AgraFlora Organics Increases Ownership Position in Propagation Services Canada Inc.

Published: March 22, 2019

AgraFlora Organics Increases Ownership Position in Propagation Services Canada Inc.

AgraFlora Organics International Inc., a growth oriented and diversified international cannabis company, acquired an additional 10% of the shares of Propagation Services Canada Inc. (“PSC”) for $14 million payable by common shares of AgraFlora at a price of $0.68 per share, equivalent to 20,588,235 common shares. The transaction has been agreed to in principle and approved by both boards of directors of AgraFlora and PSC. Following the transaction, the ownership of PSC will consist of AgraFlora as to 60%, the Houwelings Partnership Group as to 30% and the investors of Delta Organics Cannabis Corp. (“DOCC”) as to 10%.

“It is important for AgraFlora to continue to have a majority stake in the joint venture company Propagation Services Canada,” said Derek Ivany, President and CEO of AgraFlora. “The Delta Greenhouse Complex will become our marquee facility with 2.1 million square feet of greenhouse space and 100,000 square feet in production facilities. Progress on the retrofit continues to be on target and we expect to submit our licensing application video to Health Canada by the end of June.”

AgraFlora is issuing common shares at $0.68 per share which is an approximate 53% premium to the shares paid to DOCC at $0.445 for its 20% purchase of PSC, as announced in November 2018. The 10% acquired by AgraFlora comes from four shareholders of PSC who have shown confidence in the AgraFlora management team by converting their PSC shares into shares of AgraFlora. This is an arm’s length transaction and no finder’s fees are to be paid.

Upon closing the final $20 million payment of a previously announced financing, DOCC will receive an additional 10% from AgraFlora and AgraFlora will remain the majority shareholder with a 50% ownership position of PSC, with the Houwelings Partnership Group with 30% and the investors of DOCC with 20%. AgraFlora’s 50% ownership of PSC will entitle it to 50% of the annual estimated production of 250,000,000 grams from the Delta Greenhouse Complex.