- Planet 13 Holdings (CSE:PLTH) is renegotiating its terminated acquisition of a sales license and dispensary in Santa Ana, California
- The original agreement with Newtonian Principles was terminated on April 13, 2020, following “unmet conditions”
- Planet 13 will now issue C$1.41 million in cash and $5.63 million in Class A Restricted Shares for the acquisition
- A 25 per cent lease abatement will also apply during construction and until the dispensary opens
- Planet 13 Holdings (PLTH) finished trading yesterday at $1.49 per share, with a $203.01 million market cap
Planet 13 Holdings (CSE:PLTH) is renegotiating its recently terminated acquisition of a cannabis sales license and dispensary in Santa Ana.
The original agreement with Newtonian Principles fell through in an announcement dated April 13 this year. Planet 13 attributed the termination to “unmet conditions.”
Under the original deal, Planet 13 would have issued C$8.17 million in cash, on top of a $282,000 deposit. The company would have also issued 2,039,808 Class A Restricted Shares, valued at $5.63 million, for the acquisition.
Now, a renegotiated agreement will see Planet 13 pay just $1.13 million, plus the retained $282,000 deposit. The company will still issue 3,940,932 Class A Restricted Shares, valued at $5.63 million.
In addition, negotiations with the current landlord have produced a 25 per cent lease abatement. The abatement will be effective during construction and until the dispensary opens. This will hopefully reduce further reduce costs and increase Planet 13’s flexibility.
Planet 13 has always maintained that the Santa Ana acquisition is a logical and profitable step. When announcing the original deal on June 6, 2019, the company said that it had considered many factors. In particular, the location of the dispensary was the single most important criteria.
Planet 13 currently has an existing super-dispensary in Las Vegas. With the significant volume of people travelling between Los Angeles and Nevada, the Santa Ana acquisition formed a “natural brand extension.”
Planet 13’s Co-CEO, Bob Groesbeck, said that the company had evaluated hundreds of California locations. The company continues to believe that the Santa Ana location is best suited to a Planet 13-style dispensary.
“While we can’t forecast how COVID-19 might affect our timeline, we’ve negotiated an agreement that reduces the upfront capital invested, gives us control over the timing of fixed costs, and provides flexibility on dispensary buildout.
“We de-risked the transaction substantially while securing the next stage of growth for Planet 13,” he added.
While the definitive agreement seems firm for the time being, it is subject to both local and sated regulatory approval. The company should obtain the approval within the next three weeks.
Planet 13 Holdings (PLTH) finished trading yesterday at $1.49 per share, with a market cap of $203.01 million.