HEXO formalizes its Belleville presence, establishing a centre of excellence for cannabis-based products and creating jobs in the region

Kanata, Ontario, CANADA

QUEBEC, Quebec, Oct. 31, 2018 (GLOBE NEWSWIRE) -- HEXO Corp. (“HEXO” or the “Company”) (TSX:HEXO) has announced the closing of the acquisition of its interest in a large facility in Belleville, Ontario. This is the first facility that the Company has established outside of Quebec, further delivering on its national expansion strategy and allowing HEXO to create a centre of excellence for the development of advanced cannabis products.

“Closing the transaction and acquiring our interest in this facility is integral to carrying out our hub and spoke business strategy,” said Sebastien St-Louis, HEXO’s CEO and co-founder. “The space can be scaled up based on our future needs and provides HEXO with the infrastructure it needs to continue partnering with Fortune 500 companies and to create category-winning cosmetics, edibles, vapes and more.”

The centralized location, conveniently located along primary shipping routes in Ontario, will allow HEXO to process and distribute cannabis-based products to fulfil its commitments across Canada.

The Company will host an event in late November to give the residents of Belleville and the surrounding areas the opportunity to come learn about HEXO’s history and vision from Chief Brand Officer and co-founder, Adam Miron. HEXO will also use the event as an opportunity to provide information about the types of jobs that will be available at the facility and the projected timelines for the Belleville location.

“Establishing operations in Belleville allows us to capture the skilled local workforce, many of whom may have previously worked at the facility when it was a Sears Distribution Centre,” said Miron. “We look forward to building close ties in the region and supporting its economic wellbeing for years to come.”

The building is owned by Belleville Complex Inc. and is a joint venture in which Olegna Holdings Inc. will hold a 75% interest and HEXO will hold a 25% interest, with the potential to acquire an additional 10% interest once certain milestones are met. In addition to its initial lease of 579,000 sq. ft. of the space under a long-term lease, HEXO will have rights of first offer and first refusal to lease the remaining space in the building.

The transaction is considered a “related party transaction” within the meaning of Multilateral Instrument 61 - 101 - Protection of Minority Security Holders in Special Transactions (“MI 61-101”) because Mr. Vincent Chiara, a director of HEXO, holds a majority interest in Olegna Holdings Inc. HEXO is relying on applicable exemptions from the minority approval and valuation requirements of MI 61-101 on the basis that neither the fair market value of the subject matter of, nor the fair market value of the consideration for, the transaction exceeds 25% of HEXO’s market capitalization. The terms of the transaction have been reviewed and approved by the independent directors of the Company, and the rental rates for the facility were supported by estimates from independent appraisers.

About HEXO Corp.

HEXO Corp. creates and distributes innovative, easy-to-use and easy-to-understand products to serve the Canadian cannabis market. One of the country’s lowest-cost producers, HEXO is rapidly increasing its production capacity in the lead up to the adult-use cannabis market. The Company currently operates with over 310,000 sq. ft. of production capacity with construction on another 1,000,000 sq. ft. expansion set to be complete by year end. HEXO will serve the adult-use market under the HEXO brand, while continuing to serve its medical cannabis clients through the well-known Hydropothecary brand.

Forward-Looking Information

This press release may contain forward-looking information that is based on certain assumptions and involves known and unknown risks and uncertainties and other factors that could cause actual events to differ materially from current assumptions and expectations. These statements should not be read as guarantees of future performance or results. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those implied by such statements. A more complete discussion of the risks and uncertainties facing the Company appears in the Company’s Annual Information Form and continuous disclosure filings, which are available on SEDAR’s website at www.sedar.com. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company disclaims any intention or obligation, except to the extent required by law, to update or revise any forward-looking statements as a result of new information or future events, or for any other reason.

Neither the Toronto Stock Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Toronto Stock Exchange) accepts responsibility for the adequacy or accuracy of this release.

Investor Relations:
Kathy Chow

Media Relations:
Sarah Brown

Adam Miron