Auxly Acquires 100% Ownership of Sunens and Amends Credit Facility
TORONTO, Nov. 22, 2021 (GLOBE NEWSWIRE) -- Auxly Cannabis Group Inc. (TSX - XLY) (“Auxly” or the “Company”), a leading consumer packaged goods company in the cannabis products market, today announced that it has acquired 100% ownership of Sunens Farms Inc. (“Sunens”). Pursuant to a share purchase agreement between Auxly and Peter Quiring, the Company acquired all the issued and outstanding securities of Sunens not already owned by Auxly (the “Acquisition”). Concurrent with the Acquisition, Sunens and the Company have amended and restated Sunens’ secured credit facility that was entered into in September 2019 (as amended, the “Amended and Restated Credit Facility”) underwritten by a syndicate of lenders led by the Bank of Montreal (“BMO”), bringing the total principal indebtedness thereunder to $62.5 million.
Auxly acquired all of the issued and outstanding securities of Sunens not already owned by Auxly from Peter Quiring for consideration of: (i) $1.6 million, comprised of $500,000 in cash and $1.1 million in Auxly common shares; (ii) a $3.4 million unsecured promissory note payable over 30 months in equal monthly installments with the first payment due 12 months after the date of closing; and (iii) the transfer of certain non-core assets of Sunens.
Concurrent with the Acquisition, Sunens has entered into an Amended and Restated Credit Facility with the following terms:
“The acquisition of Sunens, a highly automated greenhouse with a demonstrated ability to grow high-quality cannabis at scale, increases Auxly’s cultivation capabilities and strengthens our position as a leader in the Canadian cannabis market,” said Hugo Alves, CEO of Auxly. “Having full ownership and operational control of Sunens gives us the security of supply, quality control, economies of scale and genetic exclusivity that will enable us to continue delivering quality products to our consumers under brands that they can trust. The ability to fully consolidate the activities of Sunens will improve gross margins and support Auxly’s path to profitability.”
“This is a defining moment for Auxly. Our commitment to quality and consistency in every product we put out in the market has continued to gain consumer trust and brand loyalty,” said Mike Lickver, President of Auxly. “Sunens helps us deepen the connection with our consumers by ensuring we are meeting their needs through thoughtful innovation and product format development. We are thrilled to officially welcome the outstanding people at Sunens to our organization, and it couldn’t come at a better time. We are working hard to meet the fast-growing consumer demand for our entire suite of products and having a library of unique genetics and a consistent supply of high-quality cannabis will help us ensure that all of our products get to and stay on shelves across the country.”
Auxly remains focused on bringing new, innovative branded cannabis products to Canadian consumers and believe that this Acquisition will allow for continued growth, improved cost structure and near-term positive adjusted EBITDA.
ON BEHALF OF THE BOARD
"Hugo Alves” CEO
About Auxly Cannabis Group Inc. (TSX: XLY) (OTCQX: CBWTF)
Auxly is a leading Canadian cannabis company dedicated to bringing innovative, effective, and high-quality cannabis products to the wellness and adult-use markets. Auxly's experienced team of industry first-movers and enterprising visionaries have secured a diversified supply of raw cannabis, strong clinical, scientific and operating capabilities and leading research and development infrastructure in order to create trusted products and brands in an expanding global market.
Learn more at www.auxly.com and stay up to date at Twitter: @AuxlyGroup; Instagram: @auxlygroup; Facebook: @auxlygroup; LinkedIn: company/auxlygroup/.
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Notice Regarding Forward Looking Information:
This news release contains certain "forward-looking information" within the meaning of applicable Canadian securities law. Forward-looking information is frequently characterized by words such as "plan", "continue", "expect", "project", "intend", "believe", "anticipate", "estimate", "may", "will", "potential", "proposed" and other similar words, or information that certain events or conditions "may" or "will" occur. This information is only a prediction. Various assumptions were used in drawing the conclusions or making the projections contained in the forward-looking information throughout this news release. Forward looking information includes, but is not limited to: the anticipated benefits of the Company’s acquisition of Sunens; the Company’s execution of its product development and commercialization strategy; the intention to grow the business, operations and existing and potential activities of Auxly and Sunens; the expectation and timing of future revenues; the ability of the Company to maintain and grow its market share; discussions of plans or potential for expansion of capacity at the Sunens facility; consumer preferences; political change, future legislative and regulatory developments involving cannabis and cannabis products; and competition and other risks affecting the Company in particular and the cannabis industry generally.
A number of factors could cause actual results to differ materially from a conclusion, forecast or projection contained in the forward-looking information in this release including, but not limited to, whether: Sunens performs consistently with management's expectations; Sunens will generate sufficient cash flow to satisfy its payment obligations under the Amended and Restated Credit Facility; Sunens will remain in compliance with its operating covenants under the Amended and Restated Credit Facility; the Company is able to successfully integrate Sunens’ operations with its own; the expected benefits of the acquisition materialize in the manner expected, or at all; Sunens is able to maintain the necessary governmental and regulatory authorizations to conduct business; there is acceptance and demand for current and future Company products by consumers and provincial purchasers; and general economic, financial market, regulatory and political conditions in which the Company and its subsidiaries operate will remain the same. Additional risk factors are disclosed in the annual information form of the Company for the financial year ended December 31, 2020 dated April 23, 2021.
The forward-looking information in this release is based on information currently available and what management believes are reasonable assumptions. Forward-looking information speaks only to such assumptions as of the date of this release. In addition, this release may contain forward-looking information attributed to third party industry sources, the accuracy of which has not been verified by Auxly. Readers should not place undue reliance on forward-looking information contained in this release. The forward-looking information contained in this release is expressly qualified by the foregoing cautionary statements and is made as of the date of this release. Except as may be required by applicable securities laws, the Company does not undertake any obligation to publicly update or revise any forward-looking information to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or results, or otherwise.
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