- Village Farms' Majority Ownership Interest Confirmed by Pure
Sunfarms
- Additional Emerald Equity Contribution of $940,000 Due on December
2, 2019
- Conversion of Delta 2 Greenhouse Facility Remains on
Schedule
VANCOUVER, Nov. 29, 2019 /CNW/ - Village Farms
International, Inc. ("Village Farms") (TSX:VFF; Nasdaq:VFF)
today responded to the ongoing, inaccurate and misleading public
disclosure by Emerald Health Therapeutics, Inc. ("Emerald")
relating to Village Farms' majority ownership interest in Pure
Sunfarms Corp. ("Pure Sunfarms").
Emerald's Set-Off Claim Rejected by Pure Sunfarms; Village
Farms' Majority Equity Interest Confirmed by Pure Sunfarms
In its press release of November 27,
2019, Emerald asserted that it previously notified Pure
Sunfarms that it claimed a set-off of the $5.94 million equity payment that Emerald was
obligated to make to Pure Sunfarms by November 19, 2019 (the "Equity Payment") against
an unrelated $13 million shareholder
loan that Emerald previously advanced to Pure Sunfarms (the
"Emerald Shareholder Loan"). However, Emerald has failed to
disclose that its purported set-off claim:
(a)
|
Was promptly rejected
by management of Pure Sunfarms on November 15, 2019
because,
among
other reasons, Emerald is not entitled to
unilaterally set-off unrelated obligations in a
way that would
prejudice or vary Village Farms' contractual rights and
obligations; and
|
|
|
(b)
|
Was made on November
14, 2019, approximately two weeks after its initial Equity
Payment
default occurred on
November 1, 2019.
|
Pure Sunfarms' management previously advised Emerald that
Village Farms may dilute Emerald's ownership interest in Pure
Sunfarms in accordance with the related legal agreements if
Emerald's default was not cured by November
19, 2019. Despite this warning, Emerald nonetheless failed
to make the Equity Payment by November 19,
2019. As a result, following Village Farms' $5.94 million additional equity contribution on
November 19, 2019, Pure Sunfarms
notified both Village Farms and Emerald that Village Farms' share
capital account in Pure Sunfarms had been formally increased by
$5.94 million. The related issuance
of additional Pure Sunfarms shares to Village Farms is solely a
documentary formality, which is expected to occur following a
valuation process in accordance with the Pure Sunfarms shareholders
agreement. Notwithstanding the ongoing valuation process, the
effective date of Village Farms' increased equity position in Pure
Sunfarms was November 19, 2019, and
the issuance of the related additional Pure Sunfarms shares to
Village Farms will similarly be effective as of November 19, 2019.
Additional Emerald Equity Contribution Due on December 2, 2019
In accordance with the applicable legal agreements, Emerald owes
Pure Sunfarms an additional equity contribution of $940,000 on December 2,
2019. If Emerald fails to pay this amount to Pure Sunfarms
by December 16, 2019 (being the end
of the contractual cure period for an equity payment default by
Emerald), Village Farms will again elect to exercise its
contractual right to fund any such payment default by Emerald and
further increase Village Farms' majority ownership position in Pure
Sunfarms.
Emerald's Shareholder Loan Repayment Demand Invalid; Rejected
by Pure Sunfarms
In its press release of November 20,
2019, Emerald indicated that it had formally demanded
repayment from Pure Sunfarms of the entire $13 million principal amount of the Emerald
Shareholder Loan. Pure Sunfarms' management has rejected this
repayment demand as being invalid and non-compliant on numerous
grounds.
Conversion of Delta 2 Greenhouse Facility Remains on
Schedule
Notwithstanding the numerous matters that Emerald has elected to
dispute relating to its financial obligations to Pure Sunfarms,
Village Farms does not expect these matters to have an adverse
impact on the ongoing conversion or future operations of Pure
Sunfarms' Delta 2 greenhouse facility. Conversion of the Delta 2
greenhouse facility remains on its previously announced schedule,
with cannabis production expected to commence during the second
quarter of 2020. The Delta 2 greenhouse facility is expected to be
operating at full run rate production by the end of 2020.
Forward-Looking Statements
Certain statements contained in this press release constitute
forward-looking information within the meaning of applicable
securities laws ("forward-looking statements"). Forward-looking
statements may relate to Village Farms' future outlook or financial
position and anticipated events or results and may include
statements regarding the financial position, business strategy,
budgets, litigation, projected production, projected costs, capital
expenditures, financial results, taxes, plans and objectives of or
involving Village Farms and Pure Sunfarms. Particularly, statements
regarding future results, performance, achievements, prospects or
opportunities for Village Farms, Pure Sunfarms, the greenhouse
vegetable industry or the cannabis and hemp industries are
forward-looking statements. In some cases, forward-looking
information can be identified by such terms as "outlook", "may",
"might", "will", "could", "should", "would", "occur", "expect",
"plan", "anticipate", "believe", "intend", "estimate", "predict",
"potential", "continue", "likely", "schedule", "objectives", or the
negative or grammatical variation thereof or other similar
expressions concerning matters that are not historical facts.
Although the forward-looking statements contained in this press
release are based upon assumptions that management believes are
reasonable based on information currently available to management,
there can be no assurance that actual results or events will be
consistent with these forward-looking statements. Forward-looking
statements necessarily involve known and unknown risks and
uncertainties, many of which are beyond Village Farms' control,
that may cause Village Farms' or the industry's actual results,
performance, achievements, prospects and opportunities in future
periods to differ materially from those expressed or implied by
such forward-looking statements. These risks and uncertainties
include, among other things, the factors contained in Village
Farms' filings with U.S. and Canadian securities regulators,
including as detailed in Village Farms' annual information form and
management's discussion and analysis for the year-ended
December 31, 2018 and for the three
and nine-month periods ended September 30,
2019.
When relying on forward-looking statements to make decisions,
Village Farms cautions readers not to place undue reliance on these
statements, as forward-looking statements involve significant risks
and uncertainties and should not be read as guarantees of future
results, events, performance, achievements, prospects and
opportunities. The forward-looking statements made in this press
release only relate to events or information as of the date on
which the statements are made in this press release. Except as
required by law, Village Farms undertakes no obligation to update
or revise publicly any forward-looking statements, whether as a
result of new information, future events or otherwise.
About Village Farms International, Inc.
Village Farms is one of the largest and longest-operating
vertically integrated greenhouse growers in North America and the only publicly traded
greenhouse produce company in Canada. Village Farms produces and distributes
fresh, premium-quality produce with consistency 365 days a year to
national grocers in the U.S. and Canada from more than nine million square feet
of Controlled Environment Agriculture (CEA) greenhouses in
British Columbia and Texas, as well as from its partner greenhouses
in British Columbia, Ontario and Mexico. Village Farms is now leveraging its 30
years of experience as a vertically integrated grower for the
rapidly emerging global cannabis opportunity through its majority
ownership position in British
Columbia-based Pure Sunfarms, one of the single largest
cannabis growing operations in the world. Village Farms also
intends to pursue opportunities to become a vertically integrated
leader in the U.S. hemp-derived CBD market, subject to compliance
with all applicable U.S. federal and state laws, Village Farms has
established two joint ventures, Village Fields Hemp USA, LLC, and Arkansas Valley Green and Gold
Hemp LLC, for multi-state outdoor hemp cultivation and CBD
extraction and plans to pursue controlled environment hemp
production at its Texas greenhouse
operations, which total 5.7 million square feet of production area,
subject to legalization of hemp in Texas.
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SOURCE Village Farms International, Inc.