Marillionaire
3年前
SOL Global Investments Corp. Announces Substantial Issuer Bid
Price Range Set Between $4.05 to $4.25
TORONTO--(BUSINESS WIRE)-- SOL Global Investments Corp. (the “Company” or “SOL Global”) (CSE: SOL) (OTCQ: SOLCF) (Frankfurt: 9SB) is pleased to announce that further to its press release dated September 7, 2021, its board of directors (the “Board”) has approved the launch and terms of a substantial issuer bid (the “Offer”) pursuant to which SOL Global will offer to purchase for cancellation up to $30,000,000 of its outstanding common shares (the “Common Shares”).
Subject to filing and/or obtaining the necessary exemptive relief under applicable securities laws, the Offer will proceed by way of a “Dutch auction”. Holders of Common Shares wishing to tender to the Offer will be entitled to specify the number of Common Shares being tendered at a price of not less than $4.05 and not more than $4.25 per Common Share in increments of $0.05 per Common Share (the “Auction Tender”).
The purchase price to be paid by SOL Global for each validly deposited Common Share will be determined upon expiry of the Offer and will be based on the number of Common Shares validly deposited and the prices specified by shareholders as part of their Auction Tender. As a result, SOL Global shareholders who tender their Common Shares will set the purchase price for the Offer. The purchase price will be the lowest price (which will not be more than $4.25 per Common Share and not less than $4.05 per Common Share) which enables SOL Global to purchase Common Shares up to the maximum amount available under the Offer, determined in accordance with the terms of the Offer. Common Shares deposited at or below the purchase price as finally determined by SOL Global will be purchased at such purchase price. Common Shares deposited at prices above the purchase price will not be taken up in connection with the Offer and will be returned to the respective shareholders.
If the aggregate purchase price for Common Shares validly tendered is greater than the amount available under the Offer, SOL Global will purchase Common Shares from the holders of Common Shares who made purchase price tenders or tendered at or below the purchase price as finally determined by SOL Global on a pro rata basis, except that "odd lot" holders (holders of less than 100 Shares) will not be subject to proration.
SOL Global expects to mail the formal offer to purchase, issuer bid circular, letter of transmittal, notice of guaranteed delivery and other related documents (the "Offer Documents") containing the terms and conditions of the Offer, instructions for tendering Common Shares, and the factors considered by SOL Global’s Board in making its decision to approve the Offer, among other things, in approximately one week. The Offer Documents will be filed with the applicable securities regulators in Canada and will be available under the Company’s profile on SEDAR at www.sedar.com. Shareholders should carefully read the Offer Documents prior to making a decision with respect to the Offer.
The Offer will not be conditional upon any minimum number of Common Shares being tendered. The Offer will, however, be subject to other conditions described in the Offer Documents and SOL Global will reserve the right, subject to applicable laws, to withdraw, extend or vary the Offer, if, at any time prior to the payment of deposited Common Shares, certain events occur. The Offer is expected to remain open for acceptance until 11:59 p.m. (Toronto time) on the date that is 35 days from the date the offer is commenced, unless withdrawn, extended or varied by SOL Global. SOL Global expects to file with securities commissions an application for exemptive relief to allow it to extend the Offer.
SOL Global’s Board has approved the making of the Offer and the purchase price for Common Shares, however none of SOL Global, its Board, the dealer manager or the depositary makes any recommendation to any shareholder as to whether to deposit or refrain from depositing any Common Shares under the Offer. Shareholders are urged to carefully evaluate all information in the Offer, consult their own financial, legal, investment and tax advisors and make their own decisions as to whether to deposit Common Shares under the Offer and, if so, how many Common Shares to deposit and at what price or prices.
The Offer referred to in this press release has not yet commenced. This press release is for informational purposes only and does not constitute an offer to buy or the solicitation of an offer to sell SOL Global’s Common Shares. The solicitation and the offer to buy the Common Shares will only be made pursuant to Offer Documents to be filed with the applicable securities regulators in Canada and remains subject to SOL Global filing and/or obtaining certain exemptive relief under applicable securities laws in Canada. The Offer will be optional for all shareholders, who will be free to choose whether to participate, how many Common Shares to tender and at what price to tender within the specified range. Any shareholder who does not deposit any Common Shares (or whose Common Shares are not repurchased under the Offer) will realize a proportionate increase in equity interest in SOL Global, to the extent that Common Shares are purchased under the Offer.
SOL Global has retained Clarus Securities Inc. (“Clarus”) to act as financial advisor and dealer manager in connection with the Offer. Any questions or requests for information may be directed to Clarus, as dealer manager for the Offer, Rob Orviss at rorviss@clarusecurities.com.
About SOL Global Investments Corp.
SOL Global is a diversified investment and private equity holding company engaged in the small and mid-cap sectors. SOL Global’s investment partnerships range from minority positions to large strategic holdings with active advisory mandates. The Company’s seven primary business segments include Retail, Agriculture, QSR & Hospitality, Media Technology & Gaming, and New Age Wellness.
The Company’s head office is located at 100 King Street West, Suite 5600, Toronto, Ontario, M5X 1C9.
Alwaysbmikki
3年前
Here we go ???? SOL Global Investments Settles Litigation with 1235 Fund LP
Settlement Amount of $68.5 million Plus Principal and Interest
TORONTO, August 07, 2021--(BUSINESS WIRE)--SOL Global Investments Corp. ("SOL Global" or the "Company") (CSE: SOL) (OTCPK: SOLCF) (Frankfurt: 9SB) is pleased to announce that the litigation relating to a senior, secured non-convertible debenture issued and sold to 1235 Fund LP ("1235") in the principal amount of CAD$50 million and bearing interest at 6.0% per annum (the "Debenture") has been settled. As previously disclosed, SOL Global had commenced legal proceedings in New York against 1235 and another entity, and 1235 had commenced legal proceedings against SOL Global and others in Ontario. Both legal proceedings concerned the interpretation of the Debenture and related agreements and the rights of the parties under these agreements.
Pursuant to the settlement, a subsidiary of SOL Global will acquire all of 1235’s rights under the Debenture for CAD $120 million (which is CAD $68.5 million above the Debenture’s principal and accrued interest), which will be paid on September 7, 2021. To partially fund the acquisition, the subsidiary will receive an equity investment from SOL Global which has entered into a loan agreement with an arm’s length private lender for a secured loan in the principal amount of CAD$50 million (the "Loan"). The Loan will have a term of 12 months and will bear interest at the rate of 9% per annum. The Loan will be secured by a general security agreement.
"SOL Global is pleased that the litigation is at an end," said SOL Global CEO, Andy DeFrancesco. "Although SOL Global’s subsidiary has sufficient holdings to fully fund the acquisition, we decided to take on a small loan rather than fund the acquisition solely from a sell down of our portfolio, as we see significant upside in our core holdings."
"1235 can confirm that the litigation with SOL Global concerning the Debenture has been settled on a mutually acceptable basis," said the Director of the General Partner of 1235.
https://finance.yahoo.com/news/sol-global-investments-settles-litigation-130000751.html
Marillionaire
4年前
This was a summary made for another reader who asked about the suit between 1235 Fund and Sol Global:
********************
"The suit filed in NY was Sol Global filing a suit against 1235 Fund in February, 2021.
1235 Fund filed a counter suit in Ontario/Toronto against Sol Global soon after.
Andy was named (along with his wife) as a "guarantor" for the debt
The filings seem to revolve around weather the "Equity Option" that was provided to 1235 Fund extended beyond the Harvest transaction. 1235 Fund says Yes and claims that the debt was convertible and that was the understanding by both parties since. Sol Global says no.
1. In reviewing the 1235 filing, pages 27 and 28 of the debenture, the four sub sections are the crux of the argument. I think all parties would agree that the first two subsections in part (a) do not apply. The question falls to part (b), and on the face of it one may initially think that 1235 was entitled to an equity option. However, when you review page 28 you will see that both subsections of part (b) were still linked to the Harvest transaction in so far that they depended on the price of the transaction (i.e., the "Verano Acquisition") as well as the VWAP of Harvest 5 days prior. Additionally, the 2nd part of part (b) also references the "Verano Acquisition" (which is a defined term related to only the acquisition by Harvest). Since that acquisition never was consumated (cancelled in March 2020), I find the numbers in question "uncalculable" unless the presumption is "what if" the transaction had closed as was planned.
2. The references to an "equity option" are in reference to "at Maturity Date" and not on an early pre-payment (which 1235 is claiming it is entitled to as part of an involuntary breach of contract resulting from the RTO---and this breach may be one of the few things I believe 1235 Fund is correct on). However, since it is not on the maturity of the debt, it reads that the equity option does not apply (once again).
3. Sol Global put out a tweet referencing a 2019 press release that was claimed to have been reviewed by both 1235 Fund and its general counsel which specifically states that the debt was non-convertible. This adds further credence that the original debt was not meant to be a convertible instrument (into any form of equity). If it is true that 1235 Fund and/or its general counsel did review and approve the press release, than the press release flies in the face of 1235's original claim that all parties understood that the debt was a convertible agreement.
4. Sol Global had made it clear on multiple occasions that prior to the announcement of the Verano RTO that they were operating on the assumption that 1235 Fund was only entitled to a cash payment (see their various filings). So, from a consistency perspective, Sol has made it clear for the past 4 months that they believed it was only a cash payment required.
5. Canada has rules and regulations which apply criminality to any annual interest rates above 60% falling in two components: creating that interest rate and attempting to collect on that interest rate. If those rules apply, it is clear that the amounts that 1235 Fund is attempting to collect would be well in excess of those rates by orders of magnitude.
6. 1235 Fund claims that it is uncharacteristic or unlikely that a firm such as theirs would lend money at a 6% interest rate. However, it fails to mention that it also had a short position with Harvest that they were trying to cover (something they have done in the past), and that if the "Verano Acquisition" by Harvest had gone through, it would have covered that position as well as left them with a healthy return.
Based on the above, It is my opinion, and I am not a a lawyer, that 1235 would have to overcome quite a few claims and hurdles to obtain the amounts it is seeking and would like only receive the debt+accrued interest it was entitled to (~$45MM USD) or something less than the interest rate caps of Canada (i.e., This is far less than the $550MM that they are claiming.
It would also be hard for them to claim bad faith since there is sufficient evidence, in my opinion, that seems to point to the contrary.
As support for this belief, Sol Global, yesterday, announced that they would implement a share repurchase program for up to 5% which they have done before last year and fully executed on.
As further for support, the YOLO ETF, and after all the filings in question, doubled its holdings from 1MM shares to 2MM shares bringing its ownership in SOLCF to 1.4%.
Again, this is just my opinion and I could always be wrong, but I am trying to be objective on the matter (although I am long Sol Global still as a result of this opinion)
I hope that helps"
Alwaysbmikki
4年前
Glad the company acted fast. I picked up more.
SOL Global Provides Notice of and Background to Litigation Commenced by Lender Seeking $550M+ on $50M 24-Month Loan
More content below
Mon, March 1, 2021, 8:17 AM
SOLCF
-7.58%
SOL Global Has Advised Lender It Is in Position to Repay Debenture in Cash Pursuant to Terms of Loan
SOL Global Investments Corp. ("SOL Global" or the "Company") (CSE: SOL) (OTCPK: SOLCF) (Frankfurt: 9SB) today provides notice and background concerning the copycat litigation commenced against it and others by its lender, an offshore hedge fund, which litigation concerns the same issues as the Company’s previously announced U.S. complaint against that lender.
U.S. Complaint
On February 7, 2021, SOL Global initiated litigation in the State of New York against its lender, 1235 Fund LP, an offshore hedge fund and an affiliate of MMCAP Asset Management, seeking declaratory relief that, among other things, this lender is not entitled to be repaid in any property other than cash. Diligent efforts to prosecute this claim are underway, and the lender must respond to the Complaint in March 2021.
The Company is being represented in the litigation by attorney Alex Spiro of Quinn Emanuel Urquhart & Sullivan, LLP.
The case is SOL Global Investments Corp., et al. v. 1235 Fund LP and MM Asset Management, Inc., Index No. 650858/2021 (Supreme Court, New York).
Background
On July 8, 2019, the Company announced that it had completed a $50,000,000 private placement financing by way of the issue and sale of a senior secured non-convertible debenture ("Debenture"). The Debenture bears interest at 6.0% per annum and will mature on July 5, 2021. A copy of SOL Global’s original press release concerning the Debenture, which clearly states it is a non-convertible debenture, may be viewed at https://www.newswire.ca/news-releases/sol-global-completes-50-million-debenture-financing-and-announces-corporate-update-871790166.html.
If a specific transaction involving Verano Holdings, Inc. ("Verano") and Harvest Health and Recreation Inc. ("Harvest") had occurred (the "Harvest Transaction"), the lender would have been repaid in shares of either Verano or Harvest, which would have enabled the lender to cover its short position in Harvest and provided the lender with a reasonable premium of return beyond the stipulated 6%. The Harvest Transaction did not close and thus the Debenture is repayable only in cash.
Nevertheless, on February 5, 2021, the lender wrongfully sent a formal notice purportedly electing to receive, instead of cash, 1,730,794 Verano shares then currently owned by the Company ("Old Verano Shares") (plus an additional amount of shares if the Old Verano Shares were not freely tradeable). On February 7, the lender took the formal position that the Company’s participation in an exchange of Old Verano Shares for New Verano Shares that occurred automatically as a result of Verano’s subsequent going public transaction is a breach of the Company’s obligations under the Debenture and related agreements. Pursuant to that going public transaction, each Old Verano Share previously held by the Company was exchanged for approximately 7.537 New Verano Shares.
SOL Global firmly rejects all of 1235 Fund LP’s positions. Page one of the Debenture Agreement specifically states that SOL Global "promises to pay to or to the order of Gundy Co. in trust for 1235 Fund LP… as nominee for 1235 Fund LP (hereinafter referred to as the "Lender" or the "Debentureholder"), the principal amount of fifty million dollars ($50,000,000) (the "Principal Amount") in lawful money of Canada." Section 6.3 of the Debenture further states: "If any other Event of Default shall occur for any reason, whether voluntary or involuntary, and be continuing, the Lender may by notice to the Borrower declare all or any portion of the outstanding Principal Amount of this Debenture and accrued interest on this Debenture to be due and payable, whereupon the full unpaid amount of this Debenture which shall be so declared due and payable shall be and become immediately due and payable without further notice, demand or presentment."
In the case of the alleged breach of the Debenture claimed by the lender, its only remedy would be the immediate repayment of the principal of the Debenture in said "lawful money of Canada." Other related documents also describe payment in the "lawful money of Canada." The only exception to repayment by cash would have been if the Harvest Transaction had closed. The lender never had any interest in Verano, and repeatedly expressed that view. Furthermore, SOL Global asserts in the U.S. complaint that 1235 Fund LP’s demand in the current circumstances for the delivery of Old Verano Shares (or their equivalent in New Verano Shares, which the lender has no right to in any event pursuant to the terms of the Debenture) to repay the loan would result in a breach of Section 347 of the Criminal Code of Canada, as the effective annual rate of interest would exceed the highest permitted rate of 60% by a significant multiple.
SOL Global has advised the lender that it is in a position to repay the Debenture in cash pursuant to its terms. SOL Global has also advised the lender that as the lender has called a default under the Debenture, SOL Global will demand to repay the Debenture with interest immediately. To address any uncertainty resulting from the lender’s positions, the Company commenced the litigation in New York described above.
Canadian Litigation
On February 25, 2021, the Company was informed that 1235 Fund LP commenced litigation in Ontario Superior Court seeking delivery of the equivalent in New Verano Shares of more Old Verano shares than it previously demanded or in the alternative more than $550 million in damages from SOL Global and others. Joseph Groia of Groia & Company will be acting for SOL Global in this new litigation. SOL Global is considering all of its legal options to respond to this new lawsuit, if and when it is properly served, including asking the Canadian courts to dismiss the claim as these matters are already before the Courts in New York.
SOL Global will consider additional claims and counterclaims against this offshore hedge fund, its investors and principals, and MMCAP and its investors and principals for unlawfully interfering with SOL Global’s business and reputation.
"There has been a great deal of discussion and concern about the role that offshore hedge funds play in the Canadian capital markets. This case can certainly be added to that list," said Andy DeFrancesco, Chairman and CEO of SOL Global.
SOL Global intends to update its investors and the public about the status of the litigations as information becomes available and in accordance with all applicable securities laws.
About SOL Global Investments Corp.:
SOL Global is a diversified investment and private equity holding company engaged in the small and mid-cap sectors. Our investment partnerships range from minority positions to large strategic holdings with active advisory mandates. SOL Global’s seven primary business segments include Retail, Agriculture, QSR & Hospitality, Media Technology & Gaming, Energy, and New Age Wellnesshttps://finance.yahoo.com/news/sol-global-provides-notice-background-141700327.html
Marillionaire
4年前
The following was shared with me by another party:
"February 7 complaint in NY Supreme Court (650858/2021) references a demand letter from 1235. The complaint reads, in part: "Seeking to exploit this turn of events, Defendants have claimed that 1235 Fund has an unconditional right to require SGI to repay the Debenture, in lieu of cash, in the form of more than 1.7 million shares in Verano, which, after the going-public transaction, will be worth, at a conservative estimate, nearly three times the principal amount of the loan. (nb. loan was CDN$50,000,000). $SOLCF's lead counsel in the matter is Elon Musk's preferred attorney - he's quite good at this...."
Given this, the 1.7MM Shares is in lieu of the debenture/cash, which is better than I may have thought initially.
1.7MM Shares is the equivalent of ~$43MM USD in total (which implies about the same amount as the cash owed).
What is interesting, is SolCF could simply make the transfers to 1235, and then use the cash originally allocated to pay down the debt by July to repurchase the Verano shares in the open market (granted, the float/volume is low, and it will take some time to execute that without driving Verano's price up dramatically), but it could actually net SolCF a small positive gain by doing it if executed right and avoid litigation costs and end the "drama" which may be weighing down on SolCF shares.
In the end though, based on where Verano is currently trading, and the amounts in question, its really a negligible impact to current valuations and far better than I was expecting.
So at existing Verano price levels (i.e., $25.5/Verano Share USD), this is effectively a wash.
As such, the post-tax fair market value of the company, based on my prior posts, is north of $8/Sol Share 25.2MM Verano Shares X $25.5/Verano Share X 0.8 (after-Tax deduction) +
~$75MM Post-tax Value of Bluma proceeds and economic interest +
~$28MM Post-tax Value of remaining portfolio -
-$44MM USDin Debt+accrued interest
= $569MM in USD
Divided by a Fully Diluted ~72MM Shares for SolCF
= ~$8/Sol Share
On a pre-tax basis this equates to ~$10/SolCF Share
implying an 85% to 130% potential return given the existing share price of $4.3/Sol Share
Marillionaire
4年前
So, we finally have it....what is Verano worth (at least as of today):
Answer: $31.4/Verano Share CAD (i.e., $24.72/Verano Share USD using a 1.27 exchange rate)
SolCF owns 25.2MM Shares pursuant to the latest press releases
Pre-tax Value of 25.2MM Shares = $623MM Shares USD
Post-Tax Value of 25.2MM Shares if Sol sold everything today = $498.4MM USD using a 20% cap gains tax rate
~Post-tax Value of Bluma Contribution to Sol on a Post-Tax Basis when deal closes = ~$75MM USD
~Post-tax Value of remaining portfolio (e.g., Engine, Jones, etc...) = ~$28MM USD
Number of Sol Shares Outstandings ~72MM (including the latest compensation addition)
Debt ~ $56MM CAD (i.e., debt + accrued interest todate) = $44MM USD
Total Value for Sol = Contributions of Verano + Bluma + Remaining Portfolio - Debt = ~$557.4MM
Total NAV of Sol = $7.74/Sol Share USD
But wait...what about that 1235 Fund Lawsuit thats out there:
If 1235 Fund wins the lawsuit (big IF), than that would be ~$44MM they could possibly receive Verano shares at $10 per share which would mean 4.4MM Verano Shares.
Today, the loss of those Verano @$24.72/share to Sol Global = a loss of 108.8MM
This would adjust the total NAV of Sol to $6.23/Sol Share (only if Sol lost the suit, which is unlikely)
With SolCF trading at $4.71 that represents a discount of 32% or 64% to it's NAV depending on what you think will happen with the law suit.
So, if you believe Sol will win the lawsuit, than Sol is trading at a 64% discount to its underlying NAV.
If you think they lose the lawsuit, then it's closer to 32%.
Of course, there could be legal bills related to this but I don't anticipate that to be significant given the nature and size of the dispute. That's just my simple opinion.
In either case, Sol is trading at a massive discount. This morning it rose to $5.4/Sol share before there was large dump of shares from 9:40am CST to 9:45am CST @$4.66/Sol Share which dropped the shares by ~14%. Thereafter the shares flatlined as shareholders were still stinging from the singular dump.
I believe this dump is temporary and the shares will recover to closer to Sol's NAV (as noted above).
Additionally, there are tailwinds coming that will assist Verano and SolCF to help them trade upwards
1. Verano is still trading at ~24% below its Median value when compared to its peer group members (i.e., Curaleaf, Green Thumb, Trulieve, and Cresco Labs).
2. Verano will be listed on the OTC shortly in the next several weeks which enable US investors a chance to partake in the festivities opening up the demand pipeline 10 fold
3. Verano will put out its earnings/financials and begin marketing its forecasts for this year and next (getting the word out that it is expecting to hit $350MM+ on EBITDA will further solidify its value)
3. Equity Analysts will begin to pickup coverage of Verano and begin to put out there own value estimates which will likely be towards the higher ends of the peer group multiples simply because Verano has a combination of:
a. better nationwise footprint
b. better protection in license moats relative to other peer members
c. Better EBITDA margins than all peer group members except trulieve
d. Better growth revenue growth rates than all peer group members
4. SolCF will shortly come out (most likely after the OTC public debut) with their own updated NAV values which will show the disparity in valuation
5. Our illustrious government (i.e., Schumer/Booker and more) will get further progress in decriminalizing marijuana and declassifying MJ as a Schedule 1 drug with potential for elements of SAFE banking to pass.
6. Verano will likely prepare an S-1 in anticipation of uplisting to the NYSE
7. SolCF will hopefully resolve the lawsuit
8. Verano will uplist to the S-1
Each of those events have the opportunity to present further upside/positive tailwinds for Verano which will further drive SolCF shares upwards.
I hope that helps put numbers to all the chatter and whatever you do....Happy Investing!
Marillionaire
4年前
VALUATION ON SOL GLOBAL
Needham a well respected Cannabis Analyst Group expects the Verano public opening on Monday Feb 8th to be very "frothy" so the market cap on verano is possibly gonna be on the high range
Here is a Sol Global Valuation update and breakdown that may may help all of you (in answer to someone else's question I had received):
As of today, the trading comparables for 2021 Adjusted EBITDA Multiples for the US MSO Peer Group Comp (i.e., Curaleaf, Cresco, Trulieve, and Green Thumb) which have a low-end range of 10.9x, a median of 15.9x and a high-end range of 21.7x.
Verano's forecasted 2021 EBITDA is estimated at $350MM (per management).
This would be 2nd only to GTI
Using both elements from above, this leads to a forecasted valuations for each case of:
a. Private Floor Case: $2.88BN
b. Low Case of 10.9x 2021 Adjusted EBITDA: $4Bn
c. Median Case of 15.9x 2021 Adjusted EBITDA: $5.565Bn
d. High Case of 21.7x 2021 Adjusted EBITDA: $7.595Bn
However, the private offering was actually priced at $2.88Bn for Verano+Altmed back in December 2020 to entice the private investors with upside to sign on to the private offering and prior to the Georgia election and also when the multiples were lower. So let's pretend the $2.88Bn truly is the floor value that we can expect for Verano.
Sol's stake is 12.6% in original Verano.
After the merger with Altmed that 12.6% will be diluted by 77%. Sol's share will be diluted to 9.7%.
However there will be additional dilution from the $100MM private offering which will increase the private valuation range to $100MM $2.98Bn in terms of enterprise value but also dilute the shares further down to 9.376%. (I am going to assume the $1MM to Majesta is negligible and that the transaction fees will be negligible).
Additionally, Sol's fully diluted share count of 65.43981MM based on the last filing.
So, here are some estimates for Sol's share of the potential valuations based on the 2021 EBITDA multiples + Sol's share of the private offering (i.e., $9.376MM):
a. Private Floor Case: $288MM (or $4.40/share)
b. Low Case of 10.9x 2021 Adjusted EBITDA: $367MM (or $5.6/share)
c. Median Case of 15.9x 2021 Adjusted EBITDA: $530MM (or $8/share)
d. High Case of 21.7x 2021 Adjusted EBITDA: $721MM (or $11.01/share)
This, combined with the Bluma Value/share (see prior comment) of $1.245/share leads to total value range contribution of :
a. Private Floor Case: $5.64/share
b. Low Case: $6.84/share
c. Median Case: $9.24/share
d. High Case: $12.25/share
However, we should probably take out long term capital gains tax of 20% to be more accurate, leading to an after-tax value range contribution to Sol of:
a. Private Floor Case: $4.51/share
b. Low Case: $5.47/share
c. Median Case: $7.39/share
d. High Case: $9.8/share
However Sol has debts, interest, and liabilities of another approximate $65MM which would knock of about approximately $1/share, leading to an "enterprise value" of:
a. Private Floor Case: $3.51/share
b. Low Case: $4.47/share
c. Median Case: $6.39/share
d. High Case: $8.8/share
Given Sol closed at $2.71/share on feb 1st , this reflects a return of:
a. Private Floor Case: ~30%
b. Low Case: ~65%
c. Median Case: ~135%
d. High Case: ~325%
One should probably apply a holding company discount for liquidity concerns. I would suggest 20% (given that I have already tax adjusted the numbers above and assumed no value to the otherassets), however, it is up to you. If you do apply a holding company discount, you should end up with case valuations of:
a. Private Floor Case: $2.80/share (reflecting a 3% return)
b. Low Case: $3.58/share (reflecting a 32% return)
c. Median Case: $5.11/share (reflecting a 88% return)
d. High Case: $7.04/share (reflecting a 160% return)
NOTE: THIS DOES NOT INCLUDE ANY VALUE FOR ANY OF THE OTHER SOL PORTFOLIO COMPANIES OUTSIDE OF VERANO AND SOL....but let's just pretend they are zero since they are negligible (and they are just icing on the cake).
Hopefully you can see why the value of Sol's shares are steadily rising and far more room to go. Pick your scenario and I suspect you will still come out a winner 8-)
JohnCM
4年前
STINKY
OTC DISCLOSURE & NEWS SERVICE
SOL Global Signs Binding Agreement with Merida Capital Partners' Subsidiary to Acquire Michigan Fully Licensed Cannabis Business
PR Newswire
TORONTO, April 24, 2019
Michigan's MCP Wellness to be combined with Florida's 3 Boys Farms to create new Multi-State Operator
TORONTO, April 24, 2019 /PRNewswire/ - SOL Global Investments Corp. ("SOL Global" or the "Company") (CSE: SOL) (OTCQB: SOLCF) (Frankfurt: 9SB), the owner of 3 Boys Farms, LLC ("3 Boys"), which holds one of Florida's original 14 operating and vertically integrated medical marijuana treatment center licenses, is pleased to announce that it has entered into a binding letter of intent ("LOI") with cannabis-focused private equity firm Merida Capital Partners ("Merida") dated April 23, 2019 to acquire Merida's Michigan subsidiary, MCP Wellness, Inc. ("MCP Wellness") for an aggregate purchase price of US$150 million (the "Acquisition"). MCP Wellness, a special-purpose vehicle (SPV) created to invest in Michigan cannabis operations, currently holds the rights to acquire two Michigan cultivation licenses, a processing license, and 3 fully licensed cannabis provisioning centers in Michigan with a fourth provisioning center scheduled to open in Ann Arbor in May.
MCP Wellness also has plans to open an additional nine municipally-approved provisioning centers by August 2019. Assuming MCP Wellness' expansion plans are completed as scheduled, SOL Global and Merida expect Michigan gross revenue from the acquired business to generate in excess of US$61 million in the calendar year 2019 and more than US$121 million in 2020. Below is a summarized table of projected total revenue, costs of goods sold, gross profit, expenses and net income before tax for the 2019 and 2020 fiscal years.
Projected Income Statement
Expressed in Thousands (000) and in United States Dollars
2019
2020
Total Revenue
$61,808
$121,160
Cost of Goods Sold
$32,893
$57,512
Gross Profit
$28,914
$63,648
Gross Profit %age
48%
48%
Total Expenses
$10,984
$20,310
Net Profit, before Tax
$17,930
$43,338
Gross Profit %age
29%
36%
The Acquisition, which is subject to the negotiation and execution of a definitive purchase agreement and regulatory approval for the transfer of licenses within Michigan, is expected to close in May 2019 and will not dilute SOL Global's shareholders.
SOL Global owns 3 Boys through its wholly-owned subsidiary, CannCure Investments Inc. ("CannCure"). Following the closing of the Acquisition, SOL Global intends to combine the acquired Michigan business into CannCure to form a new multi-state operator (the "MSO"). Under the terms of the LOI, the purchase price will be satisfied by way of US$35 million in cash and US$115 million in equity consideration in CannCure, resulting in Merida owning approximately 42% of CannCure (including after giving effect to the proposed CannCure private placement financing described below). In regard to the cash consideration, US$9 million will be sourced from cash on hand and US$24 million will come from a private placement financing of CannCure equity and/or debt on pricing and terms to be determined by management following market assessment. In addition to the Acquisition, the retrofitting of an approximately 110,000 square-foot cultivation facility in Michigan will begin immediately to service the growing retail footprint and demand within Michigan with high-quality flower and award-winning cannabis strains from 3 Boys' respected growers.
3 Boys will continue to strengthen its operations in Florida; as announced on April 22, 2019, 3 Boys has already received approval from the Florida Department of Health, Office of Medical Marijuana Use ("OMMU") to begin processing and dispensing cannabis flower and pre-rolled products at its new, state-of-the-art extraction and processing facility in Indiantown, Florida. 3 Boys expects to open its first two (2) retail dispensaries in Florida before the end of the second quarter, and an additional 12 such locations by March 31, 2020.
According to Marijuana Business Daily, the number of qualified active cannabis patients in Florida nearly tripled in the twelve months between December 2017 and December 2018, from 56,537 to 159,107. As of April 19, 2019, there are currently 272,366 qualified patients in Florida, according to the latest weekly update from the OMMU. 3 Boys expects this explosive rate of growth in the Florida market to continue.
Merida, which recently launched its third fund, will contribute both operational talent and oversight into the combined entity. As part of the Acquisition, certain key executives of the Michigan operation will join the MSO and serve on the leadership team with an emphasis on retail operations.
"MCP Wellness's acquisition of the Michigan licenses, once completed, will be the perfect complement to 3 Boys' operations in Florida, as both states offer tremendous growth potential and this partnership will combine talent, industry leading genetics and processing, plus cultivation and retail expertise across two of the most coveted and revenue generating markets in the U.S." said Brady Cobb, CEO of SOL Global. "This acquisition will help ensure that SOL Global, through the MSO, will be able to execute on its visionary vertically integrated cultivation and retail strategies in the United States' most promising cannabis markets."
"Over the past several years, Michigan has become one of the country's largest medical cannabis markets, projected at nearly US$900 million for 2019, according to New Frontier Data," said Mitch Baruchowitz, managing partner of Merida Capital Partners. "With adult use coming in 2020, Merida is excited by the opportunity to combine one of Michigan's leading retail operations with a Florida operator while aggressively pursuing additional acquisition targets across several states that will help create a more diversified company."
SOL Global and Merida Capital are also in active negotiations on acquisitions for the MSO in additional states. Specifically, SOL Global is finalizing negotiations to acquire an industry leading California cultivator and processor with superior genetics and a chain of prime retail dispensaries in California, and at the conclusion of that transaction, SOL Global intends to pursue a "going public transaction" of the MSO by way of an initial public offering, reverse takeover, plan of arrangement or other similar transaction that will result in the listing of the shares of the MSO on a recognized Canadian stock exchange. SOL Global and Merida both intend to be significant shareholders of the MSO following the going public transaction.
About SOL Global Investments Corp.
SOL Global is an international investment company with a focus on, but not limited to, cannabis and cannabis related companies in legal U.S. states, the hemp and CBD marketplaces and the emerging European cannabis and hemp marketplaces. Its strategic investments and partnerships across cultivation, distribution and retail complement the company's R&D program with the University of Miami. It is this comprehensive approach that is positioning SOL Global as a future frontrunner in the United States' medical cannabis industry.
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