05:03:30 EDT Wed 19 Jun 2019
Enter Symbol
or Name

Login ID:
Delta 9 Cannabis Inc
Symbol C : NINE
Shares Issued 85,686,279
Close 2018-10-10 C$ 1.69
Recent Sedar Documents

Delta 9 closes land, building acquisition

2018-10-11 08:32 ET - News Release

Mr. John Arbuthnot reports


Delta 9 Cannabis Inc. has closed its previously announced acquisition of the land and 80,000-square-foot building containing the company's current cannabis production facility from 6599362 Canada Ltd. for a price of $6.25-million, subject to certain closing adjustments and conditions. The company has also purchased certain cannabis grow pods from the vendor for a price of $952,000, plus applicable taxes. The property is located in a heavy industrial area in Winnipeg, Man. The production facility of Delta 9 has been located at the property since July, 2013.

The vendor is a non-arm's-length party of Delta 9 due to the fact that a director of Delta 9, Joanne Duhoux-Defehr, is also a director of the vendor and is the owner of 20 per cent of the issued and outstanding shares of the vendor. Accordingly, the acquisition of the property and the equipment are considered to be a non-arm's-length-party transaction and are subject to the approval of the TSX Venture Exchange. The exchange has granted its conditional approval for the acquisition of the property and the equipment and final approval of the transaction is subject to certain final filings with the exchange.

A portion of the purchase price for the property and equipment will be paid by the company from funds advanced pursuant to a $12-million loan and credit facility provided to the company by Canadian Western Bank (CWB). Pursuant to the terms of the agreement between CWB and the company, there are four separate loan segments, each of which is allocated for a different purpose, and each with its own terms:

  1. A demand operating loan of $2-million to be used to finance day-to-day operations: Interest will float at a rate of 1.00 per cent per annum above CWB's prime lending rate, which at the current time is 3.45 per cent per annum.
  2. A demand revolving loan of $4.5-million which was used to finance a portion of the acquisition of the property: Interest will initially float at 1 per cent above prime, but CWB will use its best efforts to obtain funds on a fixed rate acceptable to Delta 9 and CWB, which is intended to be at between 4.68 per cent per annum for a one-year term up to 5.45 per cent per annum for a five-year term;
  3. A demand non-revolving loan of $4.5-million to assist in the purchase of lands adjacent to the company's current production facility, as previously disclosed by the company: Interest will float at a rate of 1.00 per cent per annum above prime, with fixed rate pricing subject to negotiation up to the date of drawdown.
  4. A non-revolving credit facility of $1-million for the purchase or lease of equipment required for the operation of the company's business: Interest will float at a rate of 1.75 per cent above prime, with fixed rate pricing to be the subject of negotiation up to the date of drawdown. This facility was used to finance a portion of the purchase price of the equipment.

Delta 9 chief executive officer John Arbuthnot said the agreement is another important step in the continued expansion of Delta 9's production capacity: "Our focus this year has been to ramp up production for the legalization of cannabis in Canada on Oct. 17, 2018. The purchase agreement and our financing arrangement with Canadian Western Bank gives us certainty about the land on which we operate, and provides funding to continue our expansion for years into the future."

Delta 9's first phase of expansion is on track to increase annual production to 17,500 kilograms of cannabis annually by the end of 2019. Further expansion is planned on a Delta 9 Cannabis campus slated for construction on an adjoining parcel of industrial land.

About Delta 9 Cannabis Inc.

Delta 9 Cannabis was the fourth producer in Canada licensed to produce legal cannabis. Delta 9 now operates its wholly owned subsidiary, Delta 9 Bio-Tech Inc., as a licensed producer of medical marijuana pursuant to the ACMPR (Access to Cannabis for Medical Purposes Regulations) and operates an 80,000-square-foot production facility in Winnipeg, Man., Canada. Delta 9 also owns 50 per cent of the 70,000-square-foot Delta West facility in Alberta and co-owns the Delta 9 cannabis store retail operation.

We seek Safe Harbor.

© 2019 Canjex Publishing Ltd. All rights reserved.