February 12, 2024 By Grow Opportunity Staff
(Globe Newswire) Vancouver — Christina Lake Cannabis Corp., a leading producer of high quality extracts and sun grown cannabis, has completed the acquisition of certain assets from a private British Columbia corporation. The previously announced transaction includes acquiring ownership of outdoor cultivation facilities in Midway, British Columbia, related harvesting and manufacturing equipment, and approximately 19,000 kg. of biomass for a total purchase price of $3,000,000.
“This acquisition will solidify our position as a key supplier to the country’s top brands,” said Mark Aiken, CEO of Christina Lake Cannabis. “We are expanding our growing capability to meet rising customer demand. The increased capacity is a catalyst for robust topline growth and improved profitability by harnessing economies of scale. As the demand for our products has continued to grow over the last 2 years, we have had to supplement our own cultivation with tens of thousands of kilos of biomass supply from the wholesale market. The Midway acquisition secures our supply chain providing CLC with cost certainty and solid control over input quality.”
The Midway property represents a total of 342 acres, with slightly over 100 acres of licensed cultivation space. With this acquisition, CLC will expand its total licensed outdoor cultivation footprint to over 120 acres. Potential further expansion of additional acreage is available and could be licensed by the Company should the demand arise.
“Over the last 18 months CLC has focused on operational efficiencies and investment in their processing infrastructure,” said Jay McMillan, chairman of the Christina Lake Cannabis board of directors. “This has resulted in increased productivity and expanded capacity. The investment in the Midway property now aligns CLC’s cultivation and processing capability, positioning the company for future growth.”
The first 80-acre crop of propriety CLC strains will be planted in the spring of 2024 with expansion to the full 100 acres planned for 2025. The company will leverage the strength of their genetic development and outdoor cultivation skills to support the additional growth. CLCs products are leveraged by brands across the Canadian cannabis market to manufacture vapes, edibles, pre-roll and infused pre-roll products for both the recreational and medical markets.
The purchase price for the acquisition was paid through the issuance of a secured convertible promissory note having a 5-year term. The Note is secured by the land and buildings acquired in the transaction. The note bears interest at a rate of 10 per cent per annum for year 1, 15 per cent per annum for year 2, and 20 per cent per annum for the remaining 3 years.
Repayment of the note shall be interest only payments paid annually on February 9, 2025 and February 9, 2026, then quarterly interest payments thereafter and $1,000,000 principal repayments on or before each of February 9, 2027, 2028 and 2029 until the remaining principal amount of the Note is satisfied in full.
Outstanding principal and unpaid interest from the note may be convertible into common shares of CLC at a conversion price of $0.05 per common share during the term. The vendor shall have the right to convert the note at any time, subject to a notice period. Additionally, the company shall have the right to repay the note at any time during the term together with prepayment of any remaining interest payable under the note.
The definitive agreement for the transaction also provides the vendor with a right to nominate a member to CLC’s board of directors for so long as the conversion of the note would result in the vendor holding 10 per cent or more of the common shares. No finder’s fee were payable with respect to the transaction.
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