The Greenrose Holding Company Closes Asset Purchase of True Harvest, LLC
January 03 2022 - 7:30AM
The Greenrose Holding Company Inc. (OTC: GNRS, GNRSW) (“Greenrose”
or the “Company”) announced that it closed its previously announced
acquisition of the assets of Arizona-based True Harvest, LLC.
Under the terms of the acquisition, Greenrose
paid consideration of $57.6 million at close, consisting of $12.5
million in cash, $23.0 million in the form of a convertible note,
$4.6 million in assumed debt, and $17.5 million in shares of the
Company’s common stock. Contingent upon True Harvest achieving a
certain price point per pound of cannabis flower relative to total
flower production within 36 months of the closing of the
transaction, Greenrose will pay additional consideration of up to
$35.0 million in the form of an earnout, payable in shares of
common stock of the Company.
“Completing our asset purchase of True Harvest
expands Greenrose’s footprint into the Southwest and demonstrates
the continued execution of our growth strategy,” said Mickey
Harley, CEO and Director of Greenrose. “We look forward to working
with True Harvest’s talented cultivation team to continue building
our company around high-quality flower. With our strong cultivation
footprint in Arizona and Connecticut, we believe our platform is
well-positioned to capture the growth opportunities offered by
these new and emerging recreational markets. I am proud of the
progress we have made to date, and we will work to further expand
our platform and execute on our strategic objectives in 2022.”
Greenrose completed its business combination
with the acquisition of Connecticut-based Theraplant, LLC, on
November 26, 2021. The Company has revised its 2022 outlook for
True Harvest and Theraplant to reflect an expected Q4 2022 start
for recreational cannabis sales in Connecticut. Combined, True
Harvest and Theraplant are expected to generate between $120
million and $140 million in full year 2022 revenue, 2022 net income
of between $8 million and $14 million, and 2022 adjusted EBITDA
between the range of $75 million and $85 million.
Advisors
Gateway Group is serving as communications
advisor to Greenrose. Tarter Krinsky & Drogin LLP served as
corporate, M&A and securities counsel for Greenrose, while
Feuerstein Kulick LLP served as regulatory and debt counsel. Snell
& Wilmer LLP served as corporate, M&A and securities
counsel for True Harvest, LLC.
About The Greenrose Holding Company
Inc.
The Greenrose Holding Company Inc. intends to
become a multi-state cultivator and producer of cannabis brands and
products. Greenrose is driven by cultivation, with the
understanding that being a leader in the cannabis industry requires
starting with outstanding flower derived from unique genetics and
scalable growth methods. Greenrose aims to be a vertically
integrated company that looks for scale and horizontal
consolidation. For more information, please visit
greenroseholdings.com.
Forward-Looking Statements
Certain statements made in this release are
"forward looking statements" within the meaning of the "safe
harbor" provisions of the United States Private Securities
Litigation Reform Act of 1995. When used in this press release, the
words "estimates," "projected," "expects," "anticipates,"
"forecasts," "plans," "intends," "believes," "seeks," "may,"
"will," "should," "future," "propose" and variations of these words
or similar expressions (or the negative versions of such words or
expressions) are intended to identify forward-looking statements.
These forward-looking statements are not guarantees of future
performance, conditions or results, and involve a number of known
and unknown risks, uncertainties, assumptions and other important
factors, many of which are outside Greenrose’s or its target
companies’ control, that could cause actual results or outcomes to
differ materially from those discussed in the forward-looking
statements. Important factors, among others, that may affect actual
results or outcomes include:
- liquidity of Greenrose’s stock;
costs related to the proposed business combinations;
- Greenrose’s ability to manage
growth; Greenrose’s ability to identify and integrate other future
acquisitions;
- rising costs adversely affecting
Greenrose’s profitability;
- competition in the legal cannabis
industry;
- adverse changes to the legal
environment for the cannabis industry; and general economic and
market conditions impacting demand for Greenrose’s products and
services;
- failure to realize the anticipated
benefits of recently completed and future acquisitions, including
delays in consummating any future acquisitions or difficulty in, or
costs associated with, integrating the businesses of Greenrose,
Theraplant and True Harvest;
- prevailing prices for cannabis
products in the markets in which Greenrose operates;
- new regulations or pending changes
(and the timing of any such changes) in the current regulations in
the states of Connecticut and Arizona where the businesses of
Theraplant and True Harvest operate, respectively;
- the effects of competition on
Greenrose’s business; and
- those factors discussed in
Greenrose’s Proxy Statement on Schedule 14A filed October 5, 2021
under the heading “Risk Factors,” and other documents of Greenrose
filed, or to be filed, with the SEC.
If the risks materialize or assumptions prove
incorrect, actual results could differ materially from the results
implied by these forward-looking statements. There may be
additional risks that neither Greenrose nor True Harvest presently
know or that Greenrose and True Harvest currently believe are
immaterial that could also cause actual results to differ from
those contained in the forward-looking statements.
In addition, forward-looking statements reflect
Greenrose’s expectations, plans or forecasts of future events and
views as of the date hereof. Greenrose anticipates that subsequent
events and developments will cause its assessments to change.
However, while Greenrose may elect to update these forward-looking
statements at some point in the future, Greenrose specifically
disclaims any obligation to do so. These forward-looking statements
should not be relied upon as representing Greenrose’s assessments
as of any date subsequent to the date hereof. Accordingly, readers
should not unduly rely on any projections or other forward-looking
statements or data contained herein.
Investor Relations Contact:Gateway Investor
RelationsCody Slach or Jackie Keshner(949)
574-3860GNRS@gatewayir.com
Greenrose Contact:Daniel HarleyExecutive Vice
President, Business Development(516)
307-0383ir@greenroseholdings.com
The Greenrose Holding Company Inc. |
2022 Projections Range |
(Amounts in thousands of U.S. dollars) |
|
|
|
|
|
|
|
|
Low Range |
|
High Range |
|
|
|
|
|
|
|
Revenues, net of discounts(1) |
|
$ |
120,000 |
|
$ |
140,000 |
|
|
|
|
|
|
|
Net income (loss): |
|
$ |
8,371 |
|
$ |
14,661 |
|
Provision For Income Taxes(2) |
|
|
22,260 |
|
|
25,970 |
|
Interest expense(3) |
|
|
27,823 |
|
|
27,823 |
|
Depreciation and Amortization(4) |
|
|
16,546 |
|
|
16,546 |
|
EBITDA(5) |
|
$ |
75,000 |
|
$ |
85,000 |
|
|
|
|
|
|
|
(1) Revenue estimates assume that Connecticut recreational begins
in Q4 with an increase in purchasing at the end of Q3. Current
revenue estimates reflect recently closed acquisitions of
Theraplant and True Harvest. We presently estimate approximately
$60m of revenue will be attributed to Connecticut implementing full
legalization. |
|
(2) Prior to acquisition, our targets were LLCs, and as such, we
have utilized an estimated 26.5% on the Revenues less Cost of Goods
Sold (excluding depreciation), and estimated that rate to be
approximately 70%. |
|
(3) Interest expense calculated using the effective interest
method, as done in the article 11 pro formas. |
(4) Depreciation and amortization expense is based upon a
preliminary fair value valuation, with its related depreciation and
is used in our Article 11 proformas, which may change upon the
completion of purchase accounting under ASC 805. |
|
(5) This excludes any transaction related expenses. |
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