City View Announces Spin-Out of Cannibis Assets to Existing Shareholders

Rhea-AI Summary

City View Green Holdings (CVGRF) has announced a strategic spin-out of its cannabis assets through its subsidiary 2590672 Ontario Inc. (259 OnCo). Under the arrangement, shareholders will receive 0.032 259 OnCo shares for each City View share while maintaining their current City View holdings. The spin-out requires 66.67% shareholder approval and court authorization. Key highlights include: - 259 OnCo will retain ~$25.5M in non-capital tax losses expiring between 2034-2044 - Recent debt settlement removed $2.34M from balance sheet - Company providing up to $500K bridge loan to 259 OnCo at 10% interest - 259 OnCo plans to apply for CSE listing post-arrangement Additionally, City View plans to transform from a cannabis issuer to an investment issuer, pursuing acquisition of a Target company in the creator/influencer advertising space that has achieved 40M ad impressions and registered 3,000+ creators.

Positive

• Strategic retention of $25.5M in tax losses that can offset future income
• Successful removal of $2.34M in debt from balance sheet
• Potential for improved valuation through separate market assessment of each business
• Target acquisition company shows growth with 40M ad impressions and 3,000+ registered creators

Negative

• No guarantee 259 OnCo will successfully list on CSE
• High uncertainty around completion of business transformation to investment issuer
• Additional debt creation through $500K bridge loan to 259 OnCo
• Requires high threshold (66.67%) of shareholder approval

Toronto, Ontario--(Newsfile Corp. - May 15, 2025) - City View Green Holdings Inc. (CSE: CVGR) (OTC Pink: CVGRF) (FSE: CVY) (the "Company" or "City View") is pleased to announce the execution of a definitive arrangement agreement (the "Arrangement Agreement") with City View's subsidiary, 2590672 Ontario Inc. ("259 OnCo") in respect of the spin-out of its cannabis assets (the "Assets"), to its shareholders by way of a share capital reorganization effected through a statutory plan of arrangement (the "Arrangement") pursuant to the arrangement provisions of the Business Corporations Act (British Columbia) (the "Act"). Under the Arrangement, City View will distribute the common shares (each, a "259 Share") of 259 OnCo to City View shareholders.

Under the Arrangement, City View's current shareholders will receive 259 Shares by way of a share exchange, pursuant to which each existing common share of 259 OnCo will be exchanged for one new common share of City View and 0.032 of a 259 Share, or as otherwise determined by the board of directors of the Company. On completion of the Arrangement, City View shareholders will maintain their interest in City View and will obtain a proportionate interest in 259 OnCo.

The reorganization will be effected pursuant to s. 289 of the Act and must be approved by the Supreme Court of British Columbia and by the affirmative vote of 66 2/3% of City View's shareholders in attendance at a shareholders' meeting to be held on or before December 31, 2025 (the "Meeting").

Rob Fia, CEO, commented: "The proposed spin-out of City View Green Holdings Inc.'s cannabis assets in subsidiary 259 OnCo offers several potential benefits for shareholders. By separating 259 OnCo into a new, independently listed entity, both the core change of business entity and the cannabis business can pursue focused growth strategies tailored to their respective markets. Crucially, 259 OnCo would expect to retain significant non-capital tax losses of approximately $25,500,000 which expire between 2034 and 2044 which could be strategically utilized to offset future taxable income generated by its remaining cannabis operations, providing a substantial financial advantage. On November 27, 2024 City View announced a shares for debt settlement with creditors that removed $2,342,513.37 of indebtedness from the balance sheet. Furthermore, the spin-out could unlock greater value for shareholders by allowing the market to more clearly assess the distinct potential of each business, potentially leading to improved valuations compared to the current combined entity. This separation could also attract different investor bases with specific interests in the core change of business entity or cannabis entity, potentially increasing overall investment and liquidity for both companies."

It is currently contemplated that 259 OnCo will apply for the listing of the 259 Shares on the Canadian Securities Exchange (the "CSE") following the Arrangement, however, 259 OnCo will not be listed on a stock exchange upon completion of the Arrangement. The listing of 259 Shares is subject to meeting all the conditions for listing established by the CSE and acceptance by the CSE. There is no assurance that 259 Shares will list on the CSE.

In connection with the Arrangement, the Company has agreed to provide a bridge loan of up to $500,000 to 259 OnCo (the "Bridge Loan"). The Bridge Loan shall be for a term for 24 months at an interest rate of 10% per annum. The Bridge Loan shall be structured as a demand note, whereby 259 OnCo can draw down on the Bridge Loan upon notice to City View.

Completion of the Arrangement is subject to a number of conditions, including the following: (a) City View shareholder approval at the Meeting; (b) the approval of the Supreme Court of British Columbia; and (c) other conditions precedent as set forth in the Arrangement Agreement.

Additional details of the spin-out transaction will be included in an information circular to be mailed to shareholders of City View in connection with the Meeting. The Arrangement is expected to close in 2025.

Further to the press release on April 3, 2025, City View also intends to refocus its business operations from an "cannabis issuer" to an "investment issuer" (the "Proposed COB"). As part of the Proposed COB, City View entered into an agreement of principle with an arm's length party (the "Target") whereby the Company will acquire an ownership interest in the Target in exchange for the issuance of shares in the capital of City View (the "Proposed Acquisition").

City View is still in conducting its due diligence investigations of the Target and no definitive agreement has been entered into between City View and Target and there can be no assurance that any agreement will be entered into.

Recently the Target has gained traction by connecting brands with online creators and influencers. Since its launch, the Target has now surpassed 40 million total ad impressions, demonstrating its growing reach and effectiveness in the live streaming ecosystem. In addition, the Target's Ad platform has also experienced creator adoption with over 3,000 registered creators. These creators have collectively powered over 2,200 unique live streams featuring integrated brand advertising, highlighting the platform's active and engaged community.

Completion of the Proposed COB is subject to a number of conditions, including the acceptance and approval of City View's disclosure document by the CSE and shareholder approval. The Proposed COB cannot close until the required shareholder approval is obtained. There can be no assurance that the Proposed COB will be accepted by the CSE and/or completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular and/or listing statement to be prepared in connection with the Proposed COB, any information released or received with respect to the Proposed COB may not be accurate or complete and should not be relied upon. Trading in the securities of City View should be considered highly speculative.

The CSE has in no way passed upon the merits of the Proposed COB and has neither approved nor disapproved the contents of this press release.

For further information, contact:
City View Green Holdings Inc.
Rob Fia, CEO & President 
Phone: 416.722.4994
Email: rob@cityviewgreen.ca

Neither the Canadian Securities Exchange nor its regulations services accept responsibility for the adequacy or accuracy of this release.

Disclaimer for Forward-Looking Information: This press release contains forward-looking statements which are not composed of historical facts. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements include estimates and statements that describe the Company's future plans, objectives or goals, including words to the effect that the Company or management expects a stated condition or result to occur. Forward-looking statements may be identified by such terms as "believes", "anticipates", "expects", "estimates", "may", "could", "would", "will", or "plan". Since forward-looking statements are based on assumptions and address future events and conditions, by their very nature they involve inherent risks and uncertainties. Although these statements are based on information currently available to the Company, the Company provides no assurance that actual results will meet management's expectations. There are a number of important factors that could cause the Company's actual results to differ materially from those indicated or implied by forward-looking statements and information. When relying on the Company's forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Important factors that could cause actual results to differ materially from the Company's expectations include, among others, availability and costs of financing needed in the future, changes in equity markets and delays in the development of projects. Although the Company has a tempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.

THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS PRESS RELEASE REPRESENTS THE EXPECTATIONS OF THE COMPANY AS OF THE DATE OF THIS PRESS RELEASE AND, ACCORDINGLY, IS SUBJECT TO CHANGE AFTER SUCH DATE. READERS SHOULD NOT PLACE UNDUE IMPORTANCE ON FORWARD-LOOKING INFORMATION AND SHOULD NOT RELY UPON THIS INFORMATION AS OF ANY OTHER DATE. WHILE THE COMPANY MAY ELECT TO, IT DOES NOT UNDERTAKE TO UPDATE THIS INFORMATION AT ANY PARTICULAR TIME EXCEPT AS REQUIRED IN ACCORDANCE WITH APPLICABLE LAWS.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/252217

FAQ

What is the exchange ratio for City View's (CVGRF) cannabis asset spin-out?

Shareholders will receive 0.032 shares of 259 OnCo for each existing City View share while maintaining their current City View holdings.

How much tax loss carryforward will 259 OnCo retain after the spin-out?

259 OnCo will retain approximately $25.5 million in non-capital tax losses that expire between 2034 and 2044.

What are the key conditions for City View's (CVGRF) spin-out completion?

The spin-out requires 66.67% shareholder approval at a meeting to be held by December 31, 2025, Supreme Court of British Columbia approval, and meeting other conditions in the Arrangement Agreement.

What is City View's new business direction after the cannabis spin-out?

City View plans to transform from a cannabis issuer to an investment issuer, targeting acquisition of a company in the creator/influencer advertising space.

What financing is City View providing to 259 OnCo for the spin-out?

City View will provide a bridge loan of up to $500,000 to 259 OnCo for 24 months at 10% annual interest, structured as a demand note.