Montreal, Canada – On Friday January 26, LGC Capital, a Canadian incorporated public company announced that it had signed a Letter of Intent with the rapidly-developing Jamaican cannabis company Global Canna Labs Limited (“Global Canna Labs”) for a strategic investment in the Jamaican cannabis market as part of their ongoing international expansion.
The Letter of Intent with Global Canna Labs and one of its major shareholders provides that LGC will subscribe for a $2.5 million secured debenture, convertible into an initial 30% strategic interest in Global Canna Labs, and will also acquire a 5% royalty on Global Canna Labs’ net sales for $2 million, payable in shares of LGC.
This exciting transaction with Global Canna Labs will not only extend our global reach within the legalized cannabis industry, it will increase LGC’s investment footprint into the lucrative Caribbean Region. We believe that our investment will assist Global Canna Labs in achieving almost immediate production. The potential square footage, scale and expandability of this operation is significant and we look forward to working closely with Global Canna Labs and its highly-experienced team to build something quite special in Jamaica. –John McMullen, CEO of LGC
The Letter of Intent provides that LGC will carry out an accelerated due diligence review, to be completed by February 15, 2018, and that upon successful completion of due diligence, the parties will enter into definitive agreements by February 25, 2018.
According to the release, the Debenture will have a four-year term carry interest at an annual rate of 7%, and be secured by the assets of Global Canna Labs. The Debenture will be convertible into common shares and a Canadian affiliate will be formed so as to comply with Jamaican foreign ownership rules, corresponding to a 30% ownership interest in Global Canna Labs. The Debenture will be converted immediately prior to any liquidity event.
Today is a very significant day for the medical cannabis industry in Jamaica, with LGC today showing its strong financial commitment to jointly building a strong Jamaican brand in-country and on the world stage. Jamaica has for a long time been very well positioned to become a leader in the medical cannabis industry. –Paul Glavine, Global Canna Labs CEO
Global Canna Labs is a Jamaican entity with its head office located in Kingston, Jamaica, with operations based in Montego Bay, with plans to become one of the leading cultivators and processors in Jamaica of cannabis for medical and recreational purposes. Target production is expected to total 1,876 kg in 2018 and rising quickly to 7,741 kg annually by 2021.
Closing of the transaction with Global Canna Labs is subject to the parties entering into definitive agreements and to standard closing conditions. The transaction is subject to regulatory approval, including that of the TSX Venture Exchange.
For more information about the deal, read the full press release here.