AgraFlora Organics International (CSE: AGRA) (OTCPK: PUFXF) has increased its stake in Propagation Services Canada (PSC), a joint venture company focused on the cannabis flower and propagation market in Canada.
AgraFlora is acquiring an additional 10% of the shares of Propagation, bringing its ownership share to 60%.
AgraFlora will pay a price of $14 million in its common shares at $0.68 per share, equivalent to 20,588,235 common shares. The deal has been approved by boards of directors of both companies.
The 10% stake acquired by AgraFlora comes from four shareholders of PSC who have shown confidence in the AgraFlora management team by converting their PSC shares into shares of AgraFlora.
Following the transaction, the Houwelings Partnership Group’s ownership in PSC will be 30%, while the investors of Delta Organics Cannabis will own a 10% stake.
Why AgraFlora Upped Its Stake in PSC
PSC is a joint venture between AgraFlora, the Houweling’s Group and Delta Organic Cannabis. It operates a large-scale greenhouse facility called the Delta Greenhouse Complex in Delta, BC.
Derek Ivany, the CEO of AgraFlora, says that the Delta complex will become their “marquee facility” so “it is important for AgraFlora to continue to have a majority stake in the joint venture company Propagation Services Canada.”
“The Delta Greenhouse Complex will become our marquee facility with 2.1 million square feet of greenhouse space and 100,000 square feet in production facilities. Progress on the retrofit continues to be on target and we expect to submit our licensing application video to Health Canada by the end of June,” Ivany states.