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Sira Naturals Acquired By Canadian Cannabis Company
The Milford-based marijuana facility was the first in the state to get a recreational license.
By Charlene Arsenault, Patch Staff
Oct 21, 2018
MILFORD, MA—A Toronto-based cannabis acquisition firm has purchased Milford-based Sira Naturals and four other U.S. companies.
The Canadian Cannabis Strategies Acquisition Corp. is toking up Sira and companies in Nevada and Colorado to create an "anchor portfolio," reports the Worcester Business Journal.
The company is dishing out $76 million for the five companies.
In total, CSAC is paying $76 million in U.S. money to acquire the five firms and is issuing about 7.6 million Class B shares and $43.7 million in promissory notes.
In June, Sira Naturals was named the first business in Massachusetts to be awarded a license to grow adult-use cannabis in the state, according to multiple reports. The Massachusetts Cannabis Control Commission met with Sira Naturals in a public hearing to address an application for its cultivation facility in Milford. The company grows medical marijuana at the facility already that it sends to dispensaries in Cambridge, Needham and Somerville, and were granted the OK to cultivate product for recreational facilities.
And a month later, the company was also given the approval from the Massachusetts Cannabis Control Commission to manufacture marijuana-infused products and to transport marijuana.
CSAC called Sira Naturals a "best-in-class operator" in Massachusetts.
Organization and nature of operations
Cannabis Strategies Acquisition Corp. (“Cannabis Strategies” or the “Corporation”) is a special purpose acquisition
corporation which was incorporated for the purpose of effecting an acquisition of one or more businesses or assets, by
way of a merger, amalgamation, arrangement, share exchange, asset acquisition, share purchase, reorganization, or
any other similar business combination involving the Corporation (a “Qualifying Transaction”).
The Corporation’s
business activities are carried out in a single business segment.
The Corporation was incorporated on July 31, 2017 under the Business Corporations Act (Ontario) and is domiciled in
Canada. The registered office of the Corporation is located at 199 Bay Street, Suite 5300, Commerce Court West,
Toronto, Ontario, M5L 1B9. The head office of the Sponsor (as defined below) is located at 590 Madison Avenue, 26th
Floor, New York, New York, 10022.
On December 21, 2017, the Corporation completed its initial public offering (the “Offering”) of 12,500,000 Class A
Restricted Voting Units at $10.00 per Class A Restricted Voting Unit. Each Class A Restricted Voting Unit consisted of
one Class A restricted voting share (“Class A Restricted Voting Share”) of the Corporation, one share purchase
warrant (each, a “Warrant”) and one right (each, a “Right”). Each Class A Restricted Voting Share, unless previously
redeemed, will be automatically converted into one Class B Share following the closing of a Qualifying Transaction.
All warrants will become exercisable at a price of $11.50 per share, commencing 65 days after the completion of a
Qualifying Transaction and will expire on the day that is five years after the completion of a Qualifying Transaction or
may expire earlier if a Qualifying Transaction does not occur within the permitted timeline of 18 months (“Permitted
Timeline”) (subject to extension, as further described herein) from the closing of the Offering or if the expiry date is
accelerated. Each Warrant is exercisable to purchase one Class A Restricted Voting Share (which, following the
closing of the Qualifying Transaction, will become one Class B Share of Cannabis Strategies and each Right would
represent the entitlement to automatically receive, for no additional consideration, one-tenth (1/10) of one Class A
Restricted Voting Share (following the closing of a Qualifying Transaction, which at such time will be one-tenth (1/10)
of a Class B Share).
In connection with the Offering, the Corporation granted the underwriter a 30-day non-transferable option to purchase
up to an additional 1,875,000 Class A Restricted Voting Units, at a price of $10.00 per Class A Restricted Voting Unit,
to cover over-allotments, if any, and for market stabilization purposes.
Concurrent with the completion of the Offering, Mercer Park CB, L.P. (the “Sponsor”), a limited partnership formed
under the laws of the State of Delaware, indirectly controlled by Mercer Park, L.P., a privately-held family office based
in New York, New York and Kamaldeep Thindal and Charles Miles (or persons or companies controlled by them)
(collectively with the Sponsor, the “Founders”) purchased an aggregate of 3,662,109 Class B Shares ("Founders'
Shares"), consisting of 3,642,109 Class B Shares purchased by the Sponsor, 10,000 Class B Shares purchased by
Kamaldeep Thindal, and 10,000 Class B Shares purchased by Charles Miles, in each case assuming that the overallotment
option was exercised in full.
In addition, the Sponsor purchased an aggregate of 250,000 Class B Units (the
“Class B Units”) at $10.00 per Class B Unit and 2,500,000 Warrants (“Founders’ Warrants”) at $1.00 per Founders’
Warrant. Each Class B Unit consists of one Class B Share, one Warrant and one Right. The Founders’ Warrants will
be subject to the same terms and conditions as the Warrants underlying the Class A Restricted Voting Units and Class
B Units. The Rights underlying the Class B Units will be subject to the same terms and conditions as the Rights
underlying the Class A Restricted Voting Units.
On January 19, 2018, the underwriter exercised its over-allotment option to purchase an additional 975,000 Class A
Restricted Voting Units for aggregate proceeds of $9,750,000. As a result of the exercise of the over-allotment option,
an aggregate of 13,475,000 Class A Restricted Voting Units of the Corporation were issued for aggregate proceeds of
$134,750,000. Due to the partial exercise of the over-allotment option, an aggregate of 227,812 Class B Shares (also
known as Founders’ Shares) were forfeited without compensation by the Founders on January 19, 2018. As a result,
following the exercise of the over-allotment option and forfeiture of the 227,812 Founders’ Shares, the Founders own
an aggregate of 3,434,297 Class B Shares, 262,188 Class B Units and 2,621,870 Founders’ Warrants.
Unaudited
1. Organization and nature of operations (continued)
Each Class A Restricted Voting Unit commenced trading on December 21, 2017 on the Aequitas NEO Exchange Inc.
(the “Exchange”) under the symbol “CSA.UN”, and separated into Class A Restricted Voting Shares, Warrants and
Rights following the close of business on January 30, 2018, being 40 days following the closing of the Offering, which
trade under the symbols “CSA.A”, “CSA.WT” and “CSA.RT”, respectively. The Class B Shares issued to the Founders
and the Class B Units issued to the Sponsor will not be listed prior to the Qualifying Transaction.
The proceeds of $134,750,000 from the Offering and over-allotment are held by Odyssey Trust Company, as Escrow
Agent, in an escrow account (the “Escrow Account”) at a Canadian chartered bank or subsidiary thereof, in
accordance with the escrow agreement. Subject to applicable law and payment of certain taxes, permitted
redemptions and certain expenses, as further described herein, none of the funds held in the Escrow Account will be
released to the Corporation prior to the closing of a Qualifying Transaction.
The escrowed funds will be held to enable
the Corporation to (i) satisfy redemptions made by holders of Class A Restricted Voting Shares (including in the event
of a Qualifying Transaction or an extension to the Permitted Timeline of up to 36 months with shareholder approval
from the holders of Class A Restricted Shares and the Corporation’s board of directors, or in the event a Qualifying
Transaction does not occur within the Permitted Timeline), (ii) fund a Qualifying Transaction with the net proceeds
following payment of any such redemptions and deferred underwriting commissions, and/or (iii) pay taxes on amounts
earned on the escrowed funds and certain permitted expenses. Such escrowed funds and all amounts earned,
subject to such obligations and applicable law, will be assets of the Corporation. These escrowed funds will also be
used to pay the deferred underwriting commissions in the amount of $4,716,250, 50% of which will be payable by the
Corporation to the underwriter only upon the closing of a Qualifying Transaction (subject to availability, failing which
any short fall would be required to be made up from other sources and the remaining 50% of which (or, if a lesser
amount, the balance of the non-redeemed shares' portion of the Escrow Account, less tax liabilities on amounts
earned on the escrowed funds and certain expenses directly related to redemptions) will be payable by the
Corporation as it sees fit, including for payment to other agents or advisors who have assisted with or participated in
the sourcing, diligence and completion of its Qualifying Transaction).
In connection with consummating a Qualifying Transaction, the Corporation will require (i) approval by a majority of the
directors unrelated to the Qualifying Transaction, and (ii) approval by a majority of the holders of the Class A Restricted
Voting Shares and Class B Shares, voting together as if they were a single class of shares, at a shareholders meeting
held to consider the Qualifying Transaction, if required by the Exchange's rules at the time of the Qualifying
Transaction.
Irrespective of whether they vote for or against, or do not vote on, the proposed Qualifying Transaction,
holders of Class A Restricted Voting Shares may elect to redeem all or a portion of their Class A Restricted Voting
Shares at a per share price, payable in cash, equal to the pro-rata portion per Class A Restricted Voting Share of: (A)
the escrowed funds available in the Escrow Account at the time of the shareholders meeting (if required by the rules of
the Exchange at the time of the Qualifying Transaction, or if no such shareholders’ meeting is required, at the time
immediately prior to the redemption deposit timeline), including interest and other amounts earned thereon; less (B) an
amount equal to the total of (i) applicable taxes payable by the Corporation on such interest and other amounts earned
in the Escrow Account and (ii) actual and expected direct expenses related to the redemption, each as reasonably
determined by the Corporation, subject to certain limitations. Each holder of Class A Restricted Voting Shares,
together with any affiliate of such holder or any other person with whom such holder or affiliate is acting jointly or in
concert, will be subject to a redemption limitation of an aggregate 15% of the number of Class A Restricted Voting
Shares issued and outstanding.
Class B Shares will not be redeemable in connection with a Qualifying Transaction or
an extension to the Permitted Timeline and holders of Class B Shares shall not be entitled to access the Escrow
Account should a Qualifying Transaction not occur within the Permitted Timeline.
CANNABIS STRATEGIES ACQUISITION CORP. (CBAQF) ANNOUNCES PROPOSED QUALIFYING TRANSACTION
October 17, 2018
Highlights of the Transaction
• CSAC has executed agreements to acquire 5 existing companies to create an anchor portfolio (the “Anchor Portfolio”) of vertically integrated operations in the Eastern and Western United States, pending regulatory approval on licensing and structure
• The Anchor Portfolio was assembled based on anticipated 2018 profitability and strength of the resulting platform for future growth
- The Anchor Portfolio consists of positive Adjusted EBITDA, vertically integrated operators in limited license states with large addressable consumer populations
- The Anchor Portfolio companies comprise proven operators with deep talent pools to contribute expertise to a broader cannabis roll-up
- The combined operations are expected to have over 325 employees across 3 cultivation and production facilities and 8 dispensaries
- The quality of the Anchor Portfolio is reflected in the fact that each acquisition target required processes and controls that are expected to be sufficient to pass a 3 year financial audit
• The Anchor Portfolio possesses a strong growth profile on top of existing positive Adjusted EBITDA
- Target pro forma revenue of Cdn.$100–110 million for 2018, targeted to grow to Cdn.$250–270 million for 2019 (excluding additional acquisitions)
- Pro forma Adjusted EBITDA targeted in the range of Cdn.$30-35 million in 2018, with a goal to grow to Cdn.$130–150 million Adjusted EBITDA1 for 2019 (excluding additional acquisitions)
- The Anchor Portfolio is anticipated to produce over 5,600 kilograms of finished flower and over 550,000 grams of cannabis oil extract in 2018, targeted to grow to over 31,000 kilograms of finished flower and 3,100,000 grams annually by 2020
• In connection with the Transaction, CSAC has built an outstanding executive team of proven leaders in marketing, operations and finance, areas essential for future CSAC success
• Over 35% of the total consideration (valued at share price as of 15 October 2018) to be paid in shares, demonstrating a strong confidence in CSAC’s value proposition and creating a strong alignment of incentives for all stakeholders.
• Going forward, CSAC expects to focus on building beyond its Anchor Portfolio with future acquisitions and organic growth, with a focus on brand and consumer experience
Ayr Strategies Q3 Revenue Increases 61% Sequentially to $45.5 Million
November 18, 2020 at 4:26 pm
Published by NCV Newswire
Ayr Strategies Reports Third Quarter 2020 Results & Updates Investors on 2021 Expansion Initiatives
Q3 Revenue up 61% Q/Q to $45.5 Million; Adjusted EBITDA More Than Doubles to $19.3 Million
Annual Revenue & Adjusted EBITDA Run-Rate of $182 Million and $77 Million, Respectively
Generated Over $13 Million in Cash from Operations in Q3; Cash Balance Remains Strong with $23 Million as of September 30, 2020
Received Three HCA Approvals to Enter Adult-Use Market in Greater Boston in 2021
Announced Planned Expansions into Pennsylvania, Ohio and Arizona; More than Tripling Addressable Market to Over 40 Million People Across Five States
TORONTO, Nov. 18, 2020 (GLOBE NEWSWIRE) — Ayr Strategies Inc. (CSE: AYR.A, OTCQX: AYRSF) (“Ayr” or the “Company”), a vertically-integrated cannabis multi-state operator (MSO), is reporting financial results for the three months ended September 30, 2020. Unless otherwise noted, all results are presented in U.S. dollars.
These past several months have been a transformative period for our business. We had a record quarter with revenues up 42% year-over-year and 61% sequentially and Adjusted EBITDA more than doubled.
Ayr CEO Jonathan Sandelman
And our strong annual run-rate through Q3 does not include our new dispensary in Las Vegas set to open in a few weeks, our transition to adult-use retail sales in Massachusetts, nor our recently announced acquisitions in Arizona, Pennsylvania and Ohio, all of which when completed point to an even more robust 2021.
“Regarding the roll out of our adult-use sales in Massachusetts, the team in Massachusetts has done an incredible job to get us closer to opening our adult-use stores in 2021, as we received Host Community Agreement approvals for three of our Greater Boston locations, which include our existing Somerville dispensary and new locations in Watertown and on Boylston Street in Boston, right next to the Apple Store. And, while we are incredibly excited to be building out the best retail footprint in Massachusetts, we can’t forget about the strength of our wholesale business, which continues to benefit from expanded cultivation capacity and strong demand resulting from new adult-use dispensaries coming online every month,” Mr. Sandelman continued.
“In Nevada, our revenue improvements have been driven by exceptional retail growth, where dispensary sales are up more than 34% year-over-year on a same-store sales basis. Gross margins have also continued to improve as a result of our expanded cultivation capacity. In August, we were granted an additional dispensary license in Clark County and our new dispensary is on track to open before the end of the year, allowing us to deepen our market presence in the state and reach an even greater number of patients and customers.”
“We are excited about our announced expansion into Arizona, Pennsylvania and Ohio and are working hard toward closing these transactions. With our acquisition partner, we opened our first dispensary in Pennsylvania just last month and continue to expect additional dispensary openings in early 2021. I’ve always said this business depends on its people and we’ve seen that this year more that ever – from implementing a rapid COVID response, to receiving three HCA approvals in Massachusetts, to growing the highest quality flower, our team has formed a solid foundation for growth. Our acquisitions in Arizona, Pennsylvania and Ohio will bring many more great people and we look forward to welcoming them to the Ayr family,” Mr. Sandelman concluded.
Warrant Update
As of September 30, 2020, the Company had 12.3 million listed warrants issued and outstanding, exercisable for one Subordinate Voting Share at C$11.50 and expiring in May 2024. The warrants can be accelerated by the Company if the shares trade at C$18 or higher for a period of 20 out of 30 trading days. That threshold was triggered on November 5, 2020. The Company has not made any announcements regarding warrant acceleration, however, approximately $10 million worth of warrants have been exercised for cash in the open market between September 30, 2020 and November 18, 2020.
Acquisition Updates
Arizona
Earlier this month, Ayr signed a binding term sheet to acquire a vertically integrated cannabis operator in Arizona. The terms of the transaction include upfront consideration of $81 million, made up of $10 million in cash, $30 million in seller notes, and $41 million in stock (approximately 2.75 million shares priced at 10-day VWAP prior to announcement), with an additional 2 million shares may be payable upon the achievement of established cultivation targets.
Additional earn-out consideration in 2021 and 2022 may be paid in shares exchangeable into subordinate voting shares of Ayr, priced at the then 10-day VWAP, with the earnout value calculated based on a set discount to Ayr’s then trading enterprise value to Adjusted EBITDA multiple and based on exceeding Adjusted EBITDA hurdles in each year.
The agreement includes three licensed dispensaries, two in Chandler and one in Glendale, a 10,000 ft2 licensed indoor cultivation and processing facility in Chandler and an 80,000 ft2 licensed indoor cultivation facility under development in Phoenix.
Pennsylvania
In August, Ayr reached an agreement to acquire 100% of the membership interests in CannTech LLC for total consideration of $57 million. CannTech LLC is a licensed operator in the Commonwealth of Pennsylvania including a 143,000 ft² cultivation and processing facility with the initial construction phase comprising 45,000 ft² recently approved for cultivation and expected first harvest in March 2021. The 13-acre site provides ample room for further expansion even beyond the existing 143,000 ft² facility.
The licensed operator also has the right to operate six dispensaries poised to open in excellent retail locations, most of which are clustered in the Pittsburgh and Philadelphia region. The first dispensary opened last month in New Castle, PA, with two more expected to open in early 2021. The licensed operator also has a strong research program in collaboration with a local medical school. The transaction is expected to close by year-end.
In a separate transaction in September, Ayr proposed to acquire 100% of the membership interests in grower-processor DocHouse LLC for total consideration of $20.8 million. DocHouse LLC includes a 38,400 ft2 cultivation and extraction facility which has the capacity to expand to 74,000 ft2. The expected first harvest from the facility is in the second quarter of 2021. The transaction is expected to close by the end of November.
Ohio
In September, Ayr signed a definitive purchase agreement for an operational processing facility and has signed a non-binding term sheet regarding exclusive management rights for a level 1 cultivation license (the largest canopy license in the state) in Ohio, a growing and undersupplied market. According to the Ohio Department of Commerce, annualized retail medical marijuana sales exceeded $200 million as of October, more than doubling the market size since January 2020. Consideration for the two transactions totals $18.2 million, including $10.2 million of cash and $8.0 million in convertible seller notes.
The cultivation facility of approximately 58,000 ft2 is under construction and the approximately 9,000 ft2 processing facility is operational. Following the closing and completion of the initial phase of the level 1 cultivation facility build-out, Ayr has the flexibility to further expand canopy subject to the approval of the Ohio Department of Commerce. These transactions are expected to close in the first quarter of 2021.
These agreements are subject to, among other things, the satisfactory completion of due diligence, definitive documentation, the receipt of required regulatory approvals and the absence of a material adverse change prior to closing.
Operational Highlights
Nevada Results
Average daily retail revenues (medical and adult-use) were over $305,000 in the third quarter; daily transaction volumes over 4,500, with an average ticket of $68 per transaction
Same-store-sales increased more than 34% year-over-year, driven by a 14% increase in daily ticket volume and 20% increase in average ticket
Recently awarded two additional dispensary licenses in the greater Las Vegas market—one in Clark County and one in Henderson—target opening date for Clark County dispensary December 2020
Highly Edible voted best gummy at Las Vegas Cannabis Awards two years in a row; CannaPunch second place for best drink and Nordic Goddess second place for best topical
Massachusetts Results
Average daily retail revenues (medical only) increased to over $55,000 in the third quarter; daily transaction volumes of ~350, with an average ticket of $158 per transaction
Same-store-sales increased 140% year-over-year, split about evenly between ticket volume and average ticket
Selling to 60 of the state’s 81 adult-use dispensaries, with number one market share in flower, vapes and concentrates according BDS Analytics
Wholesale revenues ramped to over $11.0 million in the quarter, growth of 63% y/y reflecting the increase in capacity brought on in May 2020
