Harvest Health and Recreation (CSE: HARV) this morning released a somewhat opaque update this morning, identifying that it had settled a dispute with a small group of the previous owners of Interurban Capital Group. The company had originally closed a merger with ICG back in March 2020, however disputes quickly arose related to its Washington properties.
As part of the large transaction, the company paid US$85.8 million in shares, and $19.1 million in convertible debt. An additional $9.3 million was also required to be paid upon exercise of a call option to acquire controlling interests in five Washington cannabis dispensaries. Alternatively, $12.4 million could be paid to acquire substantially all of the assets of the dispensaries.
Less than a month following the close of the transaction, Harvest began litigation against the five Washington dispensaries, attempting to enforce terms of service agreements as well as the call option agreements.
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However, it appears those issues have now been settled, with a “mutually agreeable” conclusion being met via a binding settlement agreement. Effectively, $11.75 million worth of shares under the original transaction will be cancelled by Harvest. Harvest will then also receive a $12.0 million secured promissory note that bears interest at 7.5% annually that has a five year maturity. In exchange, Harvest has cancelled the service agreements it attempted to enforce, as well as the call option agreements that were in place for the Washington locations.
The finalization of the arrangement is subject to definitive agreements being entered into.
Harvest Health last traded at $2.41 on the CSE.
Information for this briefing was found via Sedar, and Harvest Health and Recreation. 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.
