Toronto, Ontario – Lineage Grow Company Ltd. (the “Company” or “Lineage“) (CSE:BUDD) is pleased to announce that it is undertaking a non-brokered private placement offering (the “Offering”). Pursuant to the Offering, the Company will issue up to CAD $10,000,000 aggregate principal amount of convertible debenture units (the “Convertible Debenture Units”) at a price of $100 per Convertible Debenture Unit.


The proceeds of the Offering will be used by the Company for the acquisition and build-out of facilities in California, Oregon, and Washington; general working capital requirements; and general corporate purposes. In particular, the Company intends to issue approximately 57,030 units (CAD $5.7 million) to certain vendors in exchange for acquiring their interests in Walnut Oaks, LLC, a California-based cannabis producer. Accordingly, the Company intends to raise net cash proceeds of approximately CAD $4.3 million to fund other capital projects and general corporate purposes.


Each Convertible Debenture Unit will consist of $100 principal amount of 10.0% unsecured convertible debentures (a “Convertible Debenture”) and 143 common share purchase warrants (the “Warrants”) of the Company. Each Convertible Debenture will be convertible into Common Shares, at the option of the holder, at a conversion price of $0.35 per Common Share (the “Conversion Price”) at any time after the first anniversary of the closing date of the Offering (the “Closing Date“) until the third business day prior to maturity. The conversion may be accelerated by the Company by at least 30-days’ notice if after four months plus one day following the Closing Date the volume weighted average price of Common Shares (“VWAP“) on the Canadian Securities Exchange (the “CSE“) of the Common Shares is greater than $0.40 for any 20 consecutive trading days.


The Convertible Debentures will mature on the third anniversary of the Closing Date and will bear interest at a rate of 10% per annum, calculated in arrears and payable semi-annually on June 30 and December 31 of each year. Unless an event of default has occurred and is continuing, the Company may elect, from time to time, subject to applicable regulatory approval, to satisfy its obligation to pay interest on the Debentures, by delivering Common Shares to the Debenture holders within three business days after the date interest is payable at an issue price equal to VWAP for the 10 trading days ending on the third trading day prior to the date of issuance.


Upon a change of control, holders of the Convertible Debentures will have the right to require the Company to repurchase their Convertible Debentures, in whole or in part, on the date that is 30 days following the giving of notice of the Change of Control, at a price equal to 100% of the principal amount of the Convertible Debentures then outstanding. If 90% or more of the principal amount of the Convertible Debentures request the repurchase, the Company will have the right to repurchase all of the remaining Convertible Debentures.


The Company will pay registered finders a finder’ fees equal to 8% of the aggregate gross proceeds of the Offering. The finders will receive a number of common share purchase warrants (“Finder’s Warrants“) equal to 8.0% of the Common Shares potentially issuable upon the conversion of the aggregate principal amount of Convertible Debentures sold under the Offering. Each Finder’s Warrant shall be exercisable into one Common Share at an exercise price of C$0.35 per Common Share at any time prior to the Maturity Date. There will be no finder compensation on Units sold to Purchasers in the United States.


The Offering is to be issued in the provinces of Canada, offshore and the United States pursuant to an exemption from US Registration Requirements and such other jurisdictions as may be agreed to by the Company and the finders, by way of private placement exemptions