VANCOUVER, March 3, 2020 /CNW/ - Village Farms
International, Inc. ("Village Farms" or the "Company") (TSX: VFF;
NASDAQ: VFF) and Emerald Health Therapeutics (TSXV: EMH;
OTCQX: EMHTF) ("Emerald") today announced that they have entered
into a settlement agreement in order to settle all outstanding
disputes with respect to their joint venture for large-scale,
low-cost, high-quality cannabis production, Pure Sunfarms Corp
("Pure Sunfarms"). Under the terms of the settlement
agreement:
- The 5,940,000 common shares of Pure Sunfarms that were placed
in escrow pending Emerald's C$5.94
million equity contribution to Pure Sunfarms (originally due
in November 2019) will be cancelled,
effective as of November 19, 2019,
and Village Farms and Emerald will cease arbitration proceedings on
the matter;
- Emerald will forfeit and waive repayment by Pure Sunfarms of
its outstanding C$13.0 million
shareholder loan to Pure Sunfarms (plus accrued interest of
C$1.1 million) and Emerald will issue
a promissory note to Pure Sunfarms in the amount of C$952,237;
- Pure Sunfarms will release Emerald from all liability arising
from their supply agreement under which Emerald had the provision
to purchase 40% of Pure Sunfarms' aggregate production in 2018 and
2019;
- Emerald will transfer 2.5% of additional equity in Pure
Sunfarms to Village Farms;
- Pure Sunfarms and Emerald will release each other from their
current supply agreement under which Emerald has the provision to
purchase 25% of Pure Sunfarms' aggregate cannabis production from
the Delta facilities in 2020, 2021 and 2022; and
- Village Farms and Emerald will mutually release each other from
all claims related to or arising from the disputes.
The net impact of the settlement on the ownership of Pure
Sunfarms, as agreed to by both Village Farms and Emerald, will be
that as of December 31, 2019, Village
Farms will have owned 53.5% of Pure Sunfarms and Emerald will have
owned 46.5% of Pure Sunfarms.
In addition, Village Farms has made an additional equity
contribution to Pure Sunfarms of C$8.0
million in 2020. In accordance with the terms of the
settlement agreement, Emerald has agreed that Village Farms will
receive additional shares in Pure Sunfarms to reflect this
additional equity contribution (the "New PSF Shares"). Upon closing
of the transactions contemplated in the settlement agreement,
including the treasury issuance of the New PSF Shares, Village
Farms will own 57.4% of Pure Sunfarms.
Upon closing of the transactions contemplated by the settlement
agreement, Pure Sunfarms will recognize C$8.1 million in sales (resulting in C$8.1 million in EBITDA) in 2019 generated by its
previous supply agreement with Emerald that it was previously
unable to recognize. Any incremental financial impact will be
recognized by Pure Sunfarms in the first quarter of 2020.
In accordance with the settlement agreement, the parties have
agreed to use reasonable commercial efforts to deliver the
requisite closing documents as soon as reasonably practicable and
in any event on or before March 6,
2020. In the event that the closing of the settlement
transactions does not occur on or before March 31, 2020, the settlement agreement will
terminate and will be void in its entirety, except with respect to
the issuance of the New PSF Shares which will survive such
termination. Although Village Farms expects the settlement
transactions to close as described herein, no assurance can be
given that such transactions will ultimately close.
Non-IFRS Measures
References in this press release to "EBITDA" are to earnings
before interest, taxes, depreciation, amortization, foreign
currency exchange gains and losses on translation of long-term
debt, unrealized gains on the changes in the value of derivative
instruments, unrealized change in biological asset, stock
compensation, and gains and losses on asset sales. EBITDA is
a cash flow measure that is not recognized under International
Financial Reporting Standards ("IFRS") and does not have a
standardized meaning prescribed by IFRS. Therefore, EBITDA may not
be comparable to similar measures presented by other issuers.
Investors are cautioned that EBITDA should not be construed as an
alternative to net income or loss determined in accordance with
IFRS as an indicator of the Company's performance or to cash flows
from operating, investing and financing activities as measures of
liquidity and cash flows. Management believes that EBITDA is an
important measure in evaluating the historical performance of the
Company.
About Village Farms International, Inc.
Village Farms is one of the largest and longest-operating
vertically integrated greenhouse growers in North America and the only publicly traded
greenhouse produce company in Canada. Village Farms produces and distributes
fresh, premium-quality produce with consistency 365 days a year to
national grocers in the U.S. and Canada from more than nine million square feet
of Controlled Environment Agriculture (CEA) greenhouses in
British Columbia and Texas, as well as from its partner greenhouses
in British Columbia, Ontario and Mexico. The Company is now
leveraging its 30 years of experience as a vertically integrated
grower for the rapidly emerging global cannabis opportunity through
its majority ownership of British
Columbia-based Pure Sunfarms Corp., one of the single
largest cannabis growing operations in the world. The Company
also intends to pursue opportunities to become a vertically
integrated leader in the U.S. hemp-derived CBD market, subject to
compliance with all applicable U.S. federal and state laws, Village
Farms has established two joint ventures, Village Fields Hemp and
Arkansas Valley Green and Gold Hemp, for outdoor hemp cultivation
and CBD extraction and is pursuing controlled environment hemp
production at a portion of its Texas greenhouse operations, which total 5.7
million square feet of production area.
Cautionary Language
Certain statements contained in this press release constitute
forward-looking information within the meaning of applicable
securities laws ("forward-looking statements"). Forward-looking
statements may relate to the Company's future outlook or financial
position and anticipated events or results and may include
statements regarding the financial position, business strategy,
budgets, litigation, projected production, projected costs, capital
expenditures, financial results, taxes, plans and objectives of or
involving the Company. Particularly, statements regarding future
results, performance, achievements, prospects or opportunities for
the Company, Pure Sunfarms, the greenhouse vegetable industry or
the cannabis and hemp industries are forward-looking statements. In
some cases, forward-looking information can be identified by such
terms as "outlook", "may", "might", "will", "could", "should",
"would", "occur", "expect", "plan", "anticipate", "believe",
"intend", "estimate", "predict", "potential", "continue", "likely",
"schedule", "objectives", or the negative or grammatical variation
thereof or other similar expressions concerning matters that are
not historical facts.
Although the forward-looking statements contained in this press
release are based upon assumptions that management believes are
reasonable based on information currently available to management,
there can be no assurance that actual results will be consistent
with these forward-looking statements. Forward-looking statements
necessarily involve known and unknown risks and uncertainties, many
of which are beyond the Company's control, that may cause the
Company's or the industry's actual results, performance,
achievements, prospects and opportunities in future periods to
differ materially from those expressed or implied by such
forward-looking statements. These risks and uncertainties include,
among other things, the factors contained in the Company's filings
with U.S. and Canadian securities regulators, including as detailed
in the Company's annual information form and management's
discussion and analysis for the year-ended December 31, 2018.
When relying on forward-looking statements to make decisions,
the Company cautions readers not to place undue reliance on these
statements, as forward-looking statements involve significant risks
and uncertainties and should not be read as guarantees of future
results, performance, achievements, prospects and opportunities.
The forward-looking statements made in this press release only
relate to events or information as of the date on which the
statements are made in this press release. Except as required by
law, the Company undertakes no obligation to update or revise
publicly any forward-looking statements, whether as a result of new
information, future events or otherwise.
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SOURCE Village Farms International, Inc.