HEXO (TSX:HEXO) announced the acquisition of an interest stake in a 2 million square feet facility in Belleville, Ontario.
As quoted in the press release:
This is the first facility of the Company to be established outside of Quebec, further delivering on its national expansion strategy and providing capacity for the manufacturing of advanced cannabis products, including cosmetics, vapes, non-alcoholic beverages and other edibles.
The building, previously used as a Sears distribution centre, will be owned in a joint venture with Olegna Holdings Inc. Initially, HEXO plans to lease up to 500,000 [square feet] of the space from the joint venture. The proposed use of the building is conditional on the city approving the rezoning application.
The building is owned by Belleville Complex Inc., a joint venture in which HEXO will hold a 25 [percent] interest and Olegna Holdings Inc. will hold a 75 [percent] interest. In addition to its initial lease of 500,000 [square feet] of the space under a long-term lease, HEXO will have rights of first offer and first refusal to lease the remaining space in the building. As part of the transaction, HEXO has loaned $20,000,000 to Belleville Complex to acquire the building. The loan will be repaid within 120 days from September 7, 2018, and as of October 7, 2018, will bear interest at an annual rate of 4 [percent], which interest shall be payable monthly. The loan is secured by a first mortgage over the building. The transaction is subject to the satisfaction of certain conditions and is scheduled to close on October 12, 2018.