Vertically integrated cannabis company Glass House Brands Inc. (NEOGLAS.A.U) (NEO: GLAS.WT.U) (OTCQX:GHBWF) said Wednesday that its subsidiary has wrapped up the previously announced acquisition of a roughly 5.5 million square foot greenhouse facility in Southern California.
Under the terms of the agreement, the Long Beach, California-based company paid the sellers of the facility at closing $93 million in cash – reducing the price from $118 million – and issued to the option holder 6.5 million subordinate voting shares at $10 per share.
The shares are subject to a customary lock-up agreement restricting the sale of 50% of such shares for six months following the closing and the remaining 50% of such shares for twelve months following the closing.
In addition, the company held back an additional 3.5 million subordinate voting shares, which may be issued to the option holder after closing upon satisfaction of certain obligations. The option holder has the right to earn up to $75 million of additional subordinate voting shares, which are subject to the same customary lock-up restrictions.
“We are thrilled to officially close escrow after significantly reducing the price which will keep an additional $25 million of cash on our balance sheet which is essentially debt-free today,” Kyle Kazan, Glass House’s chairman and CEO disclosed.
Why It Matters?
The acquisition brings roughly 160 acres of agricultural property located in Ventura County, including 125 acres of ultra-high-tech and efficient KUBO Ultra-Clima greenhouses, on-site well, water treatment facilities, automated roof washing system, supplemental lights and natural gas cogeneration facilities producing power, heat and CO2.
The company plans to reconstruct two out of six greenhouses and two packhouses totaling approximately 1.7 million square feet.
Phase 1 is expected to be completed in the first three months of 2022. The initial Phase 1 capacity is expected to conservatively produce over 180,000 dry pounds of sellable cannabis, representing an over 300% increase from the company’s current capacity.
“We can now commence the first phase of the facility’s conversion and licensing, which will dramatically increase our cultivation capacity,” Kazan added.
The company recently strengthened its management team by hiring Joe Aulenta as director of retail construction.
Glass House’s shares traded 9.64% lower at $4.5 per share after market close on Tuesday.