Sundial to Contribute Additional $88 Million to Cannabis Investment Joint Venture

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Sundial Growers Inc. has agreed to make an additional $88 million investment in its joint venture with TerrAscend Corp., a leading Canadian cannabis company. The deal will see the two companies collaborate on developing and marketing products for the global market. Sundial, which is listed on the Toronto Stock Exchange, said it would contribute another US$50 million for a total of US$158 million in cash and stock.

The announcement came as Sundial announced its Q-11 results. The company reported a net income of US$0.03 per share on revenue of $22 million, up from US$0.01 in the same period last year and earnings before interest, taxes, depreciation and amortization (EBITDA) at $13.79 million versus EBIOTA for 2016 of US$12.21Million

This is an additional investment by Sundial Growers Inc., worth approximately USD 158 Million to be invested over four years into TerrAscend Corp’s international operations – primarily in Europe and Australia/New Zealand where cannabis has been legalized or decriminalized with significant medical marijuana programs; through joint ventures which are wholly -owned by TerrAscend.

The partnership includes the acquisition of a 51% interest in one of Australia’s largest hemp farmers, Australian Industrial Hemp (AIH) Pty Ltd; and an initial investment into a Canadian late-stage ACMPR applicant for cultivation & processing to be developed on 200 acres outside Calgary, Alberta with expected annual production capacity of 110+ tons/year.

This investment will provide significant value creation opportunities as we expand our footprint internationally, support high margin product development initiatives from extraction through sale and drive operational efficiencies including economies of scale. Non-cash share based compensation expense related to this transaction was $0.02 million or approximately USD 0.002 per share during Q11 2017 versus no such expenses in Q11 2016

This investment will provide significant value creation opportunities as we expand our footprint internationally, support high margin product development initiatives from extraction through sale and drive operational efficiencies including economies of scale. Non-cash share based compensation expense related to this transaction was $0.02 million or approximately USD 0.002 per share during Q11 2017 versus no such expenses in Q11 2016

Sundial’s Board has approved the allocation of up to 50% of any net proceeds received by Sundial Organic Agriculture Inc., a wholly owned subsidiary (the “Parent Company”) following its initial public offering for which it expects receipt within the next week, towards investments into businesses that are not marijuana related but align with Sundial Group.

cannabis market share and geographic reach, and to leverage the

Sundial has invested approximately USD 20 million so far in a joint venture with Lesotho Hemp Company Ltd. (“LHC”) that is developing an industrial hemp crop outside of Maseru, Lesotho.

This investment will provide Sundial Group access to high margin product development initiatives from extraction through sale and drive operational efficiencies including economies of scale. Non-cash share based compensation expense related to this transaction was $0.02 million or approximately USD 0.002 per share during Q11 2017 versus no such expenses in Q11 2016 primarily because it is not yet generating any revenues but incurred general and administrative expenditures of $249 thousand during the quarter ended September 30.

cannabis investor joint venture

Sundial Group has entered into a binding agreement to contribute $88 million in cash and shares of its subsidiary, Sundial Growers Inc. (“SGI”) for the acquisition by Lesotho Hemp Company Ltd. (LHC), which is developing an industrial hemp crop outside of Maseru, Lesotho.

This investment will provide Sundial Group access to high margin product development initiatives from extraction through sale and drive operational efficiencies including economies of scale. Non-cash share based compensation expense related to this transaction was $0.02 million or approximately USD 0.002 per share during Q11 2017 versus no such expenses in Q11 2016 primarily because it is not yet generating any revenues but incurred.

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