Staff
RIV Capital Inc. (CSE: RIV) (OTC: CNPOF), an acquisition and investment firm, closed its previously announced acquisition of Etain LLC, one of 10 vertically integrated cannabis operators in New York.
Under the terms of the transaction, RIV Capital paid the remaining purchase price through a combination of approximately $42 million in cash and the issuance of 5,273,084 Class A common shares in RIV Capital, valued at roughly C$8.7 million ($6.4 million) or 3% of RIV Capitalâs outstanding shares. This brings Etainâs former ownersâ stake in RIV to about 16%.
When the deal was announced in March, RIV Capital had agreed to pay $212 million in cash and $35 million in stock for Etain.
At the end of November, RIV announced it had taken a $138.9 million write-down on the acquisition, based on updated cash flows and âto account for the enhanced risk and uncertainty attached to the New York market,â the company reported at the time.
Company leadership remains optimistic about the deal though.
âWith four dispensaries, including a Manhattan flagship store and locations in Kingston, Syracuse, and Westchester, as well as a cultivation and production facility in Chestertown, we believe Etain is a strong foundation and a scalable platform for future growth,â said Mark Sims, president and CEO of RIV Capital.
âWe plan to continue Etainâs collaboration with diverse New York-owned brands, optimize Etainâs attractive retail footprint, and augment Etainâs four premium product lines with high-performing West Coast brands.â
The expansion of the Chestertown-based cultivation and production infrastructure, which the company expects to complete by the second quarter of 2023, will increase cultivation capacity and support the development of new product formats in anticipation of the launch of adult-use sales in New York.
However, under the current draft rules, existing medical cannabis providers will not be able to apply for adult-use licenses for the first three years of the program.
