Sydney-headquartered medicinal cannabis and hemp-derived advanced textiles company Ecofibre (ASX: EOF) has made good one of the corporate team’s top priorities, selling its manufacturing operations in Greensboro, North Carolina for US$10.4 million ($15.8 million) under a sale and leaseback agreement.
Under the deal with an unnamed privately held real estate investment firm, which currently owns 24 industrial properties across the United States, the Australian company’s subsidiary Ecofibre Advanced Technologies Inc has a seven-year lease with two five-year extensions.
The new arrangement involves an initial annual rent of US$924,198 ($1.4 million), although the sale is still conditional upon a 30-45 day due diligence period and negotiation of final leaseback terms.
The liquidity boost follows a $7.1 million lift from asset sales in the March quarter, including $2 million from the sale of hemp seed and food business Ananda Food which may result in an extra $1 million depending on cat litter sales, and $5.1 million from a partial sell-down in EOF Bio.
The latter’s former chief operating officer Dr Alex Capano, who was also chief science officer at the group, made moves to sue Ecofibre in the US courts earlier this year, with the group formally announcing the termination of her employment on 28 March with immediate effect.
The EOF Bio division, aimed at commercialising patents developed by Ecofibre and the University of Newcastle in Australia for treating endometriosis and ovarian cancer, is now led by seasoned biotech executive Simon Allen.
Ecofibre has made further leadership changes today with the announcement that John Foley would take over from current chair Vanessa Wallace as interim CEO.
Wallace took on the role temporarily following the abrupt departure of longstanding CEO Eric Wang late last year, while Foley has been an advisor to the business as part of a turnaround plan towards profitability.
Foley will be based out of Greensboro and will continue in the position until a permanent CEO search is completed.
“I have been impressed by both the Ecofibre team and the growth potential of the innovative products they have developed,” Foley says.
“I am pleased to have the opportunity to provide transition leadership support as the business pivots from a developmental phase to achieve sustainable profitable growth.”
Foley, who recently has held CEO roles at ORG Chemical Holdings and Verdant Specialty Solutions, will be on a monthly contract earning US$10,000 ($15,170) per week.
“The leadership team and the board are delighted that John has accepted the interim CEO role at this time, as the company navigates a complex environment and remains intensely focused on the successful execution of our plans,” adds Wallace.
In late April the group reported a 13 per cent quarter-on-quarter lift on revenue to $8.1 million in the three months to 31 March 2024.
As possible signs that the turnaround is working, Ecofibre Advanced Technologies and Ananda Health reported positive unaudited EBITDA of $400,000 and $100,000 respectively, although total operating cash flow was still in the red at $2.98 million and $10.6 million over nine months.
EOF shares are up 14.81 per cent at 6.2 cents per share (cps) at the time of publication, although this is less than half their levels around the 16cps mark at the start of 2024.
Source: https://www.businessnewsaustralia.com/articles/ecofibre-sells-advanced-tech-facility-to-shore-up-us-10-4m-liquidity.html
