SOL Global Completes $50 Million Deal, President Resigns

SOL Global Investments Corp. (CSE: SOL) (OTCQB: SOLCF) completed a $50 million private placement financing by issuing and selling a senior secured non-convertible debenture to an arm’s length institutional investor. In addition to the deal, the company announced that its President Jonathan Gilbert was resigning as the President of the wholly-owned subsidiary, Impact Biosciences Inc. (formerly Scythian Biosciences Inc.).

The company also stated that it no longer planned to spin off Impact into a new, independent public company. In a statement, SOL Global said that Impact would continue to assess its options in regard to the continuing research and development of its proprietary Cannabinoid combination drug candidate for the treatment of concussions and traumatic brain injury, which is being conducted by the University of Miami and its world-renowned neuroscientific team. The mission of the study is to bring to market the first accepted cannabinoid drug regimen for concussive treatment.

Plans For Proceeds

SOL Global said that it plans to use the net proceeds for working capital and general corporate purposes and to primarily finance the continued build-out of SOL Global’s robust hemp and CBD strategy via Heavenly Rx Ltd. and the build-out and acquisition of additional assets in FloridaMichigan, and California for its previously-announced, new cannabis multi-state operator.

Terms

The Debenture bears an interest rate of 6.0% per annum and will mature two (2) years from the date of closing unless such maturity date is otherwise shortened due to the occurrence of certain independent milestones as set out within the terms and conditions of the Debenture. The Debenture may be repaid by the Company in cash or in-kind with securities held within the Company’s investment portfolio. The Debenture is not dilutive to the Company’s shareholders.

Controversy

SOL Global is losing its President at a time when the company is facing distractions from its Chairman Andy Defrancesco. The Chairman was the subject of an investigative piece by Teri Buhl that questioned whether DeFrancesco adequately disclosed the nature of a transaction and whether it involved related parties. DeFrancesco then sent a derogatory text, which Buhl made public.

DeFrancesco’s battle with Teri Buhl isn’ the only controversy he is facing. Defrancesco has been sued for defamation, conspiracy to defame and tortious interference in a business relationship by New Frontier Data’s Giadha Aquirre De Carcer. Merida Capital is also an investor in New Frontier Data. Defrancesco has said he is an investor in Prohibition Partners, a research company that had a falling out with New Frontier over a report the two companies agree to create jointly.

When the relationship was terminated, both companies released a report with similar sounding titles within a week of each other. Both companies have accused the other of borrowing intellectual property and threatened lawsuits. Merida has defended New Frontier and the spat doesn’t seem to be having any effect on the relationship with SOL Global. Merida agreed to sell its Michigan subsidiary MCP Wellness, Inc. to SOL Global in a deal valued at $150 million.

SOL Global seems to experience a great deal of turnover in the C-suite.  The company released this list of changes in December:

The following changes to management and Board have occurred during the past 12 months:
 On November 1, 2018, Andy DeFrancesco was appointed Chief Investment Officer.
 On October 3, 2018, Brady Cobb was appointed Chief Executive Officer replacing Rob Reid who remains an
active member of the Board.
 On September 4, 2018 Andy DeFrancesco was appointed to the title of Chairman of the Board.
 On September 28, 2018, Peter Liabotis was appointed Chief Financial Officer replacing Jonathan Held.
 On July 30, 2018, Brady Cobb was appointed to the Board.
 On July 26, 2018, George Scorsis resigned from the Board.
 On August 1, 2018, Jonathan Gilbert resigned from the Board.
 On April 25, 2018, Rob Reid was appointed Chief Executive Officer
 On April 25, 2018, Roger Rai rejoined the Board.
 On April 25, 2018, Renah Persofsky and Vic Neufeld resigned from the Board and Jonathan Gilbert stepped
down as Chief Executive Officer.
 On March 7, 2018, Renah Persofsky and Rob Reid joined the Board and Roger Rai and Gary Leong resigned
from the Board.
 On February 15, 2018, the Company appointed Professor Michael Barnes as its Chief Medical Officer.
 On January 15, 2018, the Company announced the appointment of Vic Neufeld, CEO of Aphria Inc. (TSX: APH),
and George Scorsis, CEO of Liberty Health Sciences Inc. (CSE: LHS) to the Board. The Company also announced
Renah Persofsky joined its advisory board and that Peter Benz and Michael Petter had resigned from its Board.

SOL Global Plans

Last month SOL Global had announced it was acquiring California-based ECD, Inc., which operates as Northern Emeralds in a deal valued at $120 million. The purchase price will be satisfied by the issuance of common shares in CannCure Investments Inc. and the deal is expected to close on or before August 1.

Northern Emeralds is located in Humboldt County, California and is a cannabis cultivation, processing, and distribution company that has six licensed dispensary companies in the state that will operate under the nationally recognized “One Plant” brand. SOL Global said it intends to open One Plant-branded dispensaries throughout California (a total of 20 operating and licensed dispensary companies), Florida, and Michigan.

 

 

Debra Borchardt

Debra BorchardtDebra Borchardt

Debra Borchardt is the CEO, Co-Founder, and Editor-In-Chief of GMR. She has covered the cannabis industry for several years at Forbes, Seeking Alpha and TheStreet. Prior to becoming a financial journalist, Debra was a Vice President at Bear Stearns where she held a Series 7 and Registered Investment Advisor license. Debra has a Masters degree in Business Journalism from New York University.


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