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BLVD Centers to Acquire Oregon Cannabis Dispensary, Announces Appointment Of New Chief Executive Officer
NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES. ALL FIGURES IN CANADIAN DOLLARS UNLESS OTHERWISE SPECIFIED.
LOS ANGELES, Jan. 14, 2019 (GLOBE NEWSWIRE) -- BLVD Centers Corporation ("BLVD" or the "Company") (CSE: BLVD) announced today that it has entered into a binding agreement to acquire an operating cannabis dispensary in Oregon, and has appointed Jacob Gamble as the Company's Chief Executive Officer and Executive Director.
As announced on October 29, 2018, the Company is seeking to supplement and enhance its existing in-patient opioid addiction center business by expanding into the cannabis industry, with the expectation that the experience it gains through its participation in the cannabis industry will have direct application for the Company's primary business.
BLVD has entered into an asset purchase agreement to acquire a dispensary that has been operating for nearly five years in Salem, Oregon under the Herbal Grasslands (www.herbal-grassland.com) brand name. The dispensary has a history of proven operating results and based upon the unaudited trailing twelve-month collections is expected to generate at least $1,000,000 in annual revenue with positive cash flow. The dispensary has two key advantages. In addition to the standard retail license for selling recreational cannabis, the dispensary also has endorsements for medical dispensing of high dose products as well as a home-delivery license.
The total cost of the transaction is expected to be less than two times revenues or about $1,795,000, paid in both stock and cash, with a portion of the consideration over time based upon performance, including all fees and expenses.
Appointment of Jacob Gamble as Chief Executive Officer and Executive Director
Jacob Gamble has been appointed as the Company's Chief Executive Officer and Executive Director of its Board of Directors. Mr. Gamble has a more than 20-year track record ranging from operations to finance. He rose to the level of Vice President of Fisher Investments overseeing a significant business line during his 13-year period with that company, and worked as a Managing Director at Paulson Investments before striking out into the cannabis industry. He specializes in the process of licensing, build-outs and development of vertically integrated operations. He has deep knowledge, contacts and experience within the cannabis industry. Through his finance background, Mr. Gamble also has experience in acquisitions of small private companies and operational integration of disparate businesses. Mr. Gamble has an undergraduate degree from Oregon State University and attended Stanford University for post-baccalaureate studies in economics. He has a Masters of Science degree from Florida Institute of Technology.
Details on Acquisition of Salem, Oregon Dispensary
The purchase price for the acquisition is (a) US$250,000, payable to the vendor on closing, (b) four quarterly payments of US$50,000 per quarter over the first four quarters following closing, (c) US$43,750 per quarter over the first four quarters following closing subject to a quarterly clawback of $1.50 against each dollar of revenue below US$680,000 (annualized) and the business being cash flow positive, and (d) a further four quarterly payments of US$93,750 per quarter for the fifth through the eighth quarters following closing. In connection with the transaction the vendor has agreed to enter into an employment contract for the 12 month period following closing, with his salary deducted from the earn-out payments. The vendor is entitled to payment of 20% of gross revenue above US$1,000,000 if business has +25% profit margin during the 12-month term of the employment agreement. In addition to these payments to the vendor, the Company is expected to incur several expenses including legal, due diligence, acquisition, accounting, advisory, regulatory, origination, and state and local transfer fees and other expenses in connection with the transaction, as well as the prior transaction which did not proceed, of which US$339,000 will be paid through the issuance of common shares of BLVD at the closing price as of Friday
As a result of this acquisition and appointment, the non-binding LOI disclosed in the October 29, 2018 press release was not completed and has been terminated.
Closing of the acquisition is subject to a number of customary conditions, including receipt of all required regulatory approvals.
"We are pleased to finally get started on our expansion plans," said Nitin Kaushal, Chairman of BLVD. "This deal gets us started and, crucially, we were able to secure the transaction with a total cost of less than 5% dilution and less than 20% of our total cash. While launching this initiative came with significant upfront transactional costs, we are now well organized for future potential deals. In working with Jacob Gamble over the past several months, I believe he is the best choice for us and gives us the best opportunity to create the highest return for our shareholders. I look forward to him leading the BLVD team to execute on the both organic growth and further acquisitions."
"I am looking forward to re-energizing this company," said Jacob Gamble, CEO of BLVD. "I have spent some time during the due diligence and acquisition negotiations working with the board. Now that we are officially on the same side of the table, I am working to finalize a plan to leverage the Company's existing detox business and strong balance sheet to deliver revenue growth, and to explore potential initiatives in the cannabis space which complement and expand the Company's business. I will be offering up that plan in detail shortly, as well as coming to Canada to meet with shareholders, bankers and market participants. I anticipate the Herbal Grasslands acquisition will the first step in many to building a fast-growing and dynamic company."
Cannabis Products as a Management Tool for Opioid Addiction
There have been several articles about medical cannabis legalization and the role it may play in a reduction of opioid related complications. These include:
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Chief Executive Officer and Executive Director
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BLVD Centers Corporation
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Certain statements contained in this press release constitute "forward-looking information" as such term is defined in applicable Canadian securities legislation. The words "may", "would", "could", "should", "potential", "will", "seek", "intend", "plan", "anticipate", "believe", "estimate", "expect" and similar expressions as they relate to the Company, Such statements reflect the Company's current views and intentions with respect to future events, and current information available to the Company, and are subject to certain risks, uncertainties and assumptions. The forward-looking information included in this press release is made as of the date of this press release and the Company undertakes no obligation to publicly update or revise any forward-looking information, other than as required by applicable law. All figures are in Canadian dollars unless otherwise indicated.