- Assets Well Positioned to Create Substantial Value for
Shareholders
- Executive Management Demonstrates Belief in Company Through
$3.1M Acquisition of Shares on
December 3, 2018
LEAMINGTON, ON, Dec. 4, 2018 /CNW/ - Aphria Inc. ("Aphria"
or the "Company") (TSX: APHA and NYSE: APHA)
today provides the following update on its Latin American
operations, including its previously completed LATAM acquisition of
LATAM Holdings Inc. consisting of licenses and other assets and
related businesses in Colombia,
Argentina and Jamaica and a right of first offer and refusal
in respect of Brazil
(collectively, the "Transaction"), which closed on
September 27, 2018.
Vic Neufeld, Aphria's Chief
Executive Officer, said, "Since closing this important strategic
acquisition in September, we have made considerable progress
supporting and building out our operations on the ground in
Latin America and the Caribbean. We have nearly 100 employees across
the region dedicated to advancing the Company's business interests,
including cultivation, processing, research and development,
partnerships and continued expansion. International operations are
a core component to our proven growth strategy and we are working
to integrate and enhance operations and product channels throughout
Latin America to position them for
sustainable, long-term shareholder value creation."
Background: LATAM Holdings Acquisition
Aphria is committed to good corporate governance and
transparency. The LATAM acquisition was a transaction
negotiated at arms' length between two publicly traded companies
each of which retained professional financial advisors (one of
which provided a formal valuation of the acquired assets).
Aphria and SOL Global Investments Corp. (formerly Scythian
Biosciences Corp.) ("SOL") are not "sister" companies and
were not "sister" companies at the time the Transaction was agreed
to between the parties.
In connection with the Transaction, the Company notes, among
other things, the following:
- The Board of Directors of Aphria received financial advice and
a fairness opinion from Cormark Securities Inc., the Company's
independent and qualified financial advisor, that the consideration
to be offered by Aphria in respect of the transaction was fair,
from a financial point of view, to Aphria.
- The Company believes that the purchase price paid under the
Transaction was comparable with similar Latin America acquisitions by other large cap,
Canadian licensed producers.
- The Transaction resulted in minimal dilution to Aphria
shareholders (6.6% basic / 6.3% fully diluted).
- The Company retained leading transaction counsel in each
jurisdiction who completed extensive legal due diligence on the
assets, licenses and businesses in each jurisdiction.
- Representatives of Aphria travelled to Colombia, Argentina, Jamaica and Brazil to conduct due diligence regarding the
assets to be acquired which included management meetings, site
visits by senior management in each country and meetings with local
authorized representatives.
- The Company entered into a negotiated share purchase agreement
with SOL in connection with the Transaction which contained
extensive representations, warranties, covenants, conditions and
indemnities which survived the closing of the
Transaction.
- In its press release announcing the transaction, the Company
transparently disclosed that certain insiders of Aphria owned a de
minimis amount of shares and warrants of SOL and that such
insiders had disclosed such interests to the Board of Directors and
recused themselves from the deliberations during which the
Transaction was discussed and from voting on the resolution
approving the Transaction.
Since the completion of the Transaction, the Company has
successfully integrated the operations in each jurisdiction, and
provides the following updates:
Colombia
- Aphria owns a 90% interest in Colcanna S.A.S. ("Colcanna").
Colcanna has received all required licenses for cultivation,
processing, export, research and commercialization.
- Colcanna sits on 34 acres of highly fertile, predominately flat
land, which is essential for the optimal cultivation of cannabis,
including the greenhouse which sits on the acreage that recently
housed mother plants.
- The Company has recently signed a Promissory Letter for the
purchase of the additional 8 hectares of land immediately adjacent
to existing property for expansion.
- Colcanna is licensed to cultivate psychoactive and
non-psychoactive cannabis. The licenses held by Colcanna also
permit cultivation, export, research and processing.
- Colcanna was also granted by the Colombian Agricultural
Institute, on October 30, 2018 a
characterization permit pursuant to Resolution No. 35244 and No.
35245 allowing the company to assess seeds and initiated a pilot
test of its strains prior to full scale cultivation.
- Greenhouses are planned for more than 20 acres of the property,
with 6 harvests expected per year.
- Colcanna is expected to achieve an initial annualized
production of 30,000 kg, growing to up to 50,000 kgs, suitable for
supplying the country and the region with high-quality medical
cannabis.
- There are 48 employees in Columbia, dedicated to cultivation
and advancing business interests.
Jamaica
- Marigold is fully operational with:
-
- An issued Tier 3 license to cultivate more than five acres of
land with cannabis for medical, scientific and therapeutic
purposes;
- An issued Research and Development License;
- A conditional Tier 2 license to process cannabis for medical,
scientific and therapeutic purposes, including the manufacturing of
cannabis-based products, in a space of over 200 square meters;
- A conditional herb house retail license to sell cannabis
products for medical, scientific and therapeutic purposes, with a
space for immediate consumption by consumers, including tourists;
and
- A conditional therapeutic retail license to provide therapeutic
or spa services utilizing cannabis products.
- Marigold's cultivation farm is operational and has harvested
approximately 2,500 kg of cannabis to date.
- The Company has taken possession of 10 acres of land at Block
B, Lot 2, part of Bernard Lodge, St.
Catherine, from the Sugar Company of Jamaica in anticipation of expanding its
cultivation as demand dictates.
- Two Herb House locations, the
first in Kingston, namely the
Sensi Medical Cannabis House, and the second, Portmore, are
expected to open in January 2019,
additional locations are currently planned for other high demand
regions of Jamaica.
- Jamaica boasts 22 employees
dedicated to the cultivation, processing and operations of the
facility and maintenance of the corporate brand.
Argentina
- Aphria's subsidiary in Argentina, ABP, is a well-established and
successful pharmaceutical import and distribution company.
- ABP is championing the research and clinical study of medical
cannabis, including through its partnership with Hospital de
Pediatria Garrahan, one of the most recognized and credible medical
institutions in South
America.
- In October 2018, ABP delivered
1,500 bottles of Aphria's renowned Rideau CBD oil, which were
provided to Hospital de Pediatria Garrahan for use in a clinical
study focused on treating refractory epilepsy in children. The
clinical study, which involves 100 patients and will be conducted
over 2.5 years, will be one of the foundational global scientific
and medical studies of its kind focused on treating refractory
epilepsy in children.
- In order to undergo its ISO 9001 inspection on October 25, 2018, ABP engaged in a retrofit of
the building in October 2018.
- Aphria and ABP, in close partnership with the Argentinean
government, continue to advance opportunities for medical cannabis
in the country, including the potential for in-country
cultivation.
- APB operates a pharmaceutical distribution warehouse and retail
pharmacy and distributes to an extensive network of pharmacies,
distributors, government clinics and hospitals throughout
Argentina.
- ABP also holds agreements with the Top 20 health insurance
companies, a strategic advantage in reaching patients accessing
Argentina's free public healthcare
system.
"Aphria has developed and launched a comprehensive suite of
brands, built a roster of strategic partners and continues to focus
on research, innovation and product development in Canada and internationally. Aphria has
experienced tremendous growth and will continue to lead the
evolution of the industry in the years to come. It is the
commitment of our incredible team and partners that has gotten us
to where we are today, making Aphria a global cannabis success
story," added Mr. Neufeld.
"Yesterday, I, along with other members of our Executive
Management team, stepped up to demonstrate our confidence in the
Company's business plan, growth strategy, integrity and value of
the assets by personally investing more than $3.1 million in Aphria's common shares,"
concluded Mr. Neufeld.
We Have A Good Thing Growing
About Aphria
Aphria is a leading global cannabis company driven by an
unrelenting commitment to our people, product quality and
innovation. Headquartered in Leamington,
Ontario – the greenhouse capital of Canada – Aphria has been setting the standard
for the low-cost production of safe, clean and pure
pharmaceutical-grade cannabis at scale, grown in the most natural
conditions possible. Focusing on untapped opportunities and backed
by the latest technologies, Aphria is committed to bringing
breakthrough innovation to the global cannabis market. The
Company's portfolio of brands is grounded in expertly-researched
consumer insights designed to meet the needs of every consumer
segment. Rooted in our founders' multi-generational expertise in
commercial agriculture, Aphria drives sustainable long-term
shareholder value through a diversified approach to innovation,
strategic partnerships and global expansion, with a presence in
more than 10 countries across 5 continents.
For more information, visit: aphria.ca
###
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS: Certain
information in this news release constitutes forward-looking
statements under applicable securities laws. Any statements that
are contained in this news release that are not statements of
historical fact may be deemed to be forward-looking statements.
Forward looking statements are often identified by terms such as
"may", "should", "anticipate", "expect", "potential", "believe",
"intend" or the negative of these terms and similar expressions.
Forward-looking statements in this news release include, but are
not limited to, statements with respect to internal expectations,
estimated margins, expectations with respect to actual production
volumes, expectations for future growing capacity and costs, the
completion of any capital project or expansions, and expectations
with respect to future production costs. Forward-looking statements
necessarily involve known and unknown risks, including, without
limitation, risks associated with general economic conditions;
adverse industry events; marketing costs; loss of markets; future
legislative and regulatory developments involving medical
marijuana; inability to access sufficient capital from internal and
external sources, and/or inability to access sufficient capital on
favourable terms; the medical marijuana industry in Canada generally, income tax and regulatory
matters; the ability of Aphria to implement its business
strategies; competition; crop failure; currency and interest rate
fluctuations and other risks.
Readers are cautioned that the foregoing list is not exhaustive.
Readers are further cautioned not to place undue reliance on
forward-looking statements as there can be no assurance that the
plans, intentions or expectations upon which they are placed will
occur. Such information, although considered reasonable by
management at the time of preparation, may prove to be incorrect
and actual results may differ materially from those
anticipated.
The forward-looking statements included in this news release are
made as of the date of this news release and the Company does not
undertake an obligation to publicly update such forward-looking
statements to reflect new information, subsequent events or
otherwise unless required by applicable securities laws.
Forward-looking statements contained in this news release are
expressly qualified by this cautionary statement.
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SOURCE Aphria Inc.