(Globe Newswire) Toronto — Cronos Group Inc. today announced that its wholly owned subsidiary entered into an agreement with Future Farmco Canada Inc., a vertical farming company, for the sale and leaseback of its property located at 4491 Concession 12 Sunnidale Road, Stayner, Ontario, Canada, L0M 1S0.
Pursuant to the terms of the sale agreement, the buyer has agreed to acquire the Peace Naturals Campus for C$23 million cash, subject to the terms and conditions set forth therein. The parties also plan to enter into a lease agreement upon closing for portions of the Peace Naturals Campus, ensuring continued operations.
“The sale-leaseback of the Peace Naturals Campus supports Cronos’ goal to reduce costs across the company,” said Mike Gorenstein, chairman, president and CEO of Cronos. “More specifically, this sale will aid in improving the gross margin profile of our business, while lowering costs and increasing our agility. This sale only strengthens our industry-leading balance sheet and allows us to continue to pursue organic growth and future transactions that bolster Cronos’ existing value. We do not expect any interruption to our current operations and plan to carry out existing growth plans within our leased space at the facility.”
Closing of the transaction is subject to certain conditions outlined in Cronos’ Form 8-K. Within 180 days of the sale agreement date, the buyer must confirm in writing that it is satisfied with various aspects of the property and has secured financing for the transaction. Cronos must receive approval from Health Canada for site perimeter changes by the later of: (i) 180 calendar days after the date of the sale agreement; or (ii) 75 calendar days after the satisfaction or waiver of the buyer’s condition described above. Additionally, both parties must agree on the terms of a lease within 75 days of the sale agreement date. The transaction is expected to close 30 calendar days after all conditions are satisfied or waived.
At closing, the parties expect to enter into a lease agreement for portions of the Peace Naturals Campus, which will include a five-year term and one five-year renewal option that may be exercised by Cronos. Cronos will also have an option to lease certain additional space during the term of the lease. Cronos can choose to terminate the lease without penalty anytime after the second year by giving written notice at least 12 months prior to termination. The leased premises will be identified and agreed between both parties prior to closing.