Establishes U.S. footprint with processing
capacity of 1,500,000kg
LAVAL, QC, May 9, 2019 /CNW Telbec/
- Neptune Wellness Solutions Inc. ("Neptune" or the "Company")
(NASDAQ: NEPT) (TSX: NEPT) today announced the signing of
a definitive agreement to acquire substantially all of the assets
of SugarLeaf Labs, LLC and Forest Remedies LLC (collectively,
"SugarLeaf"), a registered North
Carolina-based commercial hemp company providing extraction
services and formulated products. Through SugarLeaf, Neptune
establishes a U.S.-based hemp extract supply chain, gaining a
24,000 square foot facility located in the important U.S. Southeast
region. SugarLeaf's cutting-edge cold ethanol processing facility
with a processing capacity of 1,500,000 kg uses hemp cultivated by
licensed American growers consistent with federal and state
regulations to yield high-quality full and broad-spectrum hemp
extracts. The U.S. market for hemp is developing rapidly and
represents a significant opportunity for the consumer products
industry.
Neptune will acquire SugarLeaf on a debt-free basis for initial
consideration at closing of US$18
million, paid as US$12 million
in cash and US$6 million in common
shares. By achieving certain annual adjusted EBITDA and other
performance targets, additional consideration of up to US$132 million would be paid over each of the
next three years as a combination of cash and shares for a maximum
aggregate purchase price of up to US$150
million. The Transaction is expected to close on or before
July 31st, 2019, upon
completion of standard closing requirements, including regulatory
and stock exchange (NASDAQ and TSX) approvals.
"With Neptune's Canada-based
operations ramping up production and the cannabis industry growing
exponentially around the world due to an evolving legal global
framework, now is the time to establish a state-of-the-art supply
chain in the U.S. marketplace," said Jim
Hamilton, President and CEO of Neptune. "SugarLeaf's
capacity, efficient production of high-quality extracts, and strong
supplier relationships, combined with our existing competencies in
customer relationships and science-based formulations, creates a
strong value proposition to U.S. brands who want to offer
differentiated products to consumers. Neptune's objective is to be
a world's leader in extraction, purification and formulation of
value-added cannabis and natural health products. We warmly welcome
the SugarLeaf team to Neptune."
"We are thrilled to be joining forces with Neptune" said
Peter Galloway, CEO of SugarLeaf.
"The SugarLeaf team looks forward to combining our strengths with
that of the Neptune team, thereby accelerating our combined growth
and development."
Additional Information on SugarLeaf
SugarLeaf's Conover, North
Carolina extraction facility has a processing capacity of
1,500,000 kg. SugarLeaf also possesses established, solid
relationships with local farmers and consumer product companies
looking for high purity hemp extracts to add to their product
lines. The existing management team at SugarLeaf consists of
experienced operators who will continue to operate the North Carolina extraction facility.
Sugarleaf has highly efficient hemp extraction capabilities in
an important cultivation region of the U.S., developed through
years of experience in processing and extraction methods. The
company has been at the center of an extensive community that
supports hemp extract production and refining, and uses the most
advanced extraction equipment available – from stainless
centrifuges to high capacity filtering and purifying
techniques.
Additionally, Sugarleaf sources hemp material from local
licensed hemp growers who use responsible growing practices,
including organic and regenerative farming techniques. SugarLeaf
uses non-GMO ethanol at extremely cold temperatures with advanced
lab techniques that produce cannabinoid-rich extracts.
Additional Transaction Details
Upon closing of the
Transaction, Neptune will pay initial consideration of US$18 million, comprising US$12 million of cash and US$6 million in Neptune shares. Neptune plans to
finance all or part of the cash portion of the initial
consideration through a lending arrangement with a bank or other
institution, or a private or public equity financing (or a
combination of such financings). An additional US$6 million in shares will be paid when certain
production and revenue milestones are achieved. Neptune will also
pay an additional US$16 million, 50%
in cash and the remainder in Neptune common shares, should
SugarLeaf's adjusted EBITDA exceed US$8
million for any rolling 12-month period beginning
April 1, 2019. Performance-based
considerations have also been structured and will be based upon a
percentage incremental adjusted EBITDA in 2021 and 2022 above a
minimum growth level of up to a maximum of US$110 million. Neptune has the option to pay
these additional considerations with a combination of cash and
shares.
The Transaction will be subject to normal post-closing
adjustments and customary terms and conditions. The Transaction is
expected to close on or before July
31st, 2019.
TD Securities Inc. is acting as financial advisor to Neptune and
Osler, Hoskin & Harcourt LLP
is acting as legal counsel to Neptune, and Vicente Sederberg LLP is
acting as U.S. regulatory counsel to Neptune. Fluet, Huber &
Hoang is acting as legal advisor to SugarLeaf.
For more information about Neptune's US
products and
services portfolio, please write to
info@neptunecorp.com.
About Neptune Wellness Solutions Inc.
Neptune Wellness Solutions specializes in
the extraction, purification and formulation of
health and wellness
products. Licensed by Health Canada to process cannabis at its 50,000 square foot facility located in Sherbrooke,
Quebec, Neptune brings decades
of experience in the natural products sector to the legal cannabis industry.
Leveraging its scientific and technological
expertise, Neptune focuses on the development
of value-added and differentiated products for
the Canadian and global cannabis markets. Neptune's activities also include the
development and commercialization of turnkey nutrition solutions and patented ingredients such as MaxSimil®,
and of
a variety of marine and seed oils. Its head office is
located in Laval, Quebec.
Forward Looking Statements
Statements in
this press release that are
not statements of historical or current fact
constitute "forward-looking statements" within the
meaning of the U.S.
securities laws and Canadian securities laws.
Such forward-looking
statements involve known and
unknown risks, uncertainties, and other unknown
factors that could cause the
actual results of Neptune to be materially different from historical results or from any future results expressed or
implied by such forward-looking statements. In addition to statements
which explicitly describe such risks and
uncertainties, readers are
urged to consider statements labeled with the terms "believes", "belief", "expects",
"intends", "projects", "anticipates", "will", "should" or "plans" to be
uncertain and forward-looking. Readers are
cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date
of
this press release. Forward-looking information in this press release includes, but is not limited to, information
or statements about Neptune's ability to successfully develop, produce, supply, promote or generate any revenue
from the sale of
any hemp-based products in
the legal hemp market; the evolution of the U.S. regulatory
framework at both the
state and the federal level; the timing of Neptune's or its partners' anticipated
results,
including in connection with the likelihood and timing of obtaining any necessary
governmental approvals; and the ability or failure
of Neptune or its partners to comply with
governmental regulations.
The forward-looking statements contained in
this press release are expressly
qualified in their entirety by this
cautionary statement and the "Cautionary Note
Regarding Forward-Looking Information" section contained in
Neptune's latest Annual Information Form (the
"AIF"), which also forms part of Neptune's latest annual
report on Form 40-F,
and which is available on SEDAR
at www.sedar.com, on EDGAR at www.sec.gov/edgar.shtml and
on the investor section of
Neptune's website at www.neptunecorp.com. All forward-looking statements in
this press release are made as
of the date of this press release. Neptune does not undertake to update any such
forward-looking statements whether as a result of
new information, future events or otherwise, except as
required by law. The
forward-looking statements contained herein are also
subject generally to other risks and
uncertainties that are described from time to time in
Neptune public securities filings with the Securities and
Exchange Commission and the Canadian
securities commissions. Additional information
about these
assumptions and risks and uncertainties is contained
in the AIF under "Risk Factors".
Neither NASDAQ nor the Toronto Stock Exchange accepts responsibility for the adequacy or accuracy of this
release.
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SOURCE Neptune Wellness Solutions Inc.