion price equal to $1.00. If the holder elects to convert the Debentures, then the holder will also receive an amount equal to the interest that the holder would have received if the holder had held the Debentures until the Maturity Date (the "Effective Interest"), payable in: (i) units (the "Interest Units") (or if the holder is a Non-Arm’s Length Party (as such term is defined in the policies of the TSXV), Common Shares) based on the daily volume weighted average trading price for the 20 trading days preceding the date of such election; (ii) cash; or (iii) a combination of cash and Interest Units (or Common Shares, as applicable), at the Company's option. For more details in respect of the securities issued under the Offering, and the underlying securities thereunder, please see the Company's press release issued on April 22, 2022.

Each Interest Unit will consist of one Common Share and one common share purchase warrant (each, an "Interest Warrant"). Each Interest Warrant entitles the holder thereof to acquire one Common Share at an exercise price equal to the daily volume weighted average trading price for the 20 trading days preceding the date of the conversion election, at any time up to five (5) years following the date of such election (subject to adjustments in certain customary events).

Each holder of Debentures may, at their option, elect to exchange the aggregate principal amount of such holder's Debentures for an equivalent aggregate principal amount of 15.0% non-convertible secured notes expiring on the Maturity Date (each, a "Secured Note") on a one for one basis at any time prior to the Maturity Date. Any accrued interest from the date of exchanging the Debentures into Secured Notes will be carried forward and be payable on the applicable interest payment date, together with the interest accruing from the Secured Notes beginning on the date of exchange.

The Offering remains subject to the final approval of the TSX Venture Exchange (the "TSXV"), however conditional approval has been obtained in respect of the Offering and the listing of the underlying Common Shares.

The Debentures and Secured Notes shall be secured by a security interest in the Company’s Stavely facility (the “Stavely Facility”) and shall be subordinate in priority and ranking to: (1) current senior indebtedness ("Existing Indebtedness") of the Company for amounts up to 70% Loan to Value against the Company’s Stavely Facility, including any additional credit extended pursuant to Existing Indebtedness, or the assignment, assumption, transfer or replacement of such Existing Indebtedness with any other form of credit arrangement ("Alternative Indebtedness") provided that: (A) the lender(s) in respect of such Alternative Indebtedness is a chartered Canadian or U.S. bank or a credit union formed under the Credit Union Act (Alberta) or similar legislation in any other province of Canada; and (B) Existing Indebtedness is paid out in full concurrent with the execution of a definitive credit agreement in respect of Alternative Indebtedness under which funds can be unconditionally drawn by the Company; (2) any capital equipment financing in respect of the HVAC, lighting and other equipment at the Stavely Facility; and (3) the outstanding principal amount of $138,000 convertible debentures of the Company issued in June 2020.

The Offering was made pursuant to a prospectus supplement (the "Supplement") to the Company's short form base shelf prospectus dated February 26, 2021 (the "Shelf Prospectus"), with the securities regulatory authorities in each of the provinces of Canada, except Quebec. Copies of the Shelf Prospectus and, the Supplement filed in connection with the Offering, can be found on SEDAR at The Shelf Prospectus, the Supplement and the documents incorporated by reference therein contain important detailed information about the Company and the Offering. Prospective investors should read the Supplement and accompanying Shelf Prospectus and the other documents the Company has filed on SEDAR at before making an investment decision.

About Sugarbud

"Hand-Crafted Cannabis for a New Era"

Sugarbud is a consumer-driven craft cannabis company focused on the cultivation and production of superior, select-batch, craft cannabis products. Our vision and mission are to become a trusted and well-respected consumer brand renowned for providing exceptional high-quality craft cannabis products to legal markets by delighting the most discerning of cannabis consumers.

The Sugarbud Craft Cannabis Collection offers consumers "Hand-Crafted Cannabis for a New Era". The Company is proudly Albertan and is proud to share Western Canada's long tradition of exceptional craft cannabis with the most discerning of enthusiasts. Sugarbud strives to define the intersection of product craftsmanship, quality, and value for consumers in the Canadian craft cannabis space.

Sugarbud Craft Cannabis products are currently available to adult recreational consumers in the Yukon Territory, British Columbia, Alberta, Saskatchewan, Manitoba, Ontario and nationally to registered medical patients through

We Take Pride.

We Take Our Time.

Experience The Difference.


John Kondrosky
Chief Executive Officer
Sugarbud Craft Growers Corp.
Phone: (604) 499-7847

Investor Relations Contact
Chris Moulson
Chief Financial Officer
Sugarbud Craft Growers Corp.
Tel: (778) 388-8700


Forward Looking and Cautionary Statements

This news release contains forward-looking statements. More particularly, and without limitation, this news release contains statements concerning: the Offering, including the receipt, in a timely manner, of regulatory and other required approvals and clearances, including the approval of the TSXV; the listing of the Common Shares issuable upon conversion of the Debentures or the exercise of the Warrants and Compensation Warrants on the TSXV; the use of the net proceeds of the Offering; and the business plan of the Company, generally.

When used in this document, the words "will," "anticipate," "believe," "estimate," "expect," "intent," "may," "project," "should," and similar expressions are intended to be among the statements that identify forward-looking statements. The forward-looking statements are founded on the basis of expectations and assumptions made by Sugarbud. Forward-looking statements are subject to a wide range of risks and uncertainties, and although Sugarbud believes that the expectations represented by such forward-looking statements are reasonable, there can be no assurance that such expectations will be realized. Any number of important factors could cause actual results to differ materially from those in the forward-looking statements including, but not limited to: currently contemplated expansion and development plans may cease or otherwise change; production of cannabis may be lower than expected; ability to ship cannabis products may be lower than expected; demand for Sugarbud's products may be lower than anticipated; results of production and sale activities; results of scientific research; changes in prices and costs of inputs; demand for labour; demand for products; failure of counter-parties to perform contractual obligations; failure to maintain consumer brand recognition and loyalty of customers; reliance on relationships with wholesalers and retailers for distribution of products and failure to maintain strategic business relationships; intense competition, including from illicit sources; uncertainty and continued evolution of markets; product liability litigation; reliance on information technology; infringement on intellectual property; failure to benefit from partnerships; sensitivity of end-customers to increased sales taxes and economic conditions; failure to comply with certain regulations; departure of key management personnel or inability to attract and retain talent; actions and initiatives of federal and provincial governments and changes to government actions, initiatives and policies and the execution and impact thereof; the ability to implement corporate strategies; the state of domestic capital markets; the ability to obtain financing; changes in general market conditions; industry conditions and events; the size of the medical marijuana market and the recreational marijuana market; government regulations, including future legislative and regulatory developments involving medical and recreational marijuana; construction delays; risks inherent in the agricultural business, such as insects, plant diseases and similar agricultural risks which can have a significant impact on the size and quality of the harvest of cannabis crops; competition from other industry participants; and other factors more fully described from time to time in the reports and filings made by Sugarbud with securities regulatory authorities. In addition, the Company cautions that current global uncertainty with respect to the spread of the COVID-19 virus, and variant strains of the virus, and its effect on the broader global economy may continue to have a significant negative effect on the Company. While the precise impact of the COVID-19 virus on the Company remain unknown, rapid spread of the COVID-19 virus may continue to have a material adverse effect on global economic activity, and can result in volatility and disruption to global supply chains, operations, mobility of people and the financial markets, which could affect interest rates, credit ratings, credit risk, inflation, business, financial conditions, results of operations and other factors relevant to the Company. Please refer to Sugarbud's most recent annual information form and management's discussion and analysis for additional risk factors relating to Sugarbud, which can be accessed under Sugarbud's profile on Except as required by applicable laws, Sugarbud does not undertake any obligation to publicly update or revise any forward-looking statements.

Neither the TSXV nor its regulation services provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

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