Get ready for fireworks this is a gym ready to explode will be buying! Supreme to acquire prebuild marijuana licence
2014-05-13 10:04 ET - News Release
Mr. Zach Stadnyk reports
SUPREME PHARMACEUTICALS INC. ANNOUNCES SECOND ACQUISITION TARGET
Supreme Pharmaceuticals Inc. has signed a letter of intent (LOI) to acquire a greenhouse facility and 100 per cent of a Southern Ontario-based company that has been approved for a prebuild Marijuana for Medical Purposes Regulations licence. Under the terms of the MMPR licence, the target company can build out and operate a 342,000-square-foot facility that can produce up to 24 million grams (24,000 kilograms) of medicinal marijuana per year. Supreme has made an initial $250,000 payment under the terms of the LOI, and must, by May 22, 2014, advance to the target company an additional $750,000, at which time Supreme will own the facility, as described below. The transaction terms contained in the LOI are binding on the parties, subject to final documentation. Supreme currently has the necessary funds on hand to close this portion of the transaction.
The target company has the option to purchase an Ontario facility that is a state-of-the-art 342,000-square-foot facility covering approximately seven acres that was originally built by Agriculture Canada. The target company has placed in trust with the vendor of the facility the initial down payment of $250,000 to buy the facility, and upon Supreme providing the balance of the closing payment of $750,000, the facility will be fully owned by Supreme, which will have a two-year period to pay to the vendor another $4.5-million. Upon closing of the acquisition of the facility, year one will be an interest-free period, and year two will bear interest of 7 per cent.
To complete the licensing requirement and move from prebuild status to MMPR, the target company must complete the installation of the required security measures. Once Health Canada completes its final inspection of the facility, the target company will be granted an MMPR licence. It is anticipated that initial production could commence by the fourth quarter of 2014. The target company anticipates it will take 90 days after taking over the facility to construct and implement the required security measures.
Health Canada has stated that as of 2013 there were 40,000 users of medical marijuana and that by 2024 there could be over 450,000. The industry is evolving rapidly as Supreme looks to become a commercial producer in Canada.
Terms of the target company acquisition
Following the closing of the purchase of the facility, Supreme has agreed to buy all of the issued and outstanding shares of the target company in exchange for that number of shares representing 45 per cent of the current issued and outstanding common shares of Supreme, subject to regulatory approval. Neither control or the board of Supreme shall not change.
Management stated: "This new acquisition is in line with Supreme's goal of becoming a national company with its potential acquisitions in both British Columbia and Southern Ontario. We believe this transaction could provide significant upside potential for our shareholders. We have made this strategic acquisition to build long-term value for our shareholders."
