Origin House announced a binding term sheet with AltMed to alter its agreement in order to raise its equity position in AltMed.
Origin House (CSE:OH) announced a binding term sheet with Alternative Medical Enterprises (AltMed) to alter its agreement in order to raise its equity position in AltMed.
As quoted in the press release:
Origin House a leading North American cannabis products and brands company, today announced that it has signed a binding term sheet (the “Agreement”) with Alternative Medical Enterprises, LLC (“AltMed”) to convert the Company’s 3.5 [percent] royalty interest on the sale of AltMed’s MÜV branded products (“MÜV”) into a combination of cash and 125 units of AltMed’s equity raising Origin House’s aggregate equity position in AltMed to 5.1 [percent].
Marc Lustig, Chairman and CEO of Origin House said, “AltMed has established itself as a successful cannabis business in the key markets of Florida and Arizona. Based on our discussions with AltMed, we believe eliminating the royalty will facilitate the multi-jurisdictional expansion of MÜV products and also furthers our strategic aim of converting non-core assets like the MÜV royalty.”
Origin House currently owns a 4.8 [percent] equity interest in AltMed and a 3.5 [percent] gross product royalty on the sale of certain MÜV products. Pursuant to the Agreement, AltMed will issue 125 units to Origin House in addition to cash, as consideration for the Company’s royalty interest. Upon conversion of the royalty interest, Origin House will own an aggregate of 5.1 [percent] of AltMed. Based on the valuation ascribed to AltMed for the conversion of the royalty, this 5.1 [percent] equity position has an equity value of US$10.3 million. The anticipated closing date is on or before February 15, 2019.