Christina Lake Cannabis weighs $18M offer alongside earlier $15M proposal

Medical Saints proposal would acquire substantially all of the Boundary cannabis producer’s assets, but no definitive agreement has been signed

CHRISTINA LAKE — Christina Lake Cannabis is considering an $18-million offer for substantially all of its assets while an earlier $15-million proposal to acquire the company’s shares remains under review.

The company, which operates cultivation and processing facilities in Christina Lake and Midway, announced Sept. 15 that it had entered into a non-binding letter of intent with Medical Saints Ltd. after receiving an unsolicited acquisition proposal.

The new proposal does not mean Christina Lake Cannabis has been sold. As of Sept. 22, the company had not announced a definitive agreement with either potential purchaser, and its board had not approved either transaction.

A special committee of the company’s board is evaluating both proposals and can consider, negotiate and recommend strategic alternatives before any definitive agreement is approved.

The two offers have different structures, making their headline values difficult to compare directly.

An unnamed private Alberta corporation proposed in August to acquire all outstanding Christina Lake Cannabis shares for an aggregate transaction value of $15 million on a fully diluted, cash-free and debt-free basis. Under that proposal, company debt, including convertible debentures, and transaction expenses would have to be paid, satisfied or otherwise dealt with before the remaining amount could be distributed to shareholders.

Medical Saints is proposing an asset purchase instead. Its $18-million offer would cover substantially all of Christina Lake Cannabis’s operating assets, including owned land and buildings, assigned commercial leases, machinery, equipment, computers, furniture, inventory, customer lists, proprietary information, records and intellectual property.

Cash, cash equivalents, tax receivables and some other assets would be excluded. The $18 million would therefore be paid for the company’s assets rather than representing an $18-million offer directly to shareholders.

Under the Medical Saints letter of intent, $2 million of the purchase price would be advanced to Christina Lake Cannabis’s legal counsel when a definitive agreement is executed. The money would count toward the $18-million purchase price if the transaction closes.

The provision would also give Christina Lake Cannabis some protection if Medical Saints signs a definitive agreement but later fails to fund the transaction or commits a material breach. In specified circumstances, Christina Lake Cannabis could retain the $2-million advance as liquidated damages. If the deal fails for reasons not caused by Medical Saints, or because of a breach by Christina Lake Cannabis, the money would be returned.

No advance was required when the non-binding letter of intent was signed, and Christina Lake Cannabis has not announced that a definitive agreement has been reached.

The Medical Saints proposal also addresses the company’s workforce. If the transaction proceeds on the contemplated terms, Medical Saints is expected to offer employment to all Christina Lake Cannabis employees engaged in the business on substantially comparable terms and would be responsible for associated severance, termination or similar liabilities.

That provision remains part of a non-binding proposal and is not yet a binding guarantee of continued employment. Christina Lake Cannabis has not disclosed a current employee count in its transaction announcements.

CLC’s Sept. 15 disclosure also contains no commitment to maintain a specific number of Boundary jobs or to operate the Christina Lake and Midway sites at their current production levels over the longer term.

Medical Saints is a privately held federally licensed cannabis producer. Federal corporate records list the company as an active non-distributing corporation, while Health Canada lists three Medical Saints cannabis sites in Ontario.

In announcing the proposal, Medical Saints said Christina Lake Cannabis’s cultivation capacity, extraction infrastructure and processing operations would complement its existing business.

Those assets include a 32-acre Christina Lake property with more than 950,000 square feet of outdoor growing space, along with offices, propagation and drying rooms, research facilities and processing and extraction infrastructure.

Christina Lake Cannabis also owns a 342-acre property at Midway, acquired in 2024, with about 100 acres of licensed outdoor cultivation space, along with greenhouses and a dry room.

The company focuses on outdoor-grown cannabis flower, extracts and distillates sold to other cannabis businesses.

The Medical Saints letter of intent took effect Sept. 11 and gives the parties a 40-day period to negotiate a definitive agreement. The proposal remains subject to conditions that include completing negotiations, clearing encumbrances on the assets and obtaining required corporate, regulatory, stock-exchange and shareholder approvals.

The company’s original $15-million proposal also remains non-binding. Its agreement allows Christina Lake Cannabis to consider an unsolicited proposal that its board determines could provide a better outcome for shareholders, which allowed the special committee to consider the Medical Saints offer while the original proposal remained in place.

If Christina Lake Cannabis executes a definitive agreement with either purchaser, the agreement and a management information circular for the proposed shareholder meeting are expected to be filed with Canadian securities regulators, with the circular setting out the transaction terms in greater detail.

Until then, Christina Lake Cannabis remains an operating public company considering competing proposals, with neither potential acquisition assured of proceeding.

---