LEAMINGTON, ON – Aphria Inc. (APH) (APHQF), announced that it entered into a global strategic partnership with Nuuvera Corp. , a Canadian-based global cannabis business. Initially focused on the Canadian market, the partnership includes joint relationships with Nuuvera to expand production across the globe, including Europe, Israel and Latin America.
As part of the partnership, the parties entered five separate and distinct commercial transactions:
Aphria invested $2 million in a Nuuvera common share offering;
Aphria entered into a supply agreement with Nuuvera to supply annual requirements of 1,500 kgs, growing to 17,000 kgs when Aphria completes its four-part expansion plan in 2018 (“Supply Agreement“);
Aphria will sell 100 of the 200 acres of land the Company owns on Mersea Road 8 (“Mersea Property“) in Leamington to Nuuvera, in exchange for a cash payment of $4 million (“Land Acquisition“);
Aphria will provide consulting services to Nuuvera on the design and build of a 1 million square foot state-of-the-art greenhouse on the Mersea Property, in exchange for a fee equal to 8% of Nuuvera’s cost to build the facility, exclusive of its land acquisition costs; and,
Aphria entered into an operational services agreement with Nuuvera to operate the Mersea Property in exchange for a fee of $0.10 per gram of cannabis harvested in the facility (“Operational Services“). Based on Aphria’s current expected yield from its 1 million square feet of greenhouse, it is anticipated that the operational services agreement will yield an annual payment of more than $10 million per year to Aphria, once Nuuvera’s greenhouse is fully built out. Based on Aphria’s current production costs, it is anticipated that Nuuvera will, like Aphria, be one of Canada’s lowest cost producers.
“This is an exciting strategic partnership for Aphria and Nuuvera. By combining our unparalled experience in cannabis production with Nuuvera’s extensive international network, we will bring the best of two leaders to meet the growing global demand for cannabis,” said Vic Neufeld, Chief Executive Officer, Aphria. “This partnership is further recognition by the global cannabis industry of the strength of our greenhouse growing intellectual property, and of Aphria’s strategy to monetize it, in order to create additional shareholder value”. We look forward to building a long-term partnership with Nuuvera to create an even more valuable presence in the market.”
Lorne Abony, Chief Executive Officer of Nuuvera, said, “Through this partnership, Nuuvera will be one of the largest Canadian producers with one of the lowest cost production facilities in Canada and internationally. We are thrilled to partner with Aphria, a true pioneer in harnessing the power of the sun to grow pharma-grade medical cannabis.”
The Land Acquisition represents a premium over the purchase price Aphria paid to acquire the property in January 2017. The Land Acquisition remains subject to customary due diligence and obtaining a severance of the land. The Land Acquisition is anticipated to close within nine months of today’s announcement.
Aphria understands that it is Nuuvera’s intention to build a 1 million square foot state-of-the-art, Dutch-style greenhouse, along with over 350,000 square feet of infrastructure, in multiple phases. After gaining appropriate clarity on the regulatory framework for future adult use of cannabis in Canada, Aphria plans to mirror the Nuuvera build on the portion of the Mersea Property it is retaining.
Source: Technical 420