Green Growth Brands (CSE: GGB) announced this morning that it is walking from the previously announced arrangement to combine with MXY Holdings, also known as Moxie. The arrangement was to see an all-stock transaction valued at $310 million whereby the two firms would become one and remain in Green Growth’s public vehicle.
The termination of the arrangement which was announced on July 9 is believed to be the result of Green Growth’s cratering equity price. Once valued at over $5.00 per share, the equity price as of the time of writing has fallen to $0.76 despite share buybacks conducted by the company. Under the terms of the initial agreement, the equity had to remain in a price range of C$2.71 to $4.52.
Little information has been given on MXY Holdings throughout the process, aside from the fact that the firm had US$39 million in cash on hand at the time of the proposed transaction. This was largely believed to be the justification for such an arrangement, as perpetually cash-strapped Green Growth Brands continues to burn through cash at a quick pace.
Green Growth Brands placed the reason for termination of the agreement on efforts by management to reduce excessive dilution to shareholders. Moving forward, the company has indicated that it will renew its focus on its marijuana operations, with the intention to open 45 dispensaries in a three state rollout with “the same speed and energy it dedicated to its North American CBD network.”
No termination fee is to be paid by either party as a result of the MXY Holdings agreement falling apart. The US$5 million promissory note issued by Moxie to Green Growth Brands is to be repaid in cash by January 31, 2020, while $4 million in “deal fees” will be paid by July 1, 2020.
Green Growth Brands last traded at $0.75 on the CSE.
Information for this briefing was found via The CSE 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.