SNDL Inc. (NASDAQ: SNDL) will be acquiring four of Dutch Love’s seven stores and waiving $3 million in debt owed to the company by the dispensary chain as one of the transaction’s conditions.
The Calgary cannabis company announced the deal on Wednesday which will additionally consist of $1.5 million in cash payable to Lightbox Enterprises (doing business as Dutch Love) and $3.3 million in common SNDL shares provided to Lightbox for a total value of $7.8 million.
Lightbox will be providing SNDL with certain intellectual property related to its Dutch Love business. Three of the stores are located in British Columbia and one is situated in Ontario.
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In 2022, those four stores generated a total revenue stream of $11.5 million. The transaction is expected to close by the end of May this year.
“We believe we have chosen the top performing Dutch Love stores located on some of the best real estate available,” said SNDL’s CEO Zach George.
Lightbox filed for bankruptcy at the end of October following negative repercussions to its Dutch Love business resulting from the COVID-19 pandemic. The adverse impact of the pandemic resulted in the company having insufficient liquidity to pay its two primary creditors, SNDL and George Melville Holdings Limited.
Since 2021, Lightbox has been selling its assets and actively looking for other means to address its financial issues. SNDL delivered Lightbox a demand for payment and notice of intention to enforce security under section 244(1) of the Bankruptcy and Insolvency Act on October 17 last year.
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SNDL recently cut 85 jobs from its Olds Alberta production facility last month as part of a cost-saving initiative and acquired The Valens Company Inc. (TSX: VLNS) (Nasdaq: VLNS) in a transaction worth $138 million in January.
The company also acquired the Zenabis Business and its 380,000-square-foot indoor cultivation facility in New Brunswick last November.
SNDL’s stock stayed flat at US$1.57 Thursday on the Nasdaq Exchange and has declined by 13.74 per cent since the beginning of March.
rowan@mugglehead.com
