Nabis Holdings Inc (CSE:NAB) (OTCMKTS:NABIF) (FRA:A2PL) announced Thursday that subsidiary Nabis AZ LLC failed to fund its deferred payment obligation in respect of an asset purchase agreement for the assets and management agreements related to the operation of Perpetual Healthcare Inc, operator of the Emerald medical marijuana retail dispensary in Arizona.
In a statement, the parent company said that Nabis AZ was required to make payment to the vendors under an asset purchase agreement of about US$8.1 million, including accrued interest, which was due on October 25.
However, its efforts to secure alternative financing to fulfill the deferred obligation have been unsuccessful to date.
Nabis Holdings noted that Nabis AZ has received formal written notice of its default on the deferred obligation.
Following the lapse of a 10 business day cure period ending November 10, 2020, in addition to the acceleration of the some US$8.1 million the subsidiary owes, the terms of the deferred obligation contemplate:
- A specified representative of the vendor will be appointed to the board of directors of Perpetual; and
- An amended and restated operating agreement in respect of Nabis AZ will become effective, providing certain specified representatives of the vendor with an aggregate 75% membership interest in the subsidiary, with certain limited governance rights, whereby such persons will be entitled to a monthly pro-rata preferred distribution in respect of their 75% aggregate membership interest until the deferred obligation is satisfied.
Nabis Holdings said it will provide further updates in respect of the foregoing matters as they progress.
As a cannabis investment company, Vancouver-based Nabis Holdings is creating a portfolio of vertically integrated multi-state operations in the US and globally. Nabis acquired the Emerald dispensary in Phoenix in October 2019 and set out to increase profitability and margins at the Emerald dispensary while improving patient experiences.
Contact the author: [email protected].com
Follow him on Twitter @PatrickMGraham