CANADA: FSD Pharma announced a binding agreement to purchase 51% of Atlantic Island Cannabis (to be renamed FSD Atlantic Pharma Inc.) effective July 4, 2018.
The agreement involves a strategic investment of $40 million to drive production and sales of legal cannabis in the province of Newfoundland. In the first phase of the project, an indoor high quality 45,000 square foot cannabis production facility will be set up in Freshwater, Carbonear, Newfoundland. This site is expected to bring about economic benefits for the province and to create 200 local, management and construction jobs through a phased expansion approach. Phase two of the project will involve a further expansion of the indoor grow facility to up to approximately 300,000 square feet for the production and processing of legal cannabis.
The purchase price for 51% of Atlantic Island Cannabis Inc. is $6,500,000 payable in Class B subordinated shares of FSD based on a 15 day Volume Weighted Average Price. The site will initially be leased but FSD has the option to purchase the site at any time for $1,500,000. The FSD shares issued will be escrowed subject to completion of a number of conditions, including but not limited to, due diligence by FSD, satisfactory documentation, receipt of third party consents and a valid purchase order from the government of Newfoundland.
The closing date is expected to occur on or before August 31, 2018.
“Newfoundland is a fantastic province with outstanding, highly skilled people,” said Thomas Fairfull, President and CEO, FSD Pharma Inc. “This is another expansion milestone for FSD Pharma as we continue to grow our production and distribution footprint nationally.”
Speaking about the agreement, Suman Pushparajah, Chairman, Atlantic Pharma Inc. said: “One of the compelling factors for us in considering this association is the scope of benefits for the local population. We have outlined a phased growth plan to set up a long term sustainable business model for the community of Freshwater, Carbonear, Newfoundland. Seeing a real value in partnering with FSD Pharma, we are approaching the association from a long term benefit perspective.”