C21 Investments Announces Restructured Acquisition of Silver State Relief

Published: December 12, 2018

C21 Investments Announces Restructured Acquisition of Silver State Relief

C21 Investments Inc. has restructured the terms of the definitive purchase agreement under which C21 will acquire Nevada based Silver State Relief and Silver State Cultivation. The acquisition will be effective January 1, 2019 with formal completion of the transaction to occur upon receipt of approval of Nevada Department of Taxation, which is expected in January 2019.

The restructured terms include vendor financing for US$30 million of the acquisition price. As a result, the total consideration for the acquisition has been increased by $5 million to US$39 million payable in cash and by 10 million common shares to 12.5 million common shares. After payment of US$3 million on or before December 31, 2018 and application of US$6 million of deposits previously paid, C21 will issue a US$30 million secured promissory note, bearing interest at 10% per annum, payable in quarterly instalments to be amortized over the period ending June 2020. The 12.5 million common shares will be issued on closing subject to required hold periods under applicable securities laws, and will make the owner of Silver State, Sonny Newman, C21’s largest shareholder. After completion of the acquisition, Mr. Newman will own 22% of the issued and outstanding shares of C21. In addition, the parties agreed to cancel the previously negotiated US$14 million 3-year convertible note.

Silver State is an established, profitable, vertically integrated cannabis business with trailing 12-month revenue of US$25 million. “The Silver State acquisition establishes C21’s competitive position in the Nevada market.” said Robert Cheney, President and CEO, C21 Investments. “This is the first transaction in a larger plan by C21 Investments to expand significantly in the cultivation, processing and wholesale and retail distribution of branded products throughout the State of Nevada.”

C21 Investments retains the option to acquire the real-estate assets of Silver State including the 155,000 square-foot building that houses its cultivation and processing facility, the 8,000-square foot retail dispensary building, located in Sparks, Nevada servicing more than 36,000 customers per month, and its new 6000 square foot dispensary located in Fernley, Nevada which will go into operation this month.

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