In August, the group told investors it had sold Cathedral Asset Holding Corp (CAHC), which has assets in California and Oregon for a total of C$2,222,400, subject to finalizing pricing, exchangeable for common shares in the buyer Vibe Bioscience (CSE:VIBE) in two tranches - the first for C$333,360 and the second for C$1,889,040.
READ: Ventura Cannabis and Wellness sells California and Oregon cannabis assets to Vibe Bioscience in cash and share deals
Conditions now mean the price for the first tranche of shares - locked in from September 10 - has increased to C$401,369 from C$333,360, a rise of 20.4%.
The consideration is on top of the 800,000 share purchase warrants each exercisable for a Vibe share for C$0.60 for 12 months.
"I am pleased we got a premium on our assets,” Chris Heath, CEO of Ventura said in a statement. "If the mechanism for pricing remains the same, during the next 30-day Value Weighted Average Price (VWAP) period for the second tranche, we would see our cannabis assets sold for over 7 cents a share, plus two million total warrants."
The second tranche has the same mechanism as the first tranche for re-pricing and warrants, with the closing of that tranche subject to approval by Ventura shareholders, which will be sought at a special meeting scheduled for October 23 this year.
"I have spoken with several large shareholders with over 15.1% of our outstanding shares and they are enthusiastic about the premium we have received so far," noted Heath.
"Vibe is in a much stronger position than we are, with scale in the California marketplace. With nearly ten times the revenues, twice the cash and a plan for revenue growth, they are a much better currency for our shareholders to hold than where Ventura was just a few months ago: we were a small loss-making cannabis operator with the overhang of heavy contingent liabilities from operating an addiction rehab business that treated thousands of addicts and employed hundreds of former addicts.
"Now, with a successful shareholder vote, we exchange this for common stock in Vibe which has no reported contingent liability issues. Our alternative to this transaction is liquidation which will provide shareholders with much less value," he added.
Ventura also updated investors on the long-running saga of the divestment of its rehab business, saying it had been a "long and challenging undertaking", which was now at an end.
The firm believes that it is now close to finalizing the divestment and continues to believe, as reported in last quarter’s financials posted on June 30, that C$1.3 million in net assets will be contributed to the cannabis asset
"Selling loss-making entities is very difficult, especially in the COVID-19 environment. As is collecting from payors that know we ceased operations. None of this was easy, but we were able to get C$1.3 million in cash to invest in the cannabis side of our business," Heath told investors.
Contact the author at email@example.com