Harvest Health & Recreation Inc. (“Harvest”) (CSE: HARV, OTCQX: HRVSF), a vertically integrated cannabis company and multi-state operator in the U.S., is pleased to announce the settlement of its dispute with a small group of the previous owners of Interurban Capital Group (“ICG”).
On March 13, 2020, Harvest completed a merger with Interurban Capital Group, LLC for approximately US$85.8 million payable by issuance of 309,452 of Harvest’s Multiple Voting Shares, assumption of approximately $19.1 million of debt convertible into 205,594 Multiple Voting Shares and payment of an additional $9.3 million upon exercise of a call option agreement to acquire controlling interests in five Washington cannabis dispensaries or alternatively $12.4 million to acquire substantially all of the assets of these dispensaries. On April 3, 2020, Harvest commenced litigation proceedings against the Washington dispensaries and a small group of the previous owners of ICG to enforce terms of service agreements and the call option agreements.
Settlement talks resulted in a mutually agreeable resolution for all parties. In accordance with the terms of a binding settlement agreement, Harvest will cancel a total of 42,378.4 Multiple Voting Shares issued to the small group of previous owners of ICG (equivalent to 4,237,840 Subordinate Voting Shares on an as-converted basis). Harvest will also receive a $12 million secured promissory note with 7.5% interest and five-year maturity. The settlement includes cancellation of the service agreements and call option agreements for the Washington retail locations. The settlement agreement is subject to the parties entering into definitive agreements as set forth in the settlement agreement and applicable state regulatory approval.
“We are pleased to settle this dispute and move forward,” said Chief Executive Officer Steve White. “We are very excited to continue to focus on our core business operations as we execute on our plan to return to profitability.”