Marijuana company Harvest Health & Recreation Inc. said it has settled its dispute with a small group of the previous owners of Interurban Capital Group or ICG in connection with an $85.8 million acquisition deal.
In March, Arizona-based Harvest Health completed the merger with ICG for about $85.8 million, payable by issuing 309,452 of Harvest's multiple voting shares and the assumption of about $19.1 million of debt convertible into 205,594 multiple voting shares.
The merger deal also includes Harvest Health paying an additional $9.3 million upon exercise of a call option agreement to acquire controlling interests in five Washington 'Have a Heart' cannabis dispensaries, or alternatively $12.4 million to acquire substantially all of the assets of these dispensaries.
However, Harvest Health commenced litigation proceedings in April against the Washington dispensaries and some of the previous owners of ICG to enforce terms of service agreements and the call option agreements.
The company noted that settlement talks have now resulted in a mutually agreeable resolution for all parties.
Under the terms of a settlement deal, Harvest will cancel a total of 42,378.4 multiple voting shares issued to the small group of previous owners of ICG. The company will also receive a $12 million secured five-year promissory note with 7.5 percent interest.
The settlement includes cancellation of the service agreements and call option agreements for the Washington retail locations. Harvest Health will not acquire the 'Have a Heart' marijuana retail outlets in Washington.
The settlement agreement is subject to the parties entering into definitive agreements as set forth in the settlement deal.
"We are pleased to settle this dispute and move forward. We are very excited to continue to focus on our core business operations as we execute on our plan to return to profitability," said Harvest Health Chief Executive Officer Steve White.
Last week, Harvest Health said it completed the sale of its medical marijuana dispensary and cultivation assets in Arkansas for $25 million, enabling the company to focus on its core markets such as Arizona.
Arizona recently became the thirteenth state in the U.S. to legalize the cultivation and sale of recreational marijuana. Arizona is already one of the largest medical cannabis markets in the country.
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