Canadian producer Avant Brands Inc. (TSX:AVNT) (OTCQX:AVTBF) has entered a binding share purchase agreement with F-20 Developments Corp. to acquire the remaining 50% equity stake in 3PL Ventures Inc. for $15 million.
“We are excited to announce the full acquisition of our newest and largest facility, which has been a foundational flagship asset for the highly-sought after products that we produce for Canada and the global market,” said Avant CEO and founder Norton Singhavon.
Under the terms, $1.5 million will be paid in cash with the rest paid in debt and Avant shares.
Avant currently owns 50% of the issued and outstanding shares in the capital of 3PL, a joint venture with the F-20. On closing, Avant will own 100% of the issued and outstanding shares in the capital of 3PL. The transaction is expected to close on or around February 1, 2023.
Acquiring 3PL using stock is subject to approval from the Toronto Stock Exchange.
Singhavon continued, “As 3PL recently became cash-flow positive, we anticipate that it will generate meaningful cash flows to our organization in the near future, which we expect will help accelerate Avant’s future growth and expansion strategy. This acquisition combined with our recent announcement of being the winning bid at the Flowr auction, will set the stage for a transformational 2023 fiscal year for Avant. We look forward to accelerating our rapid growth as we continue working towards becoming Canada’s leading producer of ultra-premium cannabis products.”
The Ontario Superior Court of Justice approved the previously announced definitive purchase agreement to acquire all of Flowr Okanagan and its 85,000-square-foot British Columbia grow facility for $4.015 million and $1.1 million in shares of Avant, plus certain wind-down costs in connection with the Flowr Group’s insolvency proceedings
The news comes after Avant entered into a November stalking horse purchase agreement for the distressed assets.
A stalking-horse bid is an initial bid on the assets of a bankrupt company. Other buyers can submit competing offers following a low-end stalking horse bid.
The deal is expected to close within the first quarter of 2023.
“Over the course of the last year, the Avant team has been seeking investment or acquisition opportunities which would enable us to utilize our strong balance sheet in a manner which maximizes shareholder value” said Singhavon. “As a result, we are extremely pleased with the outcome of Flowr’s restructuring process, as we have always viewed their Kelowna facility as a top-tier and world class asset that would be an ideal fit for the Avant portfolio. We look forward to entering into our fiscal 2023 year with the addition of the Flowr facility and its dedicated team.”