- Signs agreement to acquire 72,000 square foot industrial facility (~34,000 square feet of future canopy) located in Eloy, Arizona.
- Enters into separate agreements to acquire existing operated indoor cultivation facilities in Phoenix and Prescott Valley.
- Once the Eloy facility is operational, Vext will have total indoor capacity of ~58,000 square feet under canopy and 10 acres of outdoor capacity, to support growth in Arizona.
All figures are in U.S. dollars ($) unless otherwise specified
VANCOUVER, BC, April 7, 2021 /CNW/ – Vext Science, Inc. (“Vext” or the “Company”) (CSE: VEXT) (OTCQX: VEXTF) a cannabinoid brand leader based in Arizona, leveraging its core expertise in extraction, manufacturing, cultivation and marketing to build a profitable multi-state footprint, announced today that it has entered into three separate purchase and sale agreements to acquire: (i) a vacant industrial facility located in Eloy, Arizona; (ii) the Company’s operated indoor cultivation facility in Phoenix; (iii) and the Company’s operated indoor cultivation facility in Prescott Valley (collectively, the “Transactions”). Vext will pay approximately $6.55 million in aggregate cash consideration upon the closing of the Transactions, representing the outright purchase of the Eloy facility, and deposits on the Phoenix and Prescott Valleyfacilities. The Company expects to enter into vendor financing arrangements for the balance of the Phoenix and Prescott Valley facilities.
“Arizona represents one of the most exciting growth opportunities in the U.S. cannabis market today, and by adding wholly-owned cultivation capacity, we are ensuring that Vext is positioned to maximize its share of this growth through both retail and wholesale channels,” said Eric Offenberger, CEO of Vext. “With the move to adult-use legalization in January and recent expansion announcements in other industries such as semiconductor production, we expect it to become increasingly challenging to find suitable cultivation locations within proximity to key population centers. By owning and expanding our cultivation capacity, we ensure stability of supply and solid margins both for the production of our award-winning Vapen brand, and our operated dispensaries. The Transactions offer us the flexibility to sell high-quality production into the wholesale market in the short term to generate additional cash flow, while looking to accretively add to our Arizona retail footprint.”
Agreement to Purchase Eloy Cultivation Facility
Vext has entered into an agreement to purchase a 72,000 square foot indoor cultivation facility in Eloy, Arizona (the “Eloy Agreement”), which is located approximately an hour from Phoenix. The Company will pay 100% cash ($4.3 million) for outright ownership of the facility, which is currently vacant. Vext expects to build the facility out to approximately 34,000 square feet under canopy within nine months of acquiring the facility. The Eloy facility also includes ample land for future expansion.
The Eloy Agreement is expected to close in June 2021, subject to certain standard closing conditions along with Vext’s completion of due diligence and zoning requirements acceptable to Vext in Vext’s sole discretion.
Agreement to Purchase Phoenix Cultivation Facility
Vext currently operates an indoor cultivation facility in Phoenix, with approximately 11,000 square feet under canopy and is currently in the process of expanding the footprint to 13,000 square feet under canopy (complete by Q4-2021). The Company has entered into an agreement with the existing owner for an outright purchase of the facility for a price of $3.1 million. The Company will pay $1 million in cash to the vendor on closing, and the vendor will provide a five-year, 8.5% interest mortgage to Vext secured by the facility, with a 20-year amortization schedule. Vext is permitted to pay the entire mortgage, or part of the mortgage, without payment penalty at any time or from time to time.
The agreement is expected to close in April 2021, subject to certain standard closing conditions.
Agreement to Purchase Prescott Valley Cultivation Facility
Vext currently operates an indoor cultivation facility in Prescott Valley, with approximately 9,000 square feet under canopy and is currently in the process of expanding the footprint to 11,000 square feet under canopy (complete by Q1-2022). The Company has entered into an agreement with the existing owner for an outright purchase of the facility along with the approximately 10 acres of outdoor growing area currently operated by Vext, for a price of $3.95 million. The Company will pay $1.15 million in cash to the vendor on closing. The vendor will provide five-year, 12.0% interest-only mortgage to Vext secured by the facility. The Company will begin making annual principal payments of $0.25 million to the vendor, beginning in 2022. Vext is permitted to pay the entire mortgage, or part of the mortgage, without payment penalty at any time or from time to time.
The agreement is expected to close in June 2021, subject to certain standard closing conditions.