EarthRenew Signs Definitive Agreement for Acquisition of Regenerative Soil Health Solutions Innovator, Replenish Nutrients Ltd.

May 4, 2021

Toronto, May 4, 2021 (GlobeNewswire) – EarthRenew Inc. (“EarthRenew” or the “Company”) (CSE:ERTH; OTCQB: VVIVF) is pleased to announce that, further to its press releases dated January 13, 2021 and February 18, 2021, it has entered into a share purchase agreement effective as of May 1, 2021 (the “Share Purchase Agreement”) respecting the Company’s previously announced acquisition of all of the issued and outstanding securities of Replenish Nutrients Ltd. (“Replenish”), a privately held regenerative fertilizer company located in Okotoks, Alberta (the “Acquisition”).  

If completed, the Acquisition is projected to provide EarthRenew with significant top line revenue through sales of existing regenerative fertilizer and soil health solutions to an existing customer base and distribution channels across Western Canada, and the Replenish senior management team experience, technical expertise and existing relationships are expected to enhance EarthRenew’s operations.

Key Highlights:

·As consideration for the Acquisition, the Company agreed to pay to the securityholders of Replenish (the “Vendors”)approximately $9 million (subject to certain adjustments for working capital and indebtedness outstanding on the completion date of the Acquisition (“Closing”)),payable as $1.41 million in cash and 21,264,096 common shares of EarthRenew (“EarthRenew Shares”) at a deemed price of $0.248 per EarthRenew Share based on the closing price of the EarthRenew Shares on May 3, 2021, less a 20% discount. Such consideration includes amounts to satisfy approximately $2.8 million of loan sowed by Replenish to certain Vendors;

Following completion of the Acquisition, the Company agreed to pay to certain of the Vendors:

o   ongoing earn-out payments totaling an aggregate of up to $7 million based on qualifying gross annual revenue of Replenish multiplied by an earn-out factor for each of its 12-month fiscal periods ending June 30, 2025 payable by a combination of cash payments and the issuance of EarthRenew Shares, provided such Vendors continue to be bound by consulting or employment agreements entered into with the Company; and

o   supplemental earn-out payments of an aggregate amount of up to $2 million based on certain sales parameters, which shall be payable by a combination of cash payments and the issuance of EarthRenew Shares and evidenced by promissory notes issuable to such Vendors on the date of Closing.

The conditions subsequent are expected to be completed no later than May 14, 2021.

In addition to any other resale restrictions imposed by applicable securities laws on the EarthRenew Shares issued to the Vendors, on a monthly basis each Vendor is restricted from disposing of that number of EarthRenew Shares equal to such Vendor’s proportionate ownership of the EarthRenew Shares issued to all Vendors pursuant to the Acquisition multiplied by 20% of the average monthly trading volume of EarthRenew Shares on the CSE for the 3 months preceding the month in which the disposition is made.

Keith Driver, EarthRenew’s President and CEO, commented:

“I am extremely pleased to announce the signing of the definitive agreement in connection with our much-anticipated acquisition of Replenish, and we are looking forward to completing the remaining legal formalities to close the transaction. Once the acquisition has completed, we intend to leverage the inherent strengths of the two teams and to build on the success each of our companies has experienced. We are confident that, upon completion, our new, combined entity will not only drive shareholder value, but also position us at the important intersection of upcycling nutrient waste streams and providing regenerative crop inputs.”

Driver continued, “The appetite for Replenish’s soil health solutions has been remarkable as evidenced by the success of their formulation and sales efforts. We are excited to begin applying our financial horsepower to this model to help extend Replenish’s market reach and broaden our joint product offerings by incorporating alternative nutrient waste streams into new crop input products.”

Share Purchase Agreement

EarthRenew has entered into a share purchase agreement effective as of May 1, 2021 with Replenish and each of the Vendors, pursuant to which EarthRenew shall acquire all of the issued and outstanding securities of Replenish.

The aggregate purchase price for the Acquisition on Closing will be approximately $9 million and shall be payable by a combination of cash payments and the issuance of EarthRenew Shares, as outlined above. In addition, the Company will also satisfy certain of Replenish’s obligations in connection with its outstanding shareholder loans, payable by a combination of cash payments and the issuance of EarthRenew Shares, and, post-Closing, certain of the Vendors will become entitled to earn-out payments totaling an aggregate of up to an additional $9 million payable by a combination of cash payments and the issuance of EarthRenew Shares, also outlined above.

In addition, the Vendors shall be entitled to nominate three individuals for election to EarthRenew’s board of directors at its annual general meeting held each year, but only for so long as the Vendors collectively hold at least 10% of the issued and outstanding EarthRenew Shares.

The Acquisition is an arm’s length transaction for the purposes of the policies of the CSE and may be subject to the approval of the CSE. EarthRenew is not paying any finder’s fees in connection with the Acquisition. The closing of the Acquisition is subject to the satisfaction of customary conditions precedent, including, inter alia, the approval of the CSE, if applicable, the provision of a legal opinion concerning the issued and outstanding share capital of Replenish, certain of the Vendors entering into consulting or employment agreements with the Company, and other closing conditions customarily found in transactions similar to the Acquisition.

About Replenish

Replenish strives to uproot the traditional farming mindset to help producers become more profitable and to provide them with greater control over their production system. Replenish develops innovative soil health products and uniquely combines existing ingredients to offer a complete array of solutions to address regenerative and conventional soil conditions. The company’s website can be found at www.ReplenishNutrients.com.

About EarthRenew

EarthRenew’s mission is to support a farm system that puts healthy soils and grower profitability back on the table. Using circular economic principles of upcycling waste products into high-value agronomic inputs, we are building an innovative platform of soil health products to establish EarthRenew as a key player in the regenerative agriculture space.  We strive to be a driving part of this movement by offering growers natural fertilizer alternatives that feed the soil to strengthen the earth’s ability to restore itself while growing healthy plants. EarthRenew benefits from multiple revenue streams including, primarily, the sale of regenerative fertilizers, but also enjoys secondary revenue from generating power and selling surplus electricity.

For further information, please visit our website at www.earthrenew.ca or contact:

Keith Driver
CEO of EarthRenew
+1 (403) 860-8623
Email: kdriver@earthrenew.ca