Sunniva Receives 30 Day Notice to Terminate for California Campus Lease

Sunniva Inc (CSE: SNN) may be about to lose some of its Californian operations, while all of its Canadian operations are currently in pending sale agreements. The issuer announced earlier this week that it had been slapped with a 30-day notice of termination under its build to lease agreement for its California Campus facility.

Sunniva Inc's Logo

The notice of termination comes at a time when Sunniva is struggling heavily. The Canadian issuer has struggled to close asset sales of two separate Canadian operations, which were being conducted as a means of paying bills for its California Campus. The sale of Sunniva Medical, the Okanagan Falls, BC facility has been expected to close numerous times since its initial announcement this past summer, but has yet to close. The recent management exodus at the firm has not helped either.

And the sale of Natural Health Services is not fairing any better. The deal, which was announced in September, cited the fourth quarter of 2019 as the closing date. Instead, the terms were just significantly modified, resulting in Sunniva expecting to only receive $250,000 in cash for the sale of the assets, and $8.75 million in shares of the private company. Originally, the $9.0 million price tag was to be split equally in terms of cash and equity.

Now, the firm is likely to lose the Cathedral City Glasshouse, referred to as the California Campus. The facility has been under construction for close to two years, and was originally slated for completion in the third quarter of 2018. Fast forward a year later, and construction still has not been completed despite over $29.2 million spent in tenant improvements. Now, following a failure to pay bills of $2.7 million to the landlord related to leasehold improvements, and the failure to follow certain terms under the build to suit arrangement, the landlord has filed a 30 day notice of termination of the lease agreement as well as a notice of default.

Sunniva’s California Campus

Further compounding the issue, is Sunniva was also served with a notice of default by a promissory note holder for not spending the funds on agreed upon expenses. That notice of default is for funds amount to approximately $7.9 million.

Sunniva has identified that it intends to defend the claims vigorously. However, as per the company, ramification of the defaults and notices are “uncertain at this time.” The timing of its occupancy permit for the California Campus cannot be estimated at this time either.

Sunniva held a cash position of $304,000 as of September 30, 2019.

Sunniva Inc last traded at $0.32.

Information for this briefing was found via Sedar and Sunniva Inc. 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.