Halo Collective and Alpha Blue Ocean Agree to Early Termination of Loan and Convertible Debentures Agreements

TORONTO – Halo Collective Inc. (NEO: HALO) (OTCQB: HCANF) (Germany: A9KN) announced that it has entered into a termination agreement mutually agreed with Global Tech Opportunities 6, an investment fund managed by Alpha Blue Ocean, pursuant to which, among other things, the Company and GTO have agreed to effect amendments to certain previously issued convertible debentures of Halo in aggregate principal amount of $7,001,318. The Amendments to all the non-dilutive and dilutive financings offered by GTO will help Halo better manage its dilution by agreeing to issue a maximum number of common shares in the capital of Halo pursuant to the amended terms of the Convertible Debentures as detailed below. The Amendments and the Termination Agreement are subject to approval by the Neo Exchange Inc. The Amendments and the Termination Agreement will become effective automatically within one trading day of the receipt of approval of the transactions by the NEO Exchange.

Under the Termination Agreement, the parties have agreed to terminate all of Halo’s existing and previously announced debt facilities and subscription agreements with GTO at no extra cost, other than the Convertible Debentures (as amended by the Amendments) in which the conversion price will now be fixed, effective on the Effective Date. The Termination Agreement also contains provisions preventing GTO from holding beneficial ownership or control of greater than 19.9% of the Common Shares outstanding and includes standstill and voting support covenants from GTO in favour of Halo.

On the Effective Date, the conversion price of the Convertible Debentures will be amended to $0.10 per Common Share and the maturity date of the Convertible Debentures will be extended by an additional 12 months such that the Convertible Debentures will mature between May 31, 2025 and July 5, 2025.

Subject to certain exceptions, if Halo issues equity securities in the sixty days following the Effective Date at an issuance price that is less than $0.10 per Common Share, the conversion price of the Convertible Debentures will be automatically adjusted downward to a share price that is equal to the issuance price of such equity securities.

The Amendments and the Termination Agreement are “related party transactions” as defined in Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”), as GTO is an insider of the Company. The Company relied on exemptions from the valuation and minority shareholder approval requirements of MI 61-101 contained in sections 5.5(g) and 5.7(1)(e) of MI 61-101, as the Company is in financial hardship. In connection with the foregoing, the independent directors of the Company determined that: (i) the Company is in serious financial difficulty; (ii) the Amendments and the Termination Agreement are designed to improve the financial position of the Company; and (iii) the terms of the Amendments and the Termination Agreement are reasonable in the circumstances of the Company. A discussion and description of the approval process adopted by the independent directors of the Company and other information required by MI 61-101 in connection with the Amendments and the Termination Agreement will be set forth in the Company’s material change report to be filed under the Company’s SEDAR profile.

This press release contains certain “forward-looking information” within the meaning of applicable Canadian securities legislation and may also contain statements that may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Such forward-looking information and forward-looking statements are not representative of historical facts or information or current condition, but instead represent only Halo’s beliefs regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of Halo’s control. Generally, such forward-looking information or forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or may contain statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “will continue”, “will occur” or “will be achieved”. Forward-looking information may relate to anticipated events or results including, but not limited to the effectiveness of the Amendments and the Termination Agreement and the timing thereof; the approval of the transactions described herein by the NEO Exchange; the Company’s plans regarding its flagship dispensary in Hollywood, including the expected opening date thereof; the proposed spin-off with Halo Tek and the expected timing thereof.

By identifying such information and statements in this manner, Halo is alerting the reader that such information and statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results to be materially different from those expressed or implied by such information and statements. In addition, in connection with the forward-looking information and forward-looking statements contained in this press release, Halo has made certain assumptions. Although Halo believes that the assumptions and factors used in preparing, and the expectations contained in, the forward-looking information and statements are reasonable, undue reliance should not be placed on such information and statements, and no assurance or guarantee can be given that such forward-looking information and statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information and statements. Among others, the key factors that could cause actual results to differ materially from those projected in the forward-looking information and statements are the following: inability of management to successfully integrate the operations of acquired businesses, changes in the consumer market for cannabis products, changes in the expected outcomes of the proposed changes to Halo’s operations, delays in obtaining required licenses or approvals necessary for the build-out of Oregon operations, dispensaries or Canadian operations, the proposed spin-out with Halo Tek Inc., delays or unforeseen costs incurred in connection with construction, the ability of competitors to scale operations in Northern California, delays or unforeseen difficulties in connection with the cultivation and harvest of Halo’s raw material, changes in general economic, business and political conditions, including changes in the financial markets; and the other risks disclosed in the Company’s annual information form dated March 31, 2022 and other disclosure documents available on the Company’s profile at www.sedar.com. Should one or more of these risks, uncertainties or other factors materialize, or should assumptions underlying the forward-looking information or statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected.

The forward-looking information and forward-looking statements contained in this press release are made as of the date of this press release, and Halo does not undertake to update any forward-looking information and/or forward-looking statements that are contained or referenced herein, except in accordance with applicable securities laws. All subsequent written and oral forward-looking information and statements attributable to Halo or persons acting on its behalf is expressly qualified in its entirety by this notice.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy any of the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

(This information is primarily sourced from Halo Collective Inc.  Highly Capitalized has neither approved nor disapproved the contents of this news release. Read our Disclaimer here).