Hamilton Locke is advising Little Green Pharma Ltd (ASX:LGP) on its proposed acquisition of 100% of the issued capital of Cannatrek Ltd by way of scheme of arrangement.
Under the proposed merger, Cannatrek shareholders will receive scrip consideration in the form of new ordinary shares in Little Green Pharma plus contingent value shares.
The contingent consideration structure provides Cannatrek Shareholders with the right to receive additional ordinary shares in Little Green Pharma subject to the calculation of a “Contingent Amount”, being the difference between the respective pre-implementation liabilities of Cannatrek and LGP (covering tax liabilities, litigation losses, bad debts and government investigations). That amount is determined on the second anniversary of the implementation date (or, if liabilities remain unresolved, upon their determination or by the fourth anniversary).
The contingent value shares are non-transferable, with no voting or dividend rights, and no right to a return of capital on a winding up.
Commenting on the transaction, Hamilton Locke Partner James Nicholls said “We are excited to be advising LGP on this transaction which represents a significant consolidation in Australia’s medical cannabis sector. The transaction incorporates a contingent consideration structure to bridge the value gap between providing upside for Cannatrek shareholders and downside protection to LGP. We are seeing an emergence of contingent consideration structures in public M&A particularly where risk is difficult to assess at the outset of the deal and we look forward to continuing to advise LGP as the contingency in this transaction is determined.”
The transaction team at Hamilton Locke is being led by Corporate Partners James Nicholls and Jeremy Newman, with support from Senior Associate Talya Jasson and Lawyers Alexis Brenssell and Emily Wang with specialist tax advice provided by Tax Partner Mark Payne.
Legal due diligence was led across several practice areas: Finance Partner Luke McShane, Senior Associate Eve Bramley and Lawyer Janice Lau; New Energy Partner Margot King and Lawyer Raeesa Lambat; Employment Partner Emily Cossgrove and Senior Associate Amy Whyte; Litigation Partner Chris Hood and Lawyer Melissa Catto; and Corporate Special Counsel Sally Scott and Senior Associates Talya Jasson and Emily Eardley.
Canaccord Genuity is acting as financier adviser to LGP in relation to the Scheme.
