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The Green Organic Dutchman Holdings Ltd. (TSX:TGOD) (OTC:TGODF) is selling its Valleyfield, Quebec-based facility to Cannara Biotech Inc. (TSXV:LOVE).
Transaction Details: Under a binding agreement of purchase and sale between Cannara Biotech and TGOD's subsidiary Medican Organic Inc., Cannara will purchase all industrial and agricultural land, main hybrid greenhouse, rooftop greenhouse as well as all support buildings and certain related equipment located in Valleyfield.
In exchange, Cannara will deposit $27 million in cash into escrow prior to the finalization of the sale, which is scheduled to take place on or before June 22.
Pursuant to the deal, Medican will enter into a two-year lease with Cannara, on closing, for roughly 80,000 square feet of cultivation, processing, and manufacturing space in the purchased facility, whereby Medican agreed to pay $12.5 per square foot per year.
Medican will also enter into a three-year lease and cannabis supply agreement for approximately 80,000 square feet of the Valleyfield-based facility with Cannara, which will commence once the initial two-year lease expires.
As part of this deal, Medican agreed to pay $8.75 per square foot annually to Cannara for the processing and manufacturing space, in addition to a net amount based on the wholesale value of bulk dried cannabis produced from the growing premises instead of rent for space.
In addition, Medican is entitled to receive an additional $5.7 million as a refund once a transfer of a utility pricing agreement with Hydro Quebec is completed, simultaneously with the closing of the deal.
BMO Capital Markets acted as representative and financial advisor for the transaction, the company disclosed.
What It Means For TGOD: Simultaneously with the closing, TGOD will eliminate its senior term debt through a roughly $31.8 million payment.
Sean Bovingdon, TGOD's CEO and interim CFO, called the deal "a major transition point for the company," as it allows it to "significantly reduce our debt while right-sizing our operations in Quebec without disruption."
"Our portfolio of products is receiving positive reviews across the country, and we look forward to providing Quebec with locally grown products as demand continues to increase," Bovingdon added.
Photo by Tim Foster on Unsplash
