Harvest Health & Recreation provide update on upcoming merger, resignation of executive chairman Jason Vedadi and planned board appointments
Harvest Health & Recreation Inc. a vertically integrated cannabis company with one of the largest and deepest footprints in the U.S., today announced the execution of a definitive merger agreement of the previously announced acquisition of Interurban Capital Group, Inc. ("ICG"), the resignation of Jason Vedadi from his role as Executive Chairman of the Board of Directors (the "Board") and planned updates to the Board.
Definitive Merger Agreement with Interurban Capital Group, Inc.
Harvest has entered into a definitive merger agreement to acquire ICG for consideration of approximately US$85.8 million payable by issuance of 309,452 multiple voting shares, assumption of approximately $19.1 million of debt convertible into 205,594 multiple voting shares and payment of an additional $9.3 million upon exercise of a call option agreement to acquire controlling interests in five Washington cannabis dispensaries or alternatively $12.4 million to acquire substantially all of the assets of these dispensaries.
The call option exercise price is payable in Harvest multiple voting shares to be valued at a per share value equal to the volume weighted average sales price for each share of Harvest subordinate voting shares during the last 15 completed trading days prior to the date of closing under the call option agreement, and multiplied by 100 after adjustment of the exercise price to Canadian dollars. ICG's assets include direct and indirect licenses and rights to acquire entities with licenses in California, Iowa, and Washington. In addition, ICG is a service provider to these entities.
"We are excited to welcome the Have a Heart dispensaries into the Harvest family," said Harvest Chief Executive Officer Steve White. "The merger provides access to capital and a new set of shareholders that will provide Harvest with greater financial flexibility and resources to invest further in key markets such as Arizona, Florida, Maryland, and Pennsylvania."
When consummated, the merger with ICG will add to Harvest's existing retail footprint three open retail locations and seven potential retail licenses in California, five open retail locations in Washington state and two open retail locations in Iowa. Prior to completion, the merger remains subject to, among other things, the receipt of regulatory approvals and the satisfaction or waiver of closing conditions customary for transactions of this nature.
Management and Board Changes
As part of its ongoing efforts to create long-term shareholder value, Harvest is taking the next steps to simplify its operating model, build clear lines of responsibility within its executive team and further enhance Board governance structure. By agreement, Jason Vedadi will transition out of his role as the Executive Chairman at Harvest and resign from the Board, effective March 11, 2020. Mr. Vedadi will continue to be available to Harvest as a strategic advisor as needed, and Mr. White will immediately assume full responsibility for the executive team. Mr. Vedadi has voluntarily agreed to maintain the current lockup schedule for his existing shares of Harvest stock. In addition, Messrs. Vedadi and White have agreed to exchange the 1,000,000 Super Voting Shares held by Mr. Vedadi for an equivalent number of Multiple Voting Shares (on an as-converted basis).
"I set out to help build a first-class multi-state cannabis company" Jason Vedadi
"With the closing of this financing and the additional strength of ICG's management team, Harvest is well-positioned to take the next steps in its development and I felt it was a good time for me to step away and allow Steve and his team to move the company forward while continuing to be available as a resource to the company."
Current independent Board member Mark Barnard, who has served on the Board since the Company went public in November of 2018, will assume duties as Chairman of the Board. He brings significant leadership experience gained through executive roles with Diageo PLC and Unilever, among others. Scott Atkison will be appointed to the Board following the required regulatory approval. Mr. Atkison has decades of executive experience in the timber and cannabis industries and brings valuable expertise, networks and fundraising skills to Harvest.
"Jason has made many valuable contributions as both Executive Chairman and as a Board member and we wish him the best," said Harvest CEO Steve White. "Harvest has a deep bench of talent and a strong leadership team in place that we are confident will continue to execute on our overall strategy with a focus on operational excellence and a return to profitability."
To learn more about Harvest Health visit their Company HQ here.
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