Debra Borchardt
Organigram Holdings Inc. (OGRMF) has taken a 40% stake in Canadian cannabinoid product company Eviana Health for C$10 million. In addition to that Organigram has signed a separate agreement with Eviana for five years to purchase up to 50% of the cannabidiol (“CBD”) production of Eviana. The deal is expected to close on or about July 13.
“This agreement is a key facet of our ongoing international expansion efforts,” explains Greg Engel, CEO, Organigram. “Our investment and concurrent offtake agreement with Eviana will provide Organigram with a source of low-cost, high-quality CBD for the burgeoning medical market within Europe. The proven cultivation and processing costing model that Eviana has developed will allow us to bring a range of innovative products to the global CBD marketplace.”
The potential investment will help Organigram in its aggressive growth strategy and makes sure that the company is well prepared to meet the international demand for CBD oil. Eviana uses natural hemp strains of cannabis sativa for cannabinoid-based topical creams and products and cosmeceutical and nutraceutical merchandise.
“We are very excited to have Organigram on board with us. Its support as both a financial and strategic partner will be a major benefit to the stakeholders of Eviana as we move forward in executing our vision to become the preeminent hemp-based CBD supplier in Europe” said Avram Adizes, CEO of Eviana.
Deal Terms
According to the company statement, Organigram will invest C$10 million in cash into Eviana for 8,695,652 common shares of Eviana and common share purchase warrants as follows: (i) 2,373,319 Warrants exercisable at $1.50 for 18 months; (ii) 3,337,480 Warrants exercisable at $1.75 for 24 months; and (iii) 3,087,487 Warrants exercisable at $2.00 for 36 months, all subject to certain acceleration provisions. The number of Warrants is subject to a proportional adjustment to result in Organigram holding a 40% interest in Eviana on a fully diluted basis immediately following the closing of the transaction.
Once the deal is closed, Organigram will own approximately 26% of Eviana’s outstanding shares on a non-diluted basis, and 40% on a fully diluted basis.
CBD Oil Purchase Agreement
Organigram will have the right to purchase up to 50% of Eviana’s annual CBD oil production at 95% of the agreed raw CBD oil wholesale price for a period of five years. The option to purchase a percentage of Eviana’s annual CBD oil production is based on Organigram’s continued ownership in Eviana.
Eviana Health
Evian Health owns Eviana Inc, which also owns Intiva Plus, which cultivates its industrial hemp oil in Serbia. The company has over 50 metric tonnes of hemp biomass in inventory including harvests from the most recent 2017 harvest available for extraction. It has a 40,000 sq ft. processing facility in Mladenovo, Serbia (near Novi Sad) and a 22,000 sq ft. pharma-grade leased facility in Belgrade which houses a soon-to-be commissioned Vitalis Supercritical CO2 Extraction System. The company recently completed the planting of 150 hectares for the 2018 hemp cultivation season.
Stock Performance
The stock was lately trading at $3.79 on the OTC Markets, down from its 52-week high of $4.56, but above its year low of $1.49.
