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Jersey-based medicinal cannabis producer Northern Leaf has entered into a contract with an "established industry player" to sell off its existing inventory after fundraising efforts underpinning a proposed merger with a Scottish CBD firm fell short.
The merger with Voyager was a crucial deal for the cultivator, which previously warned shareholders that, if the merger was not completed in a timely manner, its board of directors would have had "no choice but consider ceasing to trade with immediate effect".
In documents sent to shareholders seeking their consent for the merger and seen by Express, Northern Leaf said this was because there would have been "no realistic prospect of avoiding a heavily insolvent liquidation".
The company, which is now valued at £3.7m, has invested £30m building a 100,000sq-ft cultivation and processing facility, according to reports last year.
Late last year, the company sought to float independently on the London Stock Exchange with an initial public offering (IPO), but failed to secure sufficient interest. The merger was, in effect, a plan-B route to a stock market listing.
However, Voyager Life confirmed this week that it had cancelled the merger, citing the Easter holidays and slow investor response times as a barrier to timely fundraising.
In a creditor's update, Northern Leaf said it had "no choice but to pursue alternative options when the fundraising bookbuild remained at less than half the required amount of £2m necessary to complete the proposed merger after three weeks of marketing".
It has now struck a deal with what CEO Geoff Eyre described as "an established industry player" to sell its existing inventory for €286,350, with further finished product expected to be sold for €78,000.
"In parallel with this sale, the company is negotiating the additional funding required to meet planned payments to key suppliers and creditors during April," he said.
"The company is working with this established group to agree the funding requirements necessary to maintain Northern Leaf as a going concern through to August 2024, during which time the full terms of the acquisition of Northern Leaf can be negotiated.
"They want to keep the business alive and ultimately acquire it."
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