VANCOUVER, British Columbia, March 03, 2020 (GLOBE NEWSWIRE) — PRESS RELEASE — Emerald Health Therapeutics, Inc. has entered into a settlement agreement with Village Farms International, Inc. and Pure Sunfarms Corp. regarding disputes between the parties. On completion of the settlement, the arbitration process involving the parties will be discontinued.
“We are pleased to have reached a comprehensive settlement agreement that resolves all disputes among the parties,” said Riaz Bandali, president and chief executive officer of Emerald. “The settlement agreement allows Emerald, PSF and Village Farms to put their previous disputes aside and work together toward building on the tremendous performance of PSF to date.”
Pursuant to the settlement agreement, the supply agreements entered into between Emerald and PSF dated Dec. 21, 2018, which was for the 40% supply provision by PSF to Emerald in 2019, at a guaranteed price for 2019, and March 29, 2019, which was for the 25% supply provision by PSF, at a guaranteed price adjusted on a semi-annual basis to Emerald from 2020 to the end of 2022, respectively, will both be terminated effective as of Dec. 31, 2019, and Emerald will be released from all previous, current, and future obligations, liabilities and payments thereunder. The termination of the supply agreements removes the uncertainty regarding the potential obligation of Emerald to make any payments to PSF under the terms of those agreements and provides Emerald with full flexibility regarding future access to, and supply of, wholesale cannabis.
In exchange, Emerald will forfeit all amounts due from PSF pursuant to a shareholder’s loan of $13 million plus accrued interest of $1.1 million that Emerald previously advanced to PSF, and it will issue a promissory note to PSF in the amount of $952,237.
Emerald will cancel 5,940,000 of its common shares of PSF (currently held in escrow), fully resolving all issues in the arbitration process related to Emerald’s decision to offset a $5.94 million payment against its shareholder loan in November 2019 regarding Delta 2. Emerald has also agreed to transfer 2.5% of its PSF equity to Village Farms.
The parties have agreed that $8,000,000 provided by Village Farms to PSF in 2020 will be converted into additional common shares of PSF.
Upon completion of the settlement and the other transactions referred to above, Emerald will hold a 42.6% equity interest in PSF and retain three of six seats on the PSF board of directors.
The parties have agreed to use their reasonable commercial efforts to complete the settlement by March 6, 2020. Completion of the settlement is subject to the delivery of certain documents by all parties. Although Emerald expects the settlement transactions to close, as described herein, no assurance can be given that such transactions will ultimately close.