GBHPF - Global Hemp Group Signs Binding Agreement to Acquire Control over Strategic Water Infrastructure Assets in Colorado
(TheNewswire)
Vancouver, BC - TheNewswire - January 18, 2021 - GLOBAL HEMP GROUP INC. (“GHG” or the“Company”) (CSE:GHG ) / (CNSX:GHG.CN) / ( OTC:GBHPF ) / ( FRANKFURT:GHG) ispleased to announce that it has signed a binding Letter of Intent withPrescient Strategies Group LLC (“PSG”) to acquire its WesternSierra Resource Corporation (“WSRC”) Preferred A Class Shareholdings (“WSRC Prefs”) in a private, third party transaction. Theresulting acquisition of these WSRC Prefs will give GHG control overWSRC, and specifically its strategic water infrastructure assets thatwill be an integral part of the Company’s Colorado Hemp-AgroIndustrial Zone project as originally announced on September 16, 2020.The parties have agreed to develop the project through Innovative Hemp Technologies -a wholly owned GHG U.S. subsidiary. The resulting alignmentof GHG, WSRC and their respective management teams together under oneumbrella will result in a stronger and more focused and efficiententity.
As part of the contemplated transaction, GHG is in theprocess of commissioning updated appraisals on these water assets.Documented historical valuations of the 4,000 acre feet of waterrights and associated infrastructure are based on a 2013 and 2015 MAIappraisal and engineering reports, as well as a water lawattorney’s comprehensive summary of various historic water rightsappraisals and their relationship with land values dated March 2017.All of which support a value of US$40,000,000 or higher. GHG intendsto conduct a third party valuation of this initial assessment value tosupport such appraisal.
Transaction Details:
Prescient Strategies Group LLC currently holds19,875,000 Series A WSRC Prefs (with Voting Rights of 100 votes pershare). On signing of the Definitive Agreement, which is expected tobe concluded on or about January 25, 2021, GHG will acquire 11,006,440unencumbered WSRC Prefs from PSG for 11,006,400 GHG Preferred B shares(“GHG Prefs”) (the “Initial Issuance”), as more fully outlinedbelow.
An additional 8,868,560 WSRC Prefs have been pledged ascollateral to secure US$3,842,269 loans to WSRC (the “Loan”). These encumbered WSRC Prefs will also be acquired by GHG upon therestructuring WSRC’s existing debt (the “ WSRC Debt”) by way of,but not limited to, the consolidation, refinance or extension of theexisting WSRC Debt (the “WSRC Debt Restructuring”). Further to theWSRC Debt Restructuring, the WSRC Debt will have a maturity of aminimum of three (3) years, with the objective of replacing existingnotes and releasing the WSRC Prefs as collateral.
As part of the contemplated transaction, GHG will issue10,000,000 common share purchase warrants to PSG (the “GHGWarrants”). The GHG Warrants will be exercisable for a period offive (5) years at a price per GHG Warrants of CAD$0.05 pershare.
GHG Pref Details:
The GHG Prefs shall have a par value of US$0.50 perpreferred share and a maturity date of ten (10) years following theirissuance. The GHG Prefs will be non-voting, will pay an annualdividend of US$0.01 per share, paid in cash or shares at the option ofthe holder, and will be convertible into two (2) common shares ofGHG for every GHG Pref held by each holder thereof.
The GHG Prefs will be secured by the WSRC Prefs. TheGHG Prefs are redeemable by GHG at face value plus any accrued andunpaid dividends any time after the refinancing of the WSRC Debt andthe term of the WSRC Debt has been extended to a period of at leastthree (3) years.
Should PSG decide to sell its GHG Prefs in a privatethird party transaction, GHG will be granted a thirty day Right ofFirst Refusal (the ‘’GHG ROFR’’) to match any bona fide offer by athird-party, before PSG can act on such third-party offer.
Conditions Precedent to signing the DefinitiveAgreement:
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- The Parties completing final due diligence on orbefore January 25, 2021;
- WSRC restructuring certain unsecured debt prior tothe issuance of the GHG Prefs;
- GHG committing to provide the necessary initialpayments to complete the transaction and other DebtRestructuring.
Upon completion of the acquisition of all WSRC Prefs,GHG will nominate additional WSRC board members and advisors asrequired, the whole subject to nomination procedures of WSRC.
Throughout this entire process, GHG will work closelywith and provide support to the management of WSRC in order tomaximize the value of WSRC’s assets.
As soon as practicable each party shall provide allnecessary information and documentation to permit an application tothe Canadian Securities Exchange (the “CSE”) for approval of theTransaction, if required.
Curt Huber, President of GHG stated, “This is aproject that we have envisioned for a number of years. Sustainablegreen construction is an important cornerstone of this vision. Byaligning all parties under one umbrella and with the water assetsserving as a foundation, we will be able to move forward morerapidly and efficiently towards building what we expect will besignificant shareholder value”.
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Global Hemp Group Inc.(CSE: GHG / OTC: GBHPF / FRANKFURT: GHG), is focused on a multi-phasedstrategy to build a strong presence in the industrial hemp industrythe United States. The Company is headquartered in Vancouver, BritishColumbia, with hemp cultivation operations in the state of Oregon. Thefirst phase of this strategy is to develop hemp cultivation forextraction of cannabinoids and the smokable CBG flower market with theobjective of creating a near term revenue stream. The second phase ofthe strategy focuses on the development of value-added industrial hempproducts utilizing the processing of the entirety of the hemp plant,as envisioned in the recently announced Colorado HempAgro-Industrial Zone (HAIZ) project.Global Hemp’s Research and Development Division headed by Prof. Víctor M.Castaño, Ph.D . Prof. Castaño, arecognized leader in several areas of applied science and technologybrings an amazing wealth of knowledge and experience in a number ofdifferent disciplines. There are three immediate areas of interestthat Prof. Castaño and his team will actively be focused on todevelop Intellectual Property that can be patented and implemented inthe hemp and/or building industry, and in particular at Company’snewly announced Colorado Hemp Agro-Industrial Zone.
For FurtherInformation Contact Global Hemp Group
Tel:424-354-2998
Cautionary NoteRegarding Forward Looking Statements
Certain information set forth inthis news release may contain forward-looking statements that involve substantial known andunknown risks and uncertainties. These forward-looking statements aresubject to numerous risks and uncertainties, certain of which are beyond the control of GlobalHemp Group Inc., including, but not limited to the impact of general economic conditions, industryconditions, volatility of commodity prices, currency fluctuations,dependence upon regulatory approvals, the availability of futurefinancing and exploration risk, the legality of cannabis and hemp.Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable atthe time of preparation, may prove to be imprecise and, as such, undue reliance should not beplaced on forward-looking statements. Except as required by law, Global HempGroup Inc. disclaims any intention and assumes no obligation to updateor revise any forward looking statements to reflect actual results,whether as a result of new information, future events, changes inassumptions, changes in factors affecting such forward lookingstatements or otherwise.
The CSE has not reviewed and doesnot accept responsibility for the adequacy or accuracy of thisrelease.
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