Tilray Inc (NASDAQ: TLRY) will be closing a facility it acquired just last year as a means of cutting costs. The facility, referred to as High Park Gardens, was acquired as part of the Natura Naturals acquisition early last year.
In connection with the decision, operations at the facility will be wound down over the next six weeks, resulting in annualized savings of approximately $7.5 million on a net basis, which is said to consist of current production costs net of future third part purchases and depreciation. The move is also said to reduce ongoing capital expenditures.
The facility itself is large in size and signifies that Tilray has substantially overbuilt its cultivation capacity relative to consumer demand. The facility consists of 406,000 square feet of licensed space for cultivation and manufacturing, largely used for the recreational market in Canada. The greenhouse itself however consists of 662,000 square feet.
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Tilray will see its High Park Farms facility in Enniskillen, Ontario, as well as its High Park Holdings facility in London, Ontario remain operational. The former is cultivating and processing center, while the later is geared towards processing, manufacturing, and research and development.
Job loss figures were not included within the release.
Tilray acquired Natura Naturals in January 2019 in a transaction valued at up to $70 million. The purchase consisted of $35 million paid at closing, comprised of $15 million in cash and $20 million of class 2 Tilray shares. Earn-out arrangements were put in place for the remaining $35 million.
Tilray inc last traded at $10.81 on the Nasdaq.
Information for this briefing was found via Sedar and Tilray. 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.
