4Front Ventures Completes Sale-Leaseback Transaction Generating Proceeds of $33 Million
BY PR Newswire 12/17/2020
PHOENIX, Dec. 17, 2020 /PRNewswire/ - 4Front Ventures Corp. ( FFNTF ) ("4Front" or the "Company") is pleased to announce it has completed the sale and leaseback of its cultivation and production facilities in Olympia, WA and Georgetown, MA (the "Transaction") with an affiliate of Innovative Industrial Properties, Inc. ( IIPR ), ("IIP").
This previously announced Transaction generated proceeds of US$33 million which were used by the Company to pay down the entire outstanding senior secured debt obligation to affiliates of Gotham Green Partners. The balance of the proceeds will be used for general corporate purposes.
"We are thrilled to enter into this new long-term real estate partnership with IIP," said Leo Gontmakher, Chief Executive Officer of 4Front. "The successful closing of the Transaction marks a significant milestone in our stated strategy to further strengthen our balance sheet, providing the Company greater flexibility to fund its growth initiatives. The closing of the Transaction allows us to continue our laser focus on profitable growth within our core markets of Massachusetts, Illinois, California, Washington and Michigan."
"We are excited to welcome 4Front to our premier tenant roster," said Paul Smithers, President and Chief Executive Officer of IIP. "4Front has developed a strong footprint in their core operating markets, with a proven ability to execute and deliver a wide variety of high-quality, consistent cannabis products on a large scale. We look forward to continuing to support 4Front as they deepen their operations and strategic relationships in existing states and expand into new ones like California and beyond."
In connection with this Transaction, 4Front issued LI Lending LLC ("LI Lending") 12,135,922 class A subordinate voting share purchase warrants (the "Warrants") on a private placement basis with a strike price of $0.824 USD (the "Private Placement"). The Warrants have a two-year expiration period and are being issued in exchange for LI Lending waiving security on the Georgetown property which was previously part of LI Lending's collateral package.
The issuance of Warrants to LI Lending constitutes a "related party transaction" within the meaning of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ("MI 61- 101"). The Private Placement is exempt form the formal valuation and minority approval requirements provided under MI 6-101 as the Company is not listed on specified markets and the fair market value (as determined under MI 61-101) of the Warrants exceeds 25% of the Company's market capitalization (as determined under MI 61-101).
A material change report in respect of this related party transaction could not be filed earlier than 21 days prior to the closing of the Private Placement due to the fact that the details of the Private Placement were not finalized until shortly prior to the completion of the Transaction.
About 4Front Ventures Corp. ( FFNTF )
4Front (CSE: FFNT) is a national multi-state cannabis operator and retailer, with a market advantage in mass-produced, low-cost quality branded cannabis products. 4Front manufactures and distributes a portfolio of over 25 cannabis brands including Marmas, Crystal Clear, Funky Monkey, Pebbles, and the Pure Ratios wellness collection, distributed through retail outlets and their chain of strategically positioned Mission branded dispensaries.
Headquartered in Phoenix, Arizona, 4Front has operations in Illinois, Massachusetts, California, Michigan, and Washington state. From plant genetics to the cannabis retail experience, 4Front's team applies expertise across the entire cannabis value chain. For more information, visit 4Front's website www.4frontventures.com.
