Canada Stock Exchange halts trading until shareholders approve CAD$43.29-million transaction

Durrant Pate/Contributor

Canadian wellness company Silo Wellness is acquiring Jamaica’s Kaya Group, which is deeply involved in the island’s medical marijuana industry.

Silo has confirmed its intention to acquire all of the issued and outstanding securities of Kaya in a transaction valued at CAD$43.29 million. This is subject to the terms and conditions set forth in the binding Letter of Intent executed on August 28, 2023 in an arms-length transaction.

Under the deal, Silo will acquire 100 per cent of the issued and outstanding shares of Kaya in exchange for 2.01 billion shares from treasury (all shares herein are pre-consolidation), for a purchase price of CAD$40.2 million. Kaya’s shares are valued at CAD$0.0461 and Silo shares valued at CAD$0.02.

As a result of the transaction, the Canadian Stock Exchange (CSE) has put a halt on trading of Silo shares, until shareholders meet to decide on the purchase of Kaya, due to the size of the transaction, the change of control, and the definition of fundamental change under the rules.

The effective time of the transaction will result in the listing of the shares of the combined company on the CSE. The CSE is likely to keep the stock halted until such shareholders’ decision.

Terms of the Transaction

·       Silo shall hold an annual and general special shareholders meeting to obtain approval for the acquisition of Kaya to elect a new board that would result in a change of control of the resulting issuer, and for a potential share consolidation and potential name change.

·       Kaya stock options, warrants, and other convertible securities will be adjusted to receive Silo common shares on an economically equivalent basis.

·       Silo Wellness will issue common shares in a best-efforts private placement financing to raise gross proceeds of CAD$250,000 to CAD$2 million at CAD two cents per share to validate the purchase price and cover costs to close the transaction, as well as provide additional capital for strategic growth post-merger.

·       Finder’s fee of 3 per cent of the transaction shall be paid to Kaya board member Benjamin Kaplan and 3% to Silo CEO, Mike Arnold for a total of 64,934,437 shares issued each.

·       The final structure of the transaction is subject to receipt of final tax, corporate, and securities law advice and securities regulatory and CSE approval for both Silo and Kaya.

·       Audited financial information about Kaya will be provided to shareholders prior to the special shareholders meeting to vote on this acquisition. This information will also be included in the press release announcing the signing of the definitive agreement.

Details about both companies

Silo Wellness Inc., founded in Oregon and a leader in psilocybin wellness retreats, and is the state’s only publicly traded company actively providing psilocybin experiences to clients. The company’s retreats, currently set in the breathtaking landscapes of Jamaica with expansion plans in Oregon, facilitate personal healing journeys.

Oregon trial lawyer and entrepreneur Mike Arnold founded Silo Wellness in 2018, while Kaya is a leader in Jamaica’s fast-growing hospitality and tourism industry through its three Kaya Herb House retail locations and Gap Café wellness centre. Kaya Herb House Drax Hall near Ocho Rios is Jamaica’s first legal medical marijuana dispensary and the company’s flagship retail complex.

It is also the base for Kaya’s cultivation and processing operations. Kaya recently opened the first phase of its wellness centre at The Gap Café, located in the pristine hills of the Jamaican Blue Mountains. Kaya offers tours of Kaya Farm at its Drax Hall location, with more than 45 different genetics being cultivated and processed.