It’s been a bit of a rough month so far for shares of AURORA CANNABIS IN COM NPV (OTCMKTS:ACBFF), which is a stock that we track closely over here at Street Register. After a great run up the charts in June and July which carried the share price from lows in the 1.40’s to a high a of 2.25, the stock lost a bit of ground to start off this month, but has been flirting with a re-breaching of the two dollar mark.
The seemingly cyclical nature of the stock’s trading patterns notwithstanding, we like ACBFF primarily for its rapid expansion into multiple cannabis markets around the globe that we’ve witnessed in 2017.
That expansion was bolstered at the beginning of the month when we learned that AURORA CANNABIS IN COM NPV (OTCMKTS:ACBFF will make a strategic investment in Hempco Food and Fiber Inc (TSX-V: HEMP) for an ownership stake of up to 19.9% on a fully diluted basis, subject to applicable regulatory approvals.
Additionally, subject to customary conditions including Hempco shareholder approval and the negotiation and execution of an option agreement, Aurora will be granted an option to acquire certain shares from the majority owners of Hempco, which, upon exercise, would bring Aurora’s total ownership interest in Hempco to 50.1% on a fully diluted basis. If Aurora elects to exercise this Option, the shares will be acquired in tranches, the pricing of which is contingent on certain performance milestones of Hempco.
Hempco is one of the world’s largest producers of industrial hemp products, and currently offers three primary product lines: (1) bulk and packaged food products (e.g. hemp protein powder, hemp seed nut/ hearts, and hemp seed oil etc.); (2) hemp fibre; and (3) functional food/nutraceuticals. Hempco’s line of consumer packaged goods (CPG are sold under the brand “PLANETHEMP,” and Hempco products are distributed in seven countries.
In connection with the Investment, Aurora has agreed to advance to Hempco $1.5 million at a rate of 10% per annum, and the advance shall be secured by Hempco. In the event that Hempco shareholders do not approve the Aurora Option within 60 days of the advance, the advance, together with accrued interest, will become repayable on demand, and Aurora shall not be required to proceed with the Investment. Following shareholder approval of the Aurora Option, funds advanced by Aurora, including the $750,000 that Aurora previously advanced to Hempco, as announced on June 8, 2017, will be applied against the purchase price for the Investment.
Should regulations change to allow for extraction of CBD from hemp, Hempco has agreed to provide Aurora right of first refusal to purchase all of the industrial hemp flowers and leaves that Hempco can acquire for extraction of CBD. Any material that Aurora does not purchase under the right of first refusal may be sold to a third party, but Hempco will not extract CBD from this material itself, unless authorized by Aurora to do so.
Additionally, Aurora and Hempco have agreed to enter into an investor rights agreement whereby Aurora shall have the right to appoint two members to Hempco’s Board of Directors and shall have the right to participate in future financings of Hempco in order to allow Aurora to maintain its ownership stake in Hempco for so long as Aurora maintains a 10% ownership interest in Hempco. (Source: Canada Newswire)
As we were mentioning above, this new diversification is only one link in a long chain of moves the company has made this year to deeply root itself in the cannabis business. We’ll want to stay on top of any new information that comes down the pipeline, and suggest you do the same. Stay locked to Street Register for updates, and we’ll deliver important developments on ACBFF as they unfold. In the meantime, if you’ve yet to sign up for our 100% free newsletter, do so now! Just enter your active email address into the box below and submit!
Disclosure: No one at Street Register has been compensated in any way for the publishing of this article, nor do we hold any position in ACBFF stock, short or long.