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Sundial Growers To Sell Bridge Farm Group To Investor Group For About C$90 Mln

Canadian cannabis company Sundial Growers Inc. said it has agreed to sell its U.K. asset, Bridge Farm Group, to a consortia of private investors that includes the former management of Bridge Farm for a total consideration of about C$90 million. Bridge Farm Group is a producer of ornamental plants, flowers and herbs in the UK.

Sundial noted that the divestiture will allow it to focus on its core strength in premium inhalable products for the Canadian recreational market.

The buyer group of Bridge Farm will assume C$45 million of debt under Sundial's existing C$115 million term debt facility. The buyers will also assume the contingent consideration liabilities and additional share obligations under the original Bridge Farm acquisition agreement.

In addition, the buyer group will cancel about 2.7 million of Sundial common shares currently held by certain members of the group. Sundial will not receive any cash consideration in connection with the transaction.

The Bridge Farm sale is conditioned on Sundial restructuring the remaining C$70 million under its term debt facility and also entering into a new syndicated credit agreement with its senior lenders by June 1, 2020.

Separately, Bridge Farm Group said that the transaction will return the company to independent ownership as a newly formed entity controlled by David Ball, former CEO of Bridge Farm and current Partner at Artemis Growth, an asset management firm.

Bridge Farm said its core focus will remain on its ornamental horticulture and produce business. The company noted that the transaction will provide continued investment in its glasshouse facilities and research into the botanical health and wellness market, including cannabis derived CBD.

Earlier in May, a group of investors filed a lawsuit against Sundial Growers, accusing the company of making "grossly exaggerated and materially misleading" representations in January 2019 regarding its investment in Bridge Farm.

According to the lawsuit, Sundial said that Bridge Farm possessed a hemp cultivation license that would enable the company to "almost immediately" export hemp and CBD to the European Union.

Based on those representations, the plaintiffs said they invested more than $4 million in Sundial before its initial public offering. However, the lawsuit adds that it turned out Bridge Farm did not possess the necessary licenses required to commercially cultivate or export hemp and CBD to the EU.

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