Green Growth Brands (CSE: GGB) announced this morning that it has completed the acquisition of its second The+Source location in Nevada. Operating under Henderson Organic Remedies, the option to purchase was initially issued on December 14, 2018.
While the terms of the acquisition are a bit atypical, the 2,693 square foot retail location located in Henderson, Nevada was acquired through the issuance of a secured loan for US$15.58 million, as well as warrant to purchase 7,609,746 common shares. The loan was due on May 4, 2019, and the common share purchase warrant, which was exercise-able at a price of $3.16 per share for a total of CAD$24.02 million, expires on December 31, 2019.
It should be noted, however, that the exercise of the warrant will be a cash-less transaction. Rather, payment-in-lieu will occur, with the remaining interest in Henderson Organic Remedies being transferred to Green Growth Brands upon exercise. While it does not state as such in any related news release or material change, the following comes from the latest financials posted by the firm on May 29, 2019.
The cash portion of the note receivable with HOR is forgivable on the closing of the HOR transaction and transfer of 46.3% ownership interest to the Company. Further, on closing of the HOR acquisition, the warrants will be exercised in exchange for common shares in the Company, and in lieu of cash, the HOR members will deliver the remaining 53.70% interest of HOR.
While the transaction officially closed in August, Henderson Organic Remedies has been the subject of a management agreement since the initial issuance of the secured loan. As a result, Green Growth Brands has been entitled to net cashflow of the location since this point in time.
It is believed that the delay in the closing of the acquisition is attributable to regulatory delays related to regulations maintained by the City of Henderson, Nevada.
Current sales data for the location was not provided by the company, however it was stated that revenue, gross margin, and transaction count has grown by “double digits.”
Green Growth Brands now fully owns two dispensaries in the state of Nevada, with licenses to open seven more. A timeline for these additional locations has yet to be given by the company.
Information for this briefing was found via Sedar and Green Growth Brands. 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.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.