EDMONTON, Alberta, Feb. 16, 2021 (GLOBE NEWSWIRE) — Alcanna Inc. (the “Company” or “Alcanna”) (TSX: CLIQ) today reported that it has agreed to sell nineteen (19) convenience-format liquor stores in British Columbia to Otter Farm and Home Co-operative (“Otter Co-op”) based in Langley, BC.
Effective February 15, 2021, Alcanna and Otter Co-op entered into an asset purchase agreement (the “Agreement”), which is binding on both parties subject to customary conditions and consents, and the completion of Otter Co-op’s financing arrangements. The total purchase price is $80.8 million, inclusive of inventory and other assets, and is subject to standard post-closing adjustments (the “Transaction”). Closing costs for the Transaction are estimated to be approximately $0.3 million. These nineteen (19) stores contributed approximately $6.9 million to Alcanna’s profit before impairment and income taxes in 2019 after adjusting for directly attributable corporate overhead and depreciation. In addition to the cash proceeds, the Transaction frees Alcanna from approximately $6.0 million in capital renovations that these stores were scheduled for over the next several years.
Alcanna retains the right to build and open its large-format Wine and Beyond stores in British Columbia including one in Kelowna which is scheduled to open in the third quarter of 2021.
On closing, the proceeds from the Transaction will be used by Alcanna for investment in its Canadian liquor retail businesses, particularly growth of the Wine and Beyond banner in Alberta and British Columbia, debt reduction and for general corporate purposes.
“This transaction provides Alcanna with balance sheet strength unprecedented in our Company’s history,” said James Burns, Vice Chair and CEO of Alcanna. “Alcanna’s board and management will be reviewing strategic options that this transaction provides over the coming months.”
“There has been a provincial government moratorium on new licenses for private liquor retailers in British Columbia since 2002. However, that moratorium expires in June of 2022 with no indication as yet as to what future direction the government might choose to take,” continued Mr. Burns. “As a local-based organization with over 60,000 members and growing, Otter Co-op is extremely well positioned to adapt to any potential changes given the tremendous consumer loyalty Otter Co-op has established with its members.”
The Transaction is expected to close on or about March 31, 2021.
ABOUT ALCANNA INC.
Alcanna is one of the largest private sector retailers of alcohol and cannabis in North America and is the largest alcohol retailer in Canada by number of stores – operating 197 alcohol retail stores in Alberta and British Columbia, and 34 cannabis retail stores in Alberta and Ontario.
Alcanna’s common shares and convertible subordinated debentures trade on the Toronto Stock Exchange under the symbols “CLIQ” and “CLIQ.DB”, respectively.
This news release contains forward-looking statements or information (collectively “forward-looking statements“) within the meaning of applicable securities legislation. Forward-looking statements are typically identified by words such as “continue”, “anticipate”, “will”, “should”, “plan”, “intention”, and similar words suggesting future events or future performance. All statements and information other than statements of historical fact contained in this news release are forward-looking statements. In particular, this news release contains forward-looking statements in respect of the Transaction: the cash proceeds of the Transaction, including price adjustments; the satisfaction of all conditions to closing; the receipt of all necessary consents; closing costs; the use of proceeds; and the anticipated closing date.
With respect to forward-looking statements contained in this news release, the Company has made assumptions regarding, among other things: the ability of management to execute the Company’s strategic plan and growth strategy, including its capital allocation strategy and growth plans for its Wine and Beyond retail store network.
Although the Company believes that the expectations reflected in the forward-looking statements, and the assumptions on which such forward-looking statements are made, are reasonable, especially given the unprecedented uncertainty of the full extent and impact of COVID-19, there can be no assurance that such expectations and assumptions will prove to be correct. Readers should not place undue reliance on forward-looking statements included in this news release. Forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties that may cause actual performance and financial results to differ materially from any estimates, forecasts or projections. These risks and uncertainties include, among other things, the duration and severity of the COVID-19 pandemic on the business, operations and financial condition of the Company; the risk that Alcanna will be unable to execute its strategic plan and growth strategy, including the capital allocation, as planned without significant adverse impacts from various factors beyond its control; dependence on suppliers; potential delays or changes in plans with respect to capital expenditures and the availability of capital on acceptable terms; risks inherent in the liquor retail industries; competition for, among other things, customers, supply, capital and skilled personnel; changes in labour costs and markets; incorrect assessments of the value of acquisitions; general economic and political conditions in Canada (including Alberta), and globally; industry conditions, including changes in government regulations; fluctuations in foreign exchange or interest rates; unanticipated operating events; failure to obtain regulatory and third‐party consents and approvals when required; changes in tax and other laws that affect us and our security holders; the potential failure of counterparties to honour their contractual obligations; stock market volatility; and the other factors described in the Company’s public filings (including the Annual Information Form) available at www.sedar.com. Readers are cautioned that this list of risk factors should not be construed as exhaustive.
The forward-looking statements contained in this news release are made as of the date hereof. Except as expressly required by applicable securities legislation, Alcanna does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement.
For Further Information
Vice Chair and Chief Executive Officer