It looks like battling business partners Village Farms International, Inc. (TSX: VFF and NASDAQ: VFF) and Emerald Health Therapeutics (TSXV: EMH and OTCQX: EMHTF) are finally making nice.
In a statement on Tuesday, Village Farms said the companies had entered an agreement to settle all outstanding disputes surrounding a joint-venture that went afoul last November.
The dispute began when veteran greenhouse vegetable grower Village Farms alleged Emerald Health, a medical cannabis producer, failed to make an advance payment of $5.94 million related to the Delta 2 facility of the Pure Sunfarms partnership. At the time, Village Farms said it was entitled to claim the payment amount as equity in Pure Sunfarms under a shareholder agreement.
But Emerald Health countered the claim by stating it had already advanced $17.41 million in total to the venture, and that it would pay for the $5.94 million advance by off-setting an outstanding $13 million owed to Emerald by Pure Sunfarms. It then said it was demanding the full $13 million outstanding.
On Tuesday, Village Farms outlined the terms of the new settlement.
The 5.94 million common shares of Pure Sunfarms that were placed in escrow pending Emerald’s $5.94 million equity contribution to Pure Sunfarms will be cancelled, and Village Farms said it and Emerald Health will cease arbitration on the matter.
Emerald will forfeit and waive repayment by Pure Sunfarms of its outstanding $13 million shareholder loan to Pure Sunfarms, plus accrued interest of $1.1 million, and Emerald will issue a promissory note to Pure Sunfarms of $952,237.
Pure Sunfarms said it will release Emerald from all liability related to their supply agreement, where Emerald had to buy 40 per cent of Pure Sunfarms’s aggregate production in 2018 and 2019;
Emerald will transfer 2.5 per cent of additional equity in Pure Sunfarms to Village Farms.
According to Pure Sunfarms, both of the companies will release each other from their current supply agreement for Emerald to buy cannabis from the Delta facilities from 2020 to 2023.
Village Farms said the net impact of the settlement is that it now owns a majority stake of 53.5 per cent of Pure Sunfarms. It also stated plans to make an equity contribution of $8 million this year, which will increase its stake to 57.4 per cent.
Top image via Village Farms