2019-01-18 09:41 ET - News Release

Ms. Diane Jang reports

HEMPCO ENTERS INTO $5 MILLION CONVERTIBLE DEBENTURE AGREEMENT WITH AURORA CANNABIS INC.

Hempco Food and Fiber Inc. has completed an agreement with Aurora Cannabis Inc. for a non-brokered private placement of a $5-million non-transferable secured convertible debenture. As previously disclosed on Dec. 21, 2018, the company has drawn $3-million against the $5-million loan for general corporate purposes.

Principal amounts outstanding from time to time will bear simple interest at a rate of 8 per cent per year until the principal amount is repaid or converted. The debenture will mature on the second anniversary of the date of issue. Aurora Cannabis will have the right to convert the principal balance into common shares of Hempco Food and Fiber at a conversion price of $1.18 per Hempco Food and Fiber share. At Aurora Cannabis's election, it may also convert the simple interest into Hempco Food and Fiber shares at a conversion price equal to the market price of Hempco Food and Fiber shares in effect on the date of the notice of conversion. Aurora Cannabis currently holds a 52-per-cent interest in Hempco Food and Fiber and, if fully converted, excluding interest, would hold 55 per cent of Hempco Food and Fiber's outstanding shares.

The convertible debenture will be secured by a general security agreement and a guarantee from Hempco Food and Fiber's wholly owned subsidiary, Hempco Canada Superfoods Inc. The guarantee will be secured by a general security agreement from Hempco Canada Superfoods.

"The agreement provides us with access to additional funds to accelerate execution of our five-prong growth strategy, which includes the development of new markets, the introduction of new product innovations, as well as capitalizing on global tricrop opportunities," commented Diane Jang, chief executive officer of Hempco Food and Fiber. "With our new Nisku plant anticipated to commence operations and ramp-up this coming spring, we are well positioned to execute and pursue accelerated growth."

The convertible debenture, as well as any Hempco Food and Fiber shares issued upon conversion, will be subject to a four-month hold period under applicable securities laws.

The issuance of the convertible debenture is finalized, subject to approval by the TSX Venture Exchange.

About Hempco Food and Fiber Inc.

For more than 12 years, Hempco Food and Fiber has been a trusted and respected pioneer, innovator and provider of premier hemp seed foods. Hempco Food and Fiber is committed to developing hemp foods, hemp fibre and hemp nutraceuticals, a tricrop opportunity for producers and processors. Hempco Food and Fiber is expanding its processing ability to meet global demands in a 56,000-square-foot facility, located at Nisku, Alta.

We seek Safe Harbor.