Greenhouse Grow Facility Will Provide
Extract Capabilities for Branded Products
TORONTO, April 1, 2019 /CNW/ - Harvest One Cannabis
Inc. (TSXV: HVT, OTCQX: HRVOF – "Harvest One") is pleased to
announce today that it has acquired an initial 52% interest in
Greenbelt Greenhouse Ltd. ("Greenbelt"), an Ontario private company located in
Hamilton, Ontario (herein, the
"Transaction").
This strategic acquisition will supply Harvest One with high
quality greenhouse grown cannabis from Greenbelt's 152,000 sq. ft.
facility which will primarily be dedicated to Harvest One's
expanding cannabis-infused health, wellness, and self-care products
under the Dream Water and Satipharm brands, and expanding products
resulting from the recently announced acquisition of Delivra,
following the closing of that transaction. The Transaction
ensures that Harvest One remains a vertically integrated house of
brands by controlling the production of cannabis through
cultivation and extraction, and ultimately to packaged good for
consumers.
In addition to the greenhouse, the Greenbelt facility also has a
42,000 sq. ft. headhouse which is an ideal location for future
extraction and processing capabilities. Greenbelt has an
application pending with Health Canada for a standard cultivation
license and a standard processor license under the Cannabis
Regulations.
Strategic Rationale
- Harvest One will now control significant production to supply
new infused formulations of existing brands already controlled by
the company.
- Harvest One secures a location to build out extraction
capabilities for its infused products.
- The Transaction ensures good value for shareholders and
provides economical access to a potential 15,000 kgs. or more of
flower per year, once licensed.
- Offtake agreement ensures access to additional supply without
further significant capital investment.
"We are excited to acquire a majority interest in Greenbelt
which significantly increases Harvest One's cannabis supply, as we
continue our formulations on cannabinoid infused health, wellness,
and self-care products across our house of brands" said
Grant Froese, CEO of Harvest One.
"In addition to the exceptional greenhouse facility, this
acquisition also gives Harvest One space to build out its own
extraction capabilities upon licensing which fulfills our goal of
vertical integration from cultivation, to processing, extraction
and, ultimately, premium infused products."
Ian Adamson, President of
Greenbelt commented, "We are delighted to be partnering with
Harvest One and look forward to completing the final retrofit of
our greenhouse facility and securing our licensing approvals from
Health Canada. With Harvest One's expanding portfolio of brands and
their experience in licensing, coupled with our larger grow
facility and space for extraction, we see tremendous upside for
Greenbelt, its shareholders, and its professional team of
operators, as we work together to provide cannabis and cannabis
infused products that consumers will come to know and trust."
TERMS OF THE TRANSACTION
In connection with the Transaction, Harvest One entered into a
securities purchase agreement dated March
29, 2019, with Greenbelt pursuant to which Harvest One
acquired $3,250,000 of treasury
common shares of Greenbelt (the "Treasury Shares"). In
addition, pursuant to a share purchase agreement dated March 29, 2019, between Harvest One and certain
existing shareholders of Greenbelt, Harvest One acquired additional
common shares of Greenbelt (the "Shareholder Shares"), giving
Harvest One an aggregate 52% controlling interest in
Greenbelt. In consideration for the Shareholder Shares,
Harvest One issued 3,521,600 common shares (each share being
issued at $0.923 per Harvest One
share based on Harvest One's 30-day VWAP ending two days prior to
the closing of the transaction), representing approximately 1.9% of
the issued and outstanding shares of Harvest One (on a non-diluted
basis).
Contemporaneous with Harvest One's investment, Greenbelt raised
an additional $1,000,000 of equity
from outside investors. The proceeds from Harvest One's
investment ($3,250,000) and from the
outside investors ($1,000,000) has
been used to retire indebtedness in full owing to existing lenders
to Greenbelt and to payout certain equipment leases, with the
balance of proceeds being used for working capital
purposes. After completion of the Transaction, Harvest One now
holds 52% of the outstanding shares of Greenbelt. In limited
circumstances, Harvest One's interest may be diluted down to
50.1%.
In addition to the foregoing, Harvest One entered into a loan
facility agreement with Greenbelt dated March 29, 2019, pursuant to which Harvest One has
agreed to provide a secured bridge loan facility to Greenbelt - in
an amount of up to $3,500,000 bearing
interest of 4.5% over a 1-year term - pursuant to which Greenbelt
may draw down funds for the purpose of completing the planned
retrofit of Greenbelt's greenhouse facility.
In connection with the Transaction, Harvest One's wholly-owned
subsidiary, United Greeneries Ltd. ("United Greeneries") and
Greenbelt have also entered into an offtake agreement dated
March 29, 2019, pursuant to which
United Greeneries will be entitled to purchase a minimum of 50% of
the offtake from Greenbelt's harvest production following
Greenbelt's licensing. The offtake agreement is perpetual in
nature and provides United Greeneries with agreed minimum volumes
at preferential pricing for the first five years of production and,
thereafter, at the then current market rates.
The Transaction is subject to final approval of the TSX Venture
Exchange.
ABOUT HARVEST ONE CANNABIS INC.
Harvest One is a global cannabis company that develops and
provides innovative lifestyle and wellness products to consumers
and patients in regulated markets around the world. The Company's
range of lifestyle solutions is designed to enhance quality of
life. Shareholders have significant exposure to the entire cannabis
value chain through three wholly-owned subsidiaries: United
Greeneries, a Licensed Producer; Satipharm (medical and
nutraceutical); and Dream Water Global (consumer), and a minority
interest in Burb Cannabis (retail operations). For more
information, please visit www.harvestone.com.
Cautionary Note Regarding Forward-Looking Statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable
securities law ("forward-looking statements").
Forward-looking statements are frequently characterized by words
such as "plan", "continue", "expect", "project", "intend",
"believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain
events or conditions "may" or "will" occur. Forward-looking
statements in this news release include, but are not limited to
statements with respect to accretive earnings, future financial
position and results of operations, anticipated benefits and costs
synergies associated with the Transaction, internal expectations,
estimated margins, expectations for future growing capacity, costs
and opportunities, liquidity of Harvest One Shares, effect of the
Transaction on Harvest One and its future strategy, plans,
objectives, goals, targets and future developments, expectations
for receipt of licenses to process or distribute cannabis in legal
markets, the completion of any capital projects or
expansions.
These statements are only predictions. Various assumptions
were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news
release, including assumptions regarding the expected growth,
results of operations, performance, industry trends and growth
opportunities for Harvest One.
Forward-looking statements are based on the opinions and
estimates of management of Harvest One at the date the statements
are made, and are subject to a variety of risks and uncertainties
and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking
statements, including, without limitation, risks associated with
general economic conditions; adverse industry events; marketing
costs; loss of markets; market or other events limiting the
liquidity of the Harvest One Shares; inability to realize
anticipated synergies; future legislative and regulatory
developments involving cannabis; inability to access sufficient
capital from internal and external sources, and/or inability to
access sufficient capital on favourable terms; the cannabis
industry in Canada and elsewhere
generally; income tax and regulatory matters; the ability of
Harvest One to implement its business strategy; competition; crop
failure; currency and interest rate fluctuations and other risks.
Readers are cautioned that the foregoing list is not
exhaustive.
Management provides forward-looking statements because it
believes they provide useful information to readers when
considering their investment objectives and cautions readers that
the information may not be appropriate for other purposes.
Consequently, all of the forward-looking statements made in this
news release are qualified by these cautionary statements and other
cautionary statements or factors contained herein, and there can be
no assurance that the actual results or developments will be
realized or, even if substantially realized, that they will have
the expected consequences to, or effects on, Harvest One. Readers
are further cautioned not to place undue reliance on
forward-looking statements as there can be no assurance that the
plans, intentions or expectations upon which they are placed will
occur. Such information, although considered reasonable by
management at the time of preparation, may prove to be incorrect
and actual results may differ materially from those
anticipated.
These forward-looking statements are made as of the date of
this news release and Harvest One assumes no obligation to update
or revise them to reflect subsequent information, events or
circumstances or otherwise, except as expressly required by
applicable law.
Neither TSX-V nor its Regulation Services Provider (as
that term is defined in the policies of the TSX-V) accept
responsibility for the adequacy or accuracy of this
release.
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SOURCE Harvest One Cannabis Inc.