News Out - GTEC Strengthens Balance Sheet with $4 million Loan Repayment and Enters into Agreement to Divest of Cannabis Cowboy Shares
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October 08, 2019 06:00 ET | Source: GTEC Holdings Ltd.
Kelowna, BC, Oct. 08, 2019 (GLOBE NEWSWIRE) --
Cannabis Cowboy completes the sale of certain assets to Fire and Flower
GTEC has received a $4 million loan payment, which will strengthen its balance sheet
GTEC enters in an agreement to divest its 25% equity stake in Cannabis Cowboy
GTEC Holdings Ltd. (TSX-V:GTEC) (OTCQB:GGTTF) (FRA:1BUP) (“GTEC” or the “Company”), is pleased to announce that pursuant to the sale of certain assets, as previously announced on September 4, 2019 (the “Transaction”), between Cannabis Cowboy Inc (“CCI”) and Fire & Flower Inc., a wholly owned subsidiary of Fire & Flower Holdings Corp. (“FFHC”) (TSX:FAF), that the Transaction has been completed.
Loan Repayment
Upon the closing of the Transaction, CCI has settled GTEC’s outstanding $4.06 million debt, in a cash repayment (the “Repayment”). The Repayment will strengthen GTEC’s balance sheet as the Company continues its near-term initiatives of completing the development of its two facilities currently under construction, with the expectation to increase its annual production output from its current 4,000 kg output to approximately 9,000 kg in 2020. The Repayment also reinforces GTEC’s ability to fulfill its debt obligations due in the second half of 2020.
“This transaction exemplifies our dedication to strengthening our balance sheet with a disciplined and non-dilutive approach, while realizing profits from non-core assets. This strategy demonstrates management’s commitment to be aligned with our shareholders,” said Norton Singhavon, Founder, Chairman and CEO of GTEC. “We are confident that the strengthened balance sheet will accelerate the development of our core cultivation business and accelerate our transition to profitability.”
Cannabis Cowboy Divestment
Concurrent to the Transaction, GTEC and Cannabis Cowboy had entered into a Share Purchase Agreement where CCI would repurchase all of GTEC’s interest, equal to 25% of CCI (the “Divestment”). As consideration for the Divestment, CCI will pay GTEC a sum of $1 million, payable as follows: (i) $800,000 in shares of FFHC at 10-day volume weighted average price leading to the signing of the definitive agreements related to the aforementioned Transaction; and (ii) a $200,000 Promissory Note to be re-paid in cash. The Promissory Note will have a two-year term and bear an interest rate of 8% per annum and is secured against Cannabis Cowboy’s BC assets. The shares of FFHC will be subject to a statutory 4 month and a day hold. The Divestment is expected to close on or about October 10, 2019.
Strategic Rationale
As previously announced, GTEC is divesting of non-core/non-operational assets to strengthen its balance sheet, while focusing the organization’s resources on the cultivation and extraction of premium indoor flower and its derivatives, with the mandate to establish long-term brand equity and consumer loyalty by distributing premium quality cannabis products.
About GTEC
GTEC Holdings is a specialized cannabis company dedicated to cultivating ultra-premium quality cannabis in purpose-built indoor facilities. The company is vertically integrated across all major sectors of the Canadian cannabis industry and currently holds the following licences issued by Health Canada pursuant to the Cannabis Act and Regulations: three Standard Cultivation licences, two Standard Processing licences (for adult-use sales into the Provincial & Territorial supply chains), two Medical Sales licences (for direct to medical patients), Standard Processing (for extraction), and Analytical Testing.
The management team is comprised of diverse experts from senior roles at leading global food & beverage, CPG and premium alcohol companies. GTEC has completed three cultivation facilities and is currently cultivating and selling cannabis. GTEC’s genetic portfolio is comprised of over 30 unique cultivars which is expected to deliver a sustainable competitive advantage and provide favourable gross margins. GTEC’s ultra-premium indoor flower will be marketed and sold under its flagship trademarked brands; BLK MKT™, Tenzo™, GreenTec™, Cognoscente™ and Treehugger™.
GTEC is actively pursuing sales and distribution opportunities across all major business channels: medical, recreational, B2B and export. GTEC is a publicly traded corporation, listed on the TSX Venture Exchange, OTCQB Venture Market and Frankfurt Stock Exchange. The Company is headquartered in Kelowna, British Columbia.
To view more about the company or to request our most recent corporate presentation, please visit our website at www.gtec.co
On behalf of the board,
Norton Singhavon
Founder, Chairman & CEO
Michael Blady
Co-Founder & Vice President
