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Aleafia Health Announces $35 Million Public Offering of 8.5% Convertible Debenture Units

Ryan Allway

June 9th, 2019

News

TORONTO, June 06, 2019 (GLOBE NEWSWIRE) — Aleafia Health Inc. (“Aleafia Health” or the “Company”) (TSX: ALEF) (OTC: ALEAF) (FRA:ARAH) is pleased to report that its offering, previously announced on June 5, 2019, (the “Offering”) will be for an offering size of $35,000,000. The Offering will be conducted on an agency basis for the issuance of 35,000 convertible debenture units of the Company (the “Convertible Debenture Units”) at a price of $1,000 per Convertible Debenture Unit (the “Offering Price”). The Offering is being led by Mackie Research Capital Corporation and BMO Capital Markets (collectively, the “Lead Agents”), on behalf of a syndicate of agents including Canaccord Genuity Corp. (together with the Lead Agents, the “Agents”).

The Company will also grant the Agents an option (the “Over-Allotment Option”) to cover over-allotments and for market stabilization purposes, exercisable at any time up to 30 days subsequent to the closing of the Offering, to increase the size of the Offering by up to 15% in Convertible Debenture (and/or the components thereof) on the same terms and conditions of the Offering, exercisable in whole or in part.

Each Convertible Debenture Unit will consist of one 8.5% unsecured convertible debenture (the “Convertible Debentures“) and 680 common share purchase warrants of the Company (the “Warrants“). Each Warrant shall entitle the holder thereof to purchase one common share in the capital of the Company at an exercise price of $1.55 (the “Exercise Price”) at any time up to 36 months following Closing of the Offering. Provided that if, at any time prior to the expiry date of the Warrants, the volume weighted average trading price of the Common Shares on the TSX is greater than $3.10 for 20 consecutive trading days, the Company may, within 15 days of the occurrence of such event, deliver a notice to the holders of Warrants accelerating the expiry date of the Warrants to the date that is 30 days following the date of such notice (the “Accelerated Exercise Period”). Any unexercised Warrants shall automatically expire at the end of the Accelerated Exercise Period.

The Convertible Debentures shall bear interest at a rate of 8.5% per annum from the date of issue, payable semi-annually in arrears on the last day of June and December in each year and will have a maturity 36 months from the date of issuance (the “Maturity Date”). The principal amount of each Convertible Debenture (the “Principal Amount”) shall be convertible, for no additional consideration, into common shares of the Company (“Common Shares”) at the option of the holder at any time prior to the earlier of: (i) the close of business on the Maturity Date, and (ii) the business day immediately preceding the date specified by the Company for redemption of the Convertible Debentures upon a change of control at a conversion price equal to $1.47 (the “Conversion Price”).

The net proceeds received by Aleafia Health from the Offering are intended to be used for working capital requirement and other general corporate purposes.

Aleafia Health will use commercially reasonable efforts to obtain the necessary approvals to list the Convertible Debentures, Warrants, and the Common Shares issuable upon conversion of the Convertible Debentures on the TSX.

Upon a change of control of the Company, holders of the Convertible Debentures will have the right to require the Company to repurchase their Convertible Debentures, in whole or in part, on the date that is 30 days following the giving of notice of the change of Control, at a price equal to 104% of the principal amount of the Convertible Debentures then outstanding plus accrued and unpaid interest thereon (the “Offer Price”). If 90% or more of the principal amount of the Convertible Debentures outstanding on the date of the notice of the change of Control have been tendered for redemption, the Company will have the right to redeem all of the remaining Convertible Debentures at the Offer Price.

The Offering is being made pursuant to a short-form prospectus filed in each of the provinces of Canada (except Québec), and otherwise by private placement exemption in those jurisdictions where the Offering can lawfully be made, including the United States and Europe.  The Convertible Debenture Units (and the Convertible Debentures and the Warrants forming part of the Convertible Debenture Units) have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or any state securities laws, and may not be offered or sold in the United States, to or for the account or benefit of, persons in the United States or U.S. Persons (as defined in Regulation S under the U.S. Securities Act) absent registration or an applicable exemption from the registration requirements of the U.S. Securities Act and in accordance with applicable state securities laws. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Convertible Debenture Units in any jurisdiction in which such offer, solicitation or sale would be unlawful.

The Company will file an amended and restated preliminary short form prospectus in respect of the Offering later today.

The closing of the Offering is currently expected to be on or about June 26, 2019 and is subject to certain conditions including, but not limited to the execution of an agency agreement and the receipt of all necessary regulatory approvals including the approval of the Toronto Stock Exchange (the “TSX”).

For Investor and Media Relations, please contact:

Nicholas Bergamini, VP, Public Affairs
416-860-5665
IR@AleafiaHealth.com
LEARN MORE: www.AleafiaHealth.com

About Aleafia Health:

Aleafia Health is a leading, vertically integrated cannabis health and wellness company with four primary business units: Cannabis Cultivation & Products, Health & Wellness Clinics, Cannabis Education, and Consumer Experience with ecommerce, retail distribution and provincial supply agreements.

Aleafia Health owns three major cannabis product & cultivation facilities, two of which are licensed and operational. Aleafia Health produces a diverse portfolio of commercially proven, high-margin derivative products including oils, capsules and sprays. Aleafia Health operates the largest national network of medical cannabis clinics and education centres staffed by MDs, nurse practitioners and educators.

Aleafia Health maintains a medical cannabis dataset with over 10 million data points to inform proprietary illness specific product development and treatment best practices. Aleafia Health is committed to creating sustainable shareholder value and was named the 2018 top performing company of the year by the TSX Venture Exchange, prior to its listing on the TSX in March 2019.

Forward Looking Information

This news release contains forward-looking information within the meaning of applicable Canadian and United States securities laws. Often, but not always, forward-looking information can be identified by the use of words such as “plans”, “expects” or “does not expect”, “is expected”, “estimates”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. Forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Aleafia Health or its subsidiaries to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information contained in this news release. Examples of such statements include statements with respect to the proposed nature of the Offering, the use of the net proceeds, anticipated receipt of regulatory approvals and the expected date of closing. Risks, uncertainties and other factors involved with forward-looking information could cause actual events, results, performance, prospects and opportunities to differ materially from those expressed or implied by such forward-looking information, including risks contained in the short-form prospectus filed in respect of the Offering and the documents incorporated by reference therein. Although Aleafia Health believes that the assumptions and factors used in preparing the forward-looking information in this news release are reasonable, undue reliance should not be placed on such information and no assurance can be given that such events will occur in the disclosed time frames or at all. The forward-looking information included in this news release are made as of the date of this news release and Aleafia Health does not undertake an obligation to publicly update such forward-looking information to reflect new information, subsequent events or otherwise unless required by applicable securities legislation.

This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.

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