Marchwell Ventures Ltd. and Santé Veritas Therapeutics Inc. enter into definitive agreement to complete reverse take-over

Vancouver, BC – January 29, 2018: Marchwell Ventures Ltd. (“Marchwell”) (NEX:MVE.H) and Santé Veritas Therapeutics Inc. (“SVT”) are pleased to announce that they have entered into a definitive business combination agreement (the “Amalgamation Agreement”) whereby Marchwell will combine with SVT to create a medical and adult use cannabis cultivation company (the “Transaction”).

Santé Veritas Therapeutics Inc.

SVT is a privately-held corporation incorporated in British Columbia in 2012 for the purpose of obtaining a licence under the Access to Cannabis for Medical Purposes Regulations (the “ACMPR”) and to thereafter operate as a medical cannabis cultivation company. Health Canada has recently issued SVT a “confirmation of readiness” for a licence under the ACMPR.

SVT is currently constructing its cultivation facilities in Powell River, British Columbia, on a site that was formerly a paper mill. SVT anticipates receipt of Licensed Producer status, permitting it to begin cultivation, in February 2018. On December 19, 2017, SVT completed a private placement of common shares for gross proceeds of approximately $16 million (the “Private Placement”) to fund construction of its facilities. 

All information provided in this press release related to SVT has been provided by management of SVT and has not been independently verified by management of Marchwell.

The Transaction

Pursuant to the terms of the Amalgamation Agreement:

  • Marchwell will consolidate (the “Consolidation”) its outstanding shares on a three into one basis; and
  • Marchwell will acquire all of the issued and outstanding shares of SVT pursuant to a three-cornered amalgamation whereby 1148607 Inc. (“Marchwell Subco”), a wholly-owned subsidiary of Marchwell, and SVT will amalgamate (the “Amalgamation”) to form a newly amalgamated company (“Amalco”), and upon the Amalgamation, former shareholders of SVT (“SVT Shareholders”) will receive one New Marchwell Share (as defined below) for each one SVT Share held and Amalco will become a wholly-owned subsidiary of Marchwell.

There are currently 23,438,433 Marchwell common shares issued and outstanding. On closing, there will be approximately 245 million SVT common shares outstanding. As a result of the Transaction, Marchwell expects to have approximately 253 million issued and outstanding common shares on an undiluted basis. Approximately 3% of those shares will be held by shareholders of Marchwell and 97% will be held by former shareholders of SVT. The shares held by new “principals” of Marchwell will be subject to such escrow requirements as may be imposed by the securities regulatory authorities.

Upon completion of the Amalgamation, Marchwell will be the parent and the sole shareholder of Amalco and thus will indirectly carry on the business of SVT. As a result, Marchwell intends to change its name to “Santé Veritas Holdings Inc.” or such other name as is acceptable to the regulators (the “Name Change”). Further, it is proposed that the management and Board of Directors of Marchwell be changed to consist of persons that have experience in the new business to be undertaken by the combined company. Biographical information regarding proposed management and directors of the combined company is provided below under the heading “Management Team and Board of Directors”

In connection with the Transaction, Marchwell will be seeking shareholder approval of the Transaction and the de-listing from the TSX Venture Exchange ("TSXV") and SVT will be seeking shareholder approval with respect to the Amalgamation. The Transaction has been unanimously approved by the Boards of Directors of SVT and Marchwell and both Boards of Directors recommend that their respective shareholders vote in favour of the Transaction and related matters.

The Transaction is subject to a number of conditions, including receipt of shareholder and regulatory approval, including approvals of the TSXV and the Canadian Securities Exchange (“CSE”). The Transaction will be carried out by parties dealing at arm's length to one another and therefore will not be considered to be a non-arm's-length transaction.

Change in Management

Following completion of the Transaction the management and board of Marchwell will resign and a new board will be appointed.

It is anticipated that the new board of directors and senior management of Marchwell after the completion of the Transaction will be:

Michael Orr  – Executive Chairman

Mr. Orr is a former Managing Director at First Marathon Securities. He has also founded and grown several successful companies.

John Walker – Chief Executive Officer, Director

Mr. Walker has spent over 25 years working in increasingly senior roles at Fortune 500 companies, including PepsiCo and Yum Brands, both in Canada and internationally.

Mark Herron – Chief Financial Officer

Mr. Herron is a CPA, CA with over 35 years experience in financial services, banking, marketing and healthcare.  Recently, he was the COO of Sunnybrook Hospital University of Toronto Clinic and an Audit and Tax Partner at Grant Thornton. Mr. Herron is a member of the Institute of Corporate Directors.

Perry Miele  – Director

Mr. Miele is Chairman and partner of Beringer Capital, a fund investing in emerging marketing services companies. Mr. Miele has over 25 years of experience building and growing companies in North America and Internationally. He is also a director of Andrew Peller Wines, a TSX listed company.

Additional independent directors are expected to be added prior to the closing of the Transaction.

Intention to De-List from the TSXV and to Seek Listing on the CSE

Marchwell intends to take steps to de-list from the TSXV prior to the completion of the Transaction. De-listing is subject to TSXV approval.

As part of the Transaction, Marchwell intends to apply to list ("Listing") its common shares on the CSE. Listing is subject to CSE approval and meeting listing requirements. Marchwell is in the process of preparing the requisite documents for submission to the CSE and will seek written consent to the Transaction and the Listing from the majority of shareholders. There is no assurance that the CSE will provide conditional or final approval of Marchwell's application for Listing.

Timing of the Transaction

Full details of the Transaction will be included in the management information circular of SVT which is expected to be mailed to its shareholders in February 2018. It is anticipated that the meeting of the shareholders of SVT meetings and closing of the Transaction will take place in the first quarter of 2018.

The Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all. Investors are cautioned that, except as disclosed in the management information circular or filing statement or other disclosure document to be prepared in connection with the Transaction, any information released or received with respect to the Transaction, may not be accurate or complete and should not be relied upon. Trading in the securities of Marchwell should be considered highly speculative. In accordance with the policies of the TSXV, Marchwell’s shares are currently halted from trading and will remain halted until further notice.

For further information please contact:

Marchwell Ventures Ltd.

Richard Graham                                                                        or                               Sandra Lee

Director                                                                                                                            (604) 488-5427

(604) 689-1428

Forward-Looking Information

Certain portions of this press release contain “forward-looking information” within the meaning of applicable Canadian securities legislation, which is also referred to as “forward-looking statements”, which may not be based on historical fact. Wherever possible, words such as “will”, “plans,” “expects,” “targets,” “continues”, “estimates,” “scheduled,” “anticipates,” “believes,” “intends,” “may,” “could,” “would” or might, and the negative of such expressions or statements that certain actions, events or results “may,” “could,” “would,” “might” or “will” be taken, occur or be achieved, have been used to identify forward looking information. Such forward-looking statements include, without limitation, SVT’s receipt of Licensed Producer status and the timing thereof, the entrance into a definitive agreement with respect to the Transaction, receipt of exchange, regulatory, shareholder, director and other approvals, the completion of the Consolidation, the delisting from the TSXV and the Listing on the CSE, and other factors.

Forward looking statements should not be read as guarantees of future events, future performance or results, and will not necessarily be accurate indicators of the times at, or by which, such events, performance or results will be achieved, if achieved at all.  Readers should not place undue reliance on such forward-looking statements, as they reflect Marchwell’s and, where applicable, management of SVT’s, current views with respect to future events and are subject to risks and uncertainties and are necessarily based upon a number of estimates and assumptions that, while considered reasonable by Marchwell and, where applicable, management of SVT, are inherently subject to significant business, economic, regulatory, competitive, political and social uncertainties and contingencies. Many factors could cause Marchwell’s and, where applicable, SVT’s actual results, performance or achievements to be materially different from any future results, performance, or achievements that may be expressed or implied by such forward-looking statements, including among others, SVT’s failure to receive, or delay in receiving, Licensed Producer status, failure to enter into a definitive agreement with respect to the Transaction, failure to obtain any of the required exchange, regulatory, shareholder director or other approvals for the Transaction, failure to complete the Consolidation, failure to delist from the TSXV or complete the Listing on the CSE, and the Amalgamation Agreement being terminated, modified or amended. The preceding list is not exhaustive of possible factors.

Marchwell disclaims any intent or obligation to update or revise publicly any forward-looking statements whether as a result of new information, estimates, future events or results, or otherwise, unless required to do so by applicable laws. The forward looking statements contained herein are expressly qualified in their entirety by this cautionary statement.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the Transaction and has neither approved nor disapproved the contents of this news release. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.