Cannasouth Limited


Transaction Type: Company meeting (Allotment)

Allottee: Shareholders of Eqalis Group New Zealand Limited

Independent Adviser(s): Simmons Corporate Finance Limited

Date of meeting: 28/04/2023


Cannasouth Limited (Cannasouth) proposed to undertake a ‘merger of equals’ with Eqalis Group New Zealand Limited (Eqalis). Shares in Eqalis were held by a group of 44 shareholders who were or might have been associated (the Eqalis Shareholders).

To effect the merger, Cannasouth would acquire 100% of the shares in Eqalis and, as consideration, Cannasouth would issue 147,891,069 new shares to the Eqalis Shareholders at an issue price of $0.33 per share (the Eqalis Allotment).

The number of shares to be issued under the Eqalis Allotment equalled the number of shares on issue in Cannasouth, such that the Eqalis Shareholders would collectively hold 50% of Cannasouth’s voting rights following the Eqalis Allotment.

In conjunction with the Eqalis Allotment, Cannasouth proposed to undertake a non-pro rata capital raise seeking to raise $7 million – $11 million through the offer of 24,137,931 – 37,931,034 Cannasouth shares at an issue price of $0.29 per share (the Capital Raise). The Capital Raise structure would allow Eqalis Shareholders to participate such that one or more of them might increase their relative voting control in Cannasouth.

Cannasouth sought shareholder approval under rule 7(d) of the Code for each of the Eqalis Allotment and the allotments under the Capital Raise.

On 28 April 2023, Cannasouth shareholders approved the relevant resolutions.

Simmons Corporate Finance Limited prepared the independent adviser’s report under rule 18 of the Code on the merits of the transaction.