AIM2 and Canopy Rivers Enter Into Binding Letter of Intent to Complete Qualifying Transaction

TORONTO - AIM2 Ventures Inc. (TSXV: AIMB.P) ("AIM2") and Canopy Rivers Corporation ("Canopy Rivers") are pleased to announce that they have entered into a binding letter of intent dated May 30, 2018 (the "LOI"), which outlines the terms and conditions pursuant to which AIM2 and Canopy Rivers will complete a transaction that will result in a reverse take-over of AIM2 by Canopy Rivers (the "Proposed Transaction"). The Proposed Transaction will be an arm's length transaction, and, if completed, will constitute AIM2's "Qualifying Transaction" (as such term is defined in Policy 2.4 of the TSX Venture Exchange (the "TSXV")). 

In addition, Canopy Rivers is pleased to announce that it has entered into an engagement letter with CIBC Capital Markets ("CIBC") and GMP Securities L.P. ("GMP"), as jointbook runners and together with Eight Capital (collectively with CIBC and GMP, the "Co-Lead Agents") as co-lead agents, on behalf of a syndicate of agents (together with the Co-Lead Agents, the "Agents") pursuant to which Canopy Rivers proposes to issue and sell, on a private placement basis, subscription receipts (the "Subscription Receipts") at a price of $3.50 per Subscription Receipt (the "Issue Price") for aggregate gross proceeds of up to $60,000,000 (the "Offering"). Additional information with respect to the Offering is provided below under the heading "Canopy Rivers Financing".

Canopy Rivers

Canopy Rivers is an investment and operating platform structured to pursue opportunities in the emerging global cannabis sector. Canopy Rivers is managed by an experienced team of qualified financial and technical professionals with significant industry experience and relationship networks. Through its strategic partnership and cornerstone investment from TSX and NYSE-listed Canopy Growth Corporation ("Canopy Growth"), Canopy Rivers is able to identify strategic counterparties seeking financial and/or operational support to incorporate into its portfolio.

Canopy Rivers was incorporated under the Canada Business Corporations Act on April 26, 2017 and, to date, in collaboration with Canopy Growth, has quickly established a diversified portfolio of cannabis industry investments that includes licensed producers, late stage applicants, pharmaceutical formulators, branded developers & distributors, and technology & media platforms. Investments are customized for each counterparty and include a balanced mix of equity, debt, royalty and profit sharing agreements.

Canopy Rivers is supported by XIB Consulting Inc. ("XIB"), which provides business management and corporate development consultation services. XIB is a Toronto-based capital markets consulting and advisory firm with a specialization in the global cannabis sector founded by Sean McNulty and Peter Hatziioannou. With substantial mergers and acquisitions advisory, institutional equity sales, and event-driven hedge fund experience, Canopy Rivers leverages XIB's industry experience, robust relationship network and their internal support team comprised entirely of former finance professionals from both domestic and international investment banks.

AIM2 Ventures Inc.

AIM2 was incorporated under the Business Corporations Act (Ontario) on October 31, 2017 and is a Capital Pool Company (as defined in the policies of the TSXV) listed on the TSXV. AIM2 has no commercial operations and no assets other than cash.

Proposed Transaction Summary

The Proposed Transaction is expected to be structured as a three-cornered amalgamation, whereby a wholly-owned subsidiary of AIM2 will amalgamate with Canopy Rivers (the "Amalgamation") to form a newly amalgamated company ("Amalco"). Pursuant to the Amalgamation, holders of class B common shares of Canopy Rivers ("Canopy Rivers Subordinated Voting Shares") will receive one New AIM2 Subordinated Voting Share (as defined below) for each Canopy Rivers Subordinated Voting Share held and the class A common shares of Canopy Rivers (the "Canopy Rivers Multiple Voting Shares") held by Canopy Growth will be exchanged for one New AIM2 Multiple Voting Share (as defined below) for each Canopy Rivers Multiple Voting Share held. In addition, pursuant to the Amalgamation, each Canopy Rivers stock option and each Canopy Rivers warrant will be exchanged for an AIM2 stock option or AIM2 warrant, as applicable, on substantially the same terms and conditions, except that such securities will thereafter be exercisable to receive one New AIM2 Subordinated Voting Share.

In order to align the value of the AIM2 common shares with the value per Canopy Rivers Subordinated Voting Share at which the Proposed Transaction will be completed, it is anticipated that AIM2 will consolidate its common shares on the basis of one post-consolidation AIM2 common share (each, a "New AIM2 Subordinated Voting Share") for every 26.565 existing AIM2 common shares (the "Consolidation").

Upon completion of the Proposed Transaction, AIM2 will be the parent and sole shareholder of Amalco and thus will indirectly carry on the business of Canopy Rivers. As a result, AIM2 intends to change its name to "Canopy Rivers Inc." or such other name as is acceptable to the regulators (the "Name Change"). Further, it is proposed that the officers and directors of Canopy Rivers will replace the existing officers and directors of AIM2. Biographical information regarding these individuals is provided below under the heading "Officers and Directors".

In connection with the Proposed Transaction, it is intended that AIM2 will amend its articles to provide for the creation of a second class of common shares (the "New AIM2 Multiple Voting Shares") with identical attributes to the New AIM2 Subordinated Voting Shares, other than voting powers. Canopy Growth will be the sole holder of the New AIM2 Multiple Voting Shares.  Each New AIM2 Multiple Voting Shares shall entitle the holder thereof to 20 votes per share and the holders of the New AIM2 Subordinated Voting Shares will be entitled to one vote per share on all matters upon which holders of shares are entitled to vote (the "Dual Class Voting Structure").

The Proposed Transaction is subject to the parties successfully entering into a definitive agreement in respect of the Proposed Transaction (the "Definitive Agreement") on or before July 15, 2018, or such other date as Canopy Rivers and AIM2 may mutually agree. Completion of the Proposed Transaction is also subject to a number of other conditions, including obtaining all necessary board, shareholder and regulatory approvals, including TSXV approval.

In connection with the Proposed Transaction, AIM2 will convene a meeting of its shareholders for the purpose of approving, among other matters, the Consolidation, the Name Change, the Dual Class Voting Structure and the election of the directors to replace the current directors of AIM2 immediately following the completion of the Proposed Transaction. Canopy Rivers will convene a meeting of its shareholders for the purpose of approving the Amalgamation and the Proposed Transaction. The Proposed Transaction has been unanimously approved by the boards of directors of Canopy Rivers and AIM2 and both boards of directors recommend that their respective shareholders vote in favor of the Proposed Transaction and related matters.

As at the date of this news release, AIM2 has 9,600,000 common shares, 960,000 stock options and 500,000 broker warrants, each exercisable to acquire one AIM2 common share (on a pre-Consolidation basis). As at the date hereof, Canopy Rivers has the following securities issued and outstanding: 104,655,546 Canopy Rivers Subordinated Voting Shares, 36,468,318 Canopy Rivers Multiple Voting Shares, options to acquire 7,365,000 Canopy Rivers Subordinated Voting Shares and warrants to acquire 14,400,000 Canopy Rivers Subordinated Voting Shares. As at the date hereof, Canopy Growth, a control person of Canopy Rivers, owns 36,468,318 Canopy Rivers Multiple Voting Shares, being all of the outstanding Canopy Rivers Multiple Voting Shares, and 4,673,938 Canopy Rivers Subordinated Voting Shares, representing approximately 4.47% of the issued and outstanding Canopy Rivers Subordinated Voting Shares (on an non-diluted basis). Collectively, the Canopy Rivers Subordinated Voting Shares and the Canopy Rivers Multiple Voting Shares held by Canopy Growth represent approximately 29.15% of the issued and outstanding Canopy Rivers shares and approximately 88.01% of the votes attached to all of the issued and outstanding Canopy Rivers shares (on an non-diluted basis).

On completion of the Proposed Transaction (including the conversion of the Subscription Receipts) and assuming completion of the Consolidation, it is anticipated that there will be an aggregate of approximately 122,159,774 New AIM2 Subordinated Voting Shares and 36,468,318 New AIM2 Multiple Voting Shares issued and outstanding and additional securities convertible into or exercisable to acquire 21,819,959 New AIM2 Subordinated Voting Shares. On completion of the Proposed Transaction, (including the conversion of the Subscription Receipts) and assuming completion of the Consolidation, former shareholders of AIM2 will hold 361,371New AIM 2 Subordinated Voting Shares, representing 0.30% of the outstanding New AIM 2 Subordinated Voting Shares and former shareholders of Canopy Rivers will hold 121,798,403 New AIM 2 Subordinated Voting Shares, representing 99.70% of the outstanding New AIM 2 Subordinated Voting Shares (on an non-diluted basis). Canopy Growth will be the sole holder of the New AIM2 Multiple Voting Shares. After giving effect to the Transaction (including the conversion of the Subscription Receipts) and the assuming completion of the Consolidation, the New AIM2 Subordinated Voting Shares will collectively represent 0.23% of the total issued and outstanding shares of the resulting issuer and 0.04% of the votes attached to the issued and outstanding shares of the resulting issuer (on an non-diluted basis).

A joint management information circular of Canopy Rivers and AIM2 will be prepared and filed in accordance with the policies of the TSXV.

Officers and Directors

Subject to applicable shareholder and TSXV approval, it is anticipated that the officers and directors of the combined company will be:

Bruce Linton – Acting Chief Executive Officer, Chairman and Director

Mr. Linton is the founder, Chairman and Chief Executive Officer of TSX and NYSE-listed Canopy Growth and co-founder of Tweed Marijuana Incorporated. After beginning his career at Newbridge Networks Corporation, Mr. Linton has since held positions that include General Manager and Re-Founder of Computerland.ca, President and Co-Founder of webHancer Corp, and part of the establishing team at CrossKeys Systems Corporation. He was also part of the leadership team for the NASDAQ/TSX initial public offering at CrossKeys.

Eddie Lucarelli – Chief Financial Officer

Mr. Lucarelli was previously Vice President, Mergers & Acquisitions at TD Securities. His team provided sell-side and buy-side M&A advisory services to large and mid-cap Canadian companies. Mr. Lucarelli began his career at Deloitte LLP where he became a Senior Manager in the firm's Financial Advisory practice. He advised domestic and international clients across a variety of industries on business valuation matters for transaction, tax, audit, accounting, litigation and other purposes. Mr. Lucarelli holds a Bachelor of Commerce from the Smith School of Business at Queen's University. He is a Chartered Professional Accountant and a Chartered Business Valuator.

Olivier Dufourmantelle – Chief Operating Officer

Mr. Dufourmantelle was previously the Chief Operating Officer and Senior Vice President, Continuous Improvement and Strategic Expansion for Canopy Growth. Prior to joining Canopy Growth, Mr. Dufourmantelle worked in various leadership and consulting roles in Asia, Europe, and North America at Michelin Tires and McKinsey & Company. Mr. Dufourmantelle received a degree in Electrical Engineering at McGill University and an MBA from Harvard Business School.

John Bell – Director

Mr. Bell is Chairman of Onbelay Capital Inc., a Canadian based private equity company. From 1996 to 2005, Mr. Bell was Chief Executive Officer and owner of Polymer Technologies Inc., an automotive parts manufacturer. Prior to that, Mr. Bell was founder and owner of Shred-Tech Limited, a global manufacturer and supplier of industrial shredders and mobile document shredders. Mr. Bell is a director of Canopy Growth (TSX: WEED; NYSE: CGC), Strongco Corporation (TSX: SQP) and the Royal Canadian Mint (TSX: MNT). Mr. Bell is a graduate of Western University Ivey School of Business, a Fellow of the institute of Chartered Accountants of Ontario, a graduate of the Institute of Directors Program of Canada and the owner's president program at Harvard and International marketing program at Oxford.

Asha Daniere – Director

Ms. Daniere is Executive Vice-President, Legal & Business Affairs at Blue Ant Media, a multi-platform media company. Ms. Daniere was previously the Senior Vice President and General Counsel at Score Media Inc., a formerly publicly traded sports media company. Prior to her role at Score Media, Ms. Daniere was General Counsel at Fun Technologies Inc., an Internet start-up that previously traded on the TSX and on AIM. Ms. Daniere practiced law in the United States at White & Case LLP and as in-house counsel to The Topps Company, Inc. Ms. Daniere was called to the bar in both New York State and Ontario. She received her J.D. from Tulane Law School and her B.A. from the University of Toronto.

Richard Mavrinac – Director

Mr. Mavrinac served as the Chief Financial Officer of George Weston Limited and Executive Vice President of Loblaw Companies Limited from 2003 to 2007 and is the Chair of the Audit Committee for Canopy Rivers. In 1996, Mr. Mavrinac assumed the role of Senior Vice President, Finance for George Weston Limited and Loblaw Companies Limited. Mr. Mavrinac has a Bachelor of Commerce degree from the University of Toronto and is a Chartered Professional Accountant.

Joseph Mimran – Director

Mr. Mimran is best-know for creating a succession of visionary brands and retail concepts, including Club Monaco, Caban and Joe Fresh.  Mr. Mimran founded Club Monaco in 1985 and in 1999 was purchased by Polo, Ralph Lauren. In 2006, Mr. Mimran founded Joe Fresh a "fast fashion" concept he created for Loblaw's and retired from in 2014.  Currently he is Chairman of Gibraltar & Co Inc. a Toronto based private investment company as well as president of Joseph Mimran and Associates Inc a branding, product development, design and sourcing company. Mr. Mimran also starred on the popular CBC show, Dragons Den.

Sponsorship

The Proposed Transaction is subject to the sponsorship requirements of the TSXV, unless a waiver or exemption from this requirement can be obtained in accordance with the policies of the TSXV. AIM2 intends to apply for a waiver of the sponsorship requirement, however there is no assurance that a waiver from this requirement can or will be obtained.  

Trading in AIM2 Common Shares

Trading in AIM2 common shares has been halted in compliance with the policies of the TSXV. Trading in the AIM2 common shares will remain halted pending the review of the Proposed Transaction by the TSXV and satisfaction of the conditions of the TSXV for resumption of trading. It is likely that trading in the AIM2 common shares will not resume prior to the closing of the Proposed Transaction.

Canopy Rivers Financing

The Subscription Receipts to be sold pursuant to the Offering will be issued pursuant to a subscription receipt agreement (the "Subscription Receipt Agreement") to be entered into among Canopy Rivers, the Co-Lead Agents and an escrow agent (the "Escrow Agent"). Upon satisfaction of certain Escrow Release Conditions (as defined below), each Subscription Receipt will be automatically converted without any further consideration or action by the holder thereof into one Canopy Rivers Subordinated Voting Share.

The gross proceeds of the Offering, less 50% of the commission and all expenses of the Agents, together with all interest and other income earned thereon (the "Escrowed Funds") are to be held in escrow by the Escrow Agent pending satisfaction of the Escrow Release Conditions. Provided that the Escrow Release Conditions are satisfied within 120 days following the closing of the Offering (the "Escrow Release Deadline"), the Escrowed Funds will be released from escrow by the Escrow Agent to: (a) the Co-Lead Agents, on behalf of the Agents, in an amount equal to 50% of the Commission, together with any pro rata interest earned thereon; and (b) Canopy Rivers, in an amount equal to the Escrowed Funds, less the foregoing deduction.

If the Escrow Release Conditions have not been satisfied on or prior to the Escrow Release Deadline, the Escrowed Funds shall be returned to the holders of the Subscription Receipts on a pro rata basis and the Subscription Receipts shall thereafter be cancelled. If the Escrowed Funds are less than the aggregate Issue Price paid for the then issued and outstanding Subscription Receipts, Canopy Rivers will contribute such amount as is necessary to pay, in respect of each Subscription Receipt cancelled, an amount equal to the Issue Price per Subscription Receipt.

The escrow release conditions ("Escrow Release Conditions") will be as follows:

(a) all conditions precedent to the closing of the Proposed Transaction as included in the Definitive Agreement have been satisfied or waived, including, inter alia, the filing and acceptance by the TSXV of the disclosure document, to the satisfaction of the Agents, and the Definitive Agreement shall not have been terminated;

(b) the receipt of all required shareholder and regulatory approvals, as applicable, for the Proposed Transaction and the Offering, to the satisfaction of the Agents;

(c) receipt of conditional approval by the TSXV for the listing of the New AIM2 Subordinated Voting Shares, including any such New AIM2 Subordinated Voting Shares issuable upon the conversion of the securities of Canopy Rivers issuable pursuant to the Offering;

(d) Canopy Rivers shall have not committed any breach of the agency agreement to be entered into between Canopy Rivers and the Agents in connection with the Offering, that has not been waived by the Agents or cured within five days of Canopy Rivers' receipt of written notice from the Agents specifying in reasonable detail the nature of such breach;

(e) the New AIM2 Subordinated Voting Shares being exempt from applicable prospectus and registration requirements of applicable securities laws and not subject to any statutory hold or restricted period; and

(f) Canopy Rivers having delivered a notice to the Escrow Agent confirming that the conditions set forth in (a) through (e) above have been met or waived.

Immediately prior to the effective time of the Proposed Transaction, upon satisfaction of the Escrow Release Conditions, the Subscription Receipts shall be automatically converted into Canopy Rivers Subordinated Voting Shares in accordance with the terms of the Subscription Receipt Agreement. Pursuant to the Amalgamation, holders of each Canopy Rivers Subordinated Voting Share will receive one New AIM2 Subordinated Voting Share for each one Canopy Rivers Subordinated Voting Share held.

The Offering is expected to close on or about July 5, 2018.

This news release does not constitute an offer of securities for sale in the United States. The securities being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and such securities may not be offered or sold within the United States absent U.S. registration or an applicable exemption from U.S. registration requirements.

Canopy Rivers is represented by Cassels Brock & Blackwell LLP. Dentons Canada LLP acts as legal counsel to AIM2 and Davies Ward Phillips & Vineberg LLP acts as legal counsel to the Agents.

A subsequent news release with respect to the closing of the Offering and including a summary of certain significant financial information with respect to Canopy Rivers will follow in due course.

Forward-Looking Information

This press release contains statements which constitute "forward-looking information" within the meaning of applicable securities laws, including statements regarding the plans, intentions, beliefs and current expectations of AIM2 and Canopy Rivers with respect to future business activities and operating performance. Forward-looking information is often identified by the words "may", "would", "could", "should", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect" or similar expressions and includes information regarding: (i) expectations regarding whether the Proposed Transaction will be consummated, including whether conditions to the consummation of the Proposed Transaction will be satisfied, or the timing for completing the Proposed Transaction, (ii) the timing for closing and pricing of the Offering, and (iii) expectations for other economic, business, and/or competitive factors.

Investors are cautioned that forward-looking information is not based on historical facts but instead reflect AIM2 and Canopy Rivers' respective management's expectations, estimates or projections concerning future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Although AIM2 and Canopy Rivers believe that the expectations reflected in such forward-looking information are reasonable, such information involves risks and uncertainties, and undue reliance should not be placed on such information, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of the combined company. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking information are the following: the ability to consummate the Proposed Transaction; the ability to obtain requisite regulatory and shareholder approvals and the satisfaction of other conditions to the consummation of the Proposed Transaction on the proposed terms and schedule; the potential impact of the announcement or consummation of the Proposed Transaction on relationships, including with regulatory bodies, employees, suppliers, customers and competitors; the re-rating potential following the consummation of the Proposed Transaction; changes in general economic, business and political conditions, including changes in the financial markets; changes in applicable laws, including the approval and implementation of the Cannabis Act; compliance with extensive government regulation; and the diversion of management time on the Proposed Transaction. This forward-looking information may be affected by risks and uncertainties in the business of AIM2 and Canopy Rivers and market conditions.

Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although AIM2 and Canopy Rivers have attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended. AIM2 and Canopy Rivers do not intend, and do not assume any obligation, to update this forward-looking information except as otherwise required by applicable law.

Completion of the Proposed Transaction is subject to a number of conditions, including but not limited to TSXV acceptance and, if applicable pursuant to TSXV requirements, majority of the minority shareholder approval. Where applicable, the Proposed Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Proposed Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the joint management information circular of AIM2 and Canopy Rivers to be prepared in connection with the Proposed Transaction, any information released or received with respect to the Proposed Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of AIM2 should be considered highly speculative.

The TSXV has in no way passed upon the merits of the Proposed Transaction and has not approved or disapproved of the contents of this news release.

Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

SOURCE: AIM2 Ventures Inc.

For further information:
Karoline Hunter
Sr. Director, Investor Relations & Communications
E-mail: ir@canopyrivers.com