Green Growth Brands has signed a definitive agreement to acquire all of the issued and outstanding shares of capital stock of Spring Oaks Greenhouses, Inc.
The purchase price for the shares of capital stock of Spring Oaks is approximately USD$54,650,000 (CAN$73,613,550), which is subject to certain post-closing purchase price adjustments.
The deal shall be satisfied by GGB at closing through a combination of: (i) cash in the amount of USD$26,150,000 (CAN$35,224,050), (ii) the issuance of common shares of GGB to Spring Oaks in the aggregate amount of USD $17,100,000 (CAD$23,033,700) (the “Consideration Shares”), with a price of USD$2.35 (CAD$3.16) per common share of GGB, and (iii) a convertible secured promissory note in the aggregate amount of USD$11,400,000 (CAN$15,355,800) (the “Convertible Secured Promissory Note”).
The Convertible Secured Promissory Note shall have a maturity date of 12 months following the date of closing, and be convertible, on the maturity date, at the option of Spring Oaks, into common shares of GGB at a conversion rate equal to the greater of (i) USD$5.00 (CAD $6.73) per common share and (ii) the closing market price of a GGB common share on the CSE on the trading day immediately prior to the Note’s maturity date, less fifteen percent. The Consideration Shares shall be subject to lock-up agreement for 16 months following the date of closing.
Completion of the acquisition of Spring Oaks is expected to occur in August 2019 and remains subject to regulatory approval, customary conditions of closing, and the satisfactory completion of due diligence by GGB.
In connection with the anticipated closing of the Spring Oaks transaction, GGB intends to pay a fee (the “Fee”) of USD$500,000 (CAD$673,500) to Jeremy Giles in full satisfaction and settlement of certain finder services performed on GGB’s behalf.
The Fee will be paid through (1) a cash payment in the amount of USD$250,000 (CAD$336,750), and (2) the issuance of common shares of GGB in the aggregate amount of USD$250,000 (CAD $336,750), priced at the time of the closing. Upon completion of the acquisition of Spring Oaks GGB will enter into a consulting services agreement with Mr. Giles for governmental relations services.
“Entering Florida through the Spring Oaks acquisition will be a great addition to our existing MSO presence in Nevada and Massachusetts.”
Peter Horvath, Green Growth Brands (pictured)
Spring Oaks holds a medical marijuana dispensary license and authorization to operate as a Medical Marijuana Treatment Center in the state of Florida.
The medical marijuana dispensary license, received in April of this year, authorizes Spring Oaks to initiate production, processing, and dispensing of medical marijuana and marijuana products. The license grants the right, but not the obligation, to open up to 35 dispensaries, subject to an increase to 40 when the Florida Medical Marijuana program surpasses 300,000 patients.
“Entering Florida through the Spring Oaks acquisition will be a great addition to our existing MSO presence in Nevada and Massachusetts, as well as to our CBD business that already has a national presence,” said Green Growth Brands CEO, Peter Horvath.
“We admire several of the existing operators in the state and Florida is a special market, with favorable financials implications for the best operators. We look forward to quickly scaling our operations in the state and bringing our expertise to every patient.”
Green Growth also announced that it has mutually agreed with ZLJT LLC and Arizona Natural Pain Solutions (jointly referred to as “Desert Rose”), to terminate the previously announced definitive agreement to acquire control of Desert Rose.
“Desert Rose is a well-run operation,” said Horvath. “However, we have made the strategic decision to turn our focus to Florida, where we believe we can grow our presence and brand recognition across the state at scale.”Cannabis Business Worldwide