Emerald Health Therapeutics (TSXV: EMH) is disputing certain claims made by Village Farms (TSX: VFF) (NASDAQ: VFF) in a news release issued last night related to Pure Sunfarms. Within, Village Farms claimed that Emerald Health has failed to meet commitments agreed to under the joint venture, and as a result Village will be taking majority ownership of Pure Sunfarms.
Specifically, Emerald Health is disputing several claims made by Village Farms related to provisions allowed under the shareholder agreement. Village Farms claims that Emerald had failed to provide $5.94 million on November 1, and following the expiration of a default notice, Village was entitled to advance the $5.94 million and take the corresponding ownership interest in the joint venture. Emerald insists that no such provision exists within the shareholder agreement.
Rather, Emerald states that a contribution notice has to be issued and subsequently defaulted on as per the shareholder agreement the two parties signed. Village Farms yesterday stated that Emerald failed to fulfill a “default notice” rather than a “contribution notice.”
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Further, under the Delta 2 Option Agreement, Emerald Health was to provide advance a total of $25.0 million to Pure Sunfarms. To date, Emerald has advanced $17.41 million in total to the venture. The final $5.94 million was to be advanced by November 1, 2019. Rather than advance the funds, Emerald notified Pure Sunfarms that it would pay for this by setting off $5.94 million from the currently outstanding $13.0 million loan owed to Emerald by Pure Sunfarms. Emerald thus is disputing the release of any of its escrowed shares by the escrow agent, claiming that it has fulfilled its commitments.
Following Pure Sunfarms actions, Emerald has now demanded for the full $13.0 million loan, plus interest, to be repaid to Emerald immediately – putting in to question Emerald’s right to the escrowed shares, given that it is now demanding the full amount of the loan be returned.
Emerald Health also remains in dispute with Pure Sunfarms related to $7.2 million claimed to be owed under the supply agreement between the two firms.
Emerald claims that it still currently owns a 50% stake in the Pure Sunfarms joint venture.
Emerald Health closed yesterday’s session at $0.42 on the TSX Venture.
Information for this briefing was found via Sedar, Emerald Health Therapeutics, and Village Farms International. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
