Alliance Growers Corp (OTCMKTS:ALGWF) has announced the finalization of a definitive agreement with WFS Pharmagreen for an equity interest acquisition of its subsidiary BC LTD. The company has equally announced a private placement of 4 million units at $0.10 per unit for proceeds of up to $0.4 million. The financing comes before the anticipated $4 million in financing to be announced later.
Acquisition of Pharmagreen subsidiary
The entity they are acquiring will build and operate their Cannabis Biotech Complex in British Colombia. The conclusion of the definitive agreement solidifies the LOI between the two companies that was amended last year.
Alliance Growers has so far invested approximately $1.35 million in the transaction that represents 10% of the equity interest and profit sharing in the Cannabis Biotech Complex. Based on the final construction and equipment costs, Alliance can opt to increase its share by up to 30%. The complex will be built jointly by Alliance growers and WFS Pharmagreen Inc. and it is scheduled for completion in the Q1 FY2020.
The Cannabis Biotech Complex will feature an ultramodern tissue culture laboratory that will generate over $100 million from the sale of cultured plantlets. The complex will also serve as a model location for Pharmagreen’s plans of global expansion. With the legalization of hemp, the two companies expect to leverage the opportunity and construct more facilitates.
Private placement financing
On securing financing Dennis Petke the CEO of alliance indicated that the company has secured multiple financing streams that will permit the company to meet its obligation and earn interest without shareholder dilution from the Cannabis Biotech Complex. The initial $400k from the financing will go into leading the order of 2 million units that will be put into the company’s projects as well as provide the working capital required for other financing streams.
Proceeds from the non-brokered private placement will be allocated to the cannabis Biotech Complex for initial planning and development including the cost of construction for the Biocanna facility in Montreal. Company directors have been granted 0.7 million options that are exercisable as common shares at $0.15. The financing is however subject to regulatory approval.