Namaste to Acquire Australian Vaporizers and Announces $6.0 Million Bought Deal Financing
VANCOUVER, BRITISH COLUMBIA--(Marketwired - Feb. 24, 2017) -
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Namaste Technologies Inc. ("Namaste" or the "Company") (CSE:N)(CSE:N.CN)(FRANKFURT:M5BQ) is pleased to report that it has entered into a definitive agreement (the "Agreement") with Australian Vaporizers PTY Limited ("Australian Vaporizers") to acquire all of the issued and outstanding shares of Australian Vaporizers in exchange for a combination of cash, common shares and an earn-out payment. Upon the completion of the transaction, Namaste further solidifies its position as the leading e-commerce company in the vaporizers and accessories space with significant market positions in the North America, Europe, South America and now Asia Pacific.
Australian Vaporizers was founded in 2010 and has grown to become the largest online retailer of vaporizers in Australia. The company's website www.australianvaporizers.com.au has approximately 80% of the market share. The company's customer database has over 48,000 individuals that have made upwards of 77,000 orders during the lifespan of the company. For the period ended June 30, 2016, the company produced approximately $4.5 million of revenue and $1.1 million of EBITDA. Gross margins for the period were over 45%. The financial results for the period have been audited by Grant Thornton Australia Ltd.
Strategic rationale for the transaction as follows:
- Positions Namaste as the leading vaporizer and accessories company in Australia, a country with a population of 24.3 million people;
- Expands customer database to well-over 300,000 individuals globally. This further positions the Company with one of the largest databases of cannabis consumers globally and spans all major
markets. Namaste will enter commercial arrangements to further monetize these customers;
- Positions the Company with over $18.0 million of run rate revenue and moves the Company into profitability. The higher margins of Australian Vaporizers are beneficial to the margins of the
- Provides full Australian distribution center and additional technical staff; and
- Attractive valuation at approximately 1x sales and 5x EBITDA.
Transaction terms and conditions are as follows:
- Purchase price of 1.0x 12-month trailing sales of $5.0 million, plus the value of inventory acquired within six (6) months preceding the closing, and 50% of the value of the inventory acquired
prior to six (6) months preceding the closing, less all liabilities and plus trade debt and cash. The total purchase price is estimated to be approximately $5.5 million;
- Consideration of 75% cash on closing, 10% in common shares based on the 20-day volume weighted average price upon signing of definitive agreement and 15% earn-out based on sales and integration
- Receipt of all director and requisite regulatory approvals relating to the transaction, including without limitation, CSE approval, if required.
Bought Deal Financing
The Company is also pleased to announce that it has entered into a letter of engagement with Eight Capital and Canaccord Genuity Corp. as co-lead underwriters and joint bookrunners, and including Beacon Securities Limited. (together, the "Underwriters"), under which the Underwriters have agreed to purchase 24,000,000 units of the Company (the "Units"), on a "bought deal" private placement basis, subject to all required regulatory approvals, at a price per Unit of $0.25 (the "Offering Price"), for total gross proceeds of $6,000,000 (the "Offering"). Each Unit shall consist of one common share of the Company (a "Share") and one-half of one common share purchase warrant (a "Warrant"). Each Warrant shall entitle the holder thereof to acquire one Share at a price of $0.35 for a period of 24 months following the Closing Date.
In the event that the closing sale price of the Company's Shares on the Canadian Securities Exchange is greater than $0.70 per Share for a period of 10 consecutive trading days at any time after the closing of the Offering, the Company may accelerate the expiry date of the Warrants by giving notice to the holders thereof and in such case the Warrants will expire on the 30th day after the date on which such notice is given by the Company.
The Company has granted the Underwriters an over-allotment option to purchase up to an additional 3,600,000 Units at the Offering at the Offering Price, exercisable in whole or in part, at any time on or prior to 48 hours prior to the closing of the Offering. If this option is exercised in full, an additional $900,000 will be raised pursuant to the Offering and the aggregate proceeds of the Offering will be up to approximately $6,900,000.