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Australis Capital Inc

Australis Capital expands Nevada presence in separate deals with Green Therapeutics and Meridian worth combined $11M in stock

CEO Scott Dowty says the combined assets, expertise and network positions the company for ‘tremendous growth’

A cannabis cultivation farm
A spin-out of Aurora Cannabis, Australis invests mainly in the cannabis industry in the United States

Australis Capital Inc (CSE:AUSA) (OTCMKTS:AUSAF) announced Tuesday that it will issue nearly $10.93 million in stock to buy Green Therapeutics LLC’s high-profile cannabis brands, and a parcel of land from Meridian Companies LLC.

A September 2018 spin-out of Aurora Cannabis Inc (TSE:ACB) (NYSE:ACB), Australis Capital mainly invests in the cannabis industry in the United States.

According to an asset purchase agreement, Australis will acquire Green Therapeutics’ Tsunami, Provisions, and GT Flowers cannabis brands, intellectual property, and the right to complete and expand the construction of a 55,000 square foot cannabis facility in North Las Vegas, Nevada.

READ: Aurora Cannabis remains top pick for Melius Research after fiscal 3Q earnings

The 8.9-acre parcel of land in North Las Vegas can support a potentially 400,000 square foot cultivation and production facility, said the company. The experienced operating team from Green Therapeutics will join Australis.

In return, Australis will award up to $8 million in stock to complete the acquisition. It already issued 7,831,855 shares valued at $6.4 million on signing the definitive agreement with Green Therapeutics.

An additional $800,000 will be issued when the new facility in North Las Vegas is fully licensed. An extra $800,000 in shares will be issued if “certain performance goals” are met utilizing the acquired assets within specific timeframes, said the company.

"Green Therapeutics and Australis' combined assets, expertise, and network positions our company for tremendous growth,” Australis Capital CEO Scott Dowty said in a statement. “Uniquely positioned with products spanning verticals where long term margins will be insulated."

Expanding footprint in Nevada

In a separate transaction, Australis bought the 8.9-acre parcel of land in North Las Vegas in exchange for $2.93 million in stock from Meridian Companies LLC. The transaction will deepen Australis' cultivation and manufacturing toehold in Nevada, which has favorable cannabis laws.

Australis will build a new facility with indoor greenhouses, advanced control systems and modern manufacturing, production, and post-production facilities for approximately $12 million. The company said “precision level” control will allow for superior cannabis flowers to be produced using the Mr Natural methodology, setting new standards for specialized organic horticulture.

"Introducing Mr Natural's Veteran Affairs registered premium organic strains and proprietary cultivation methodologies to Nevada through a purpose-built facility will serve as the launching ground for a nationally recognized cannabis brand," said Dowty.

Symbiotic relationship

The cultivation and production of Green Therapeutics brands will continue at its existing facilities while the new facility is completed. Once licensed and operational, the new facility will produce both the Green Therapeutics’ brands and Australis' award-winning organic brand, Mr Natural, as well as third-party pre-rolled joints.

Australis expects the transaction to close in late-2019 after the transfer of Green Therapeutics’ cultivation and manufacturing licenses to it.

With the transaction closing, the company expects the new facility to come up and be operational by mid-2020.

Once up-an-running, Australis expects the 55,000 square foot facility to generate $10 million to $12 million in EBITDA in its first full year of operations.

"We are excited to be working with Australis' top tier management team and leveraging their strategic relationship with Aurora Cannabis," said Green Therapeutics CEO Dr Duke Fu. "This gives us a fantastic opportunity to scale our current brands inside and outside Nevada while maximizing Australis' portfolio assets and vast cultivation experience." 

Contact Uttara Choudhury at [email protected]

Follow her on Twitter@UttaraProactive 

Quick facts: Australis Capital Inc

Price: $0.74

Market: CSE
Market Cap: $117.04 m
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