RE:Purchase Option Theorystarsearcher40 wrote: This is certainly a "clandestine" news release if there ever was one! But within it, there are at least clues.
There was some speculation here that this was somehow related to Livewell. I've thought about this for several hours now, and I would agree with this thought. There are a number of advantages to Canopy taking this approach, and the more I think about it, the more I like this. Here's my thoughts:
1) Livewell has 1.5 MILLION sq ft. This is already going to be fast-tracked into development via a $20Million debt financing provided by Canopy via Rivers. Canopy will sell/distribute the harvest for Livewell. So what we have is a massive facility done "in the Canopy way". No missteps. No after-the-fact retrofit. Done right the first time. Canopy also benefits from the debt financing, money they will ultimately recover plus terms. (Great for Canopy. Great for Livewell.)
2) So Canopy plunks down another $10million (on top of the $20million debt financing). This will allow Livewell to ramp up even faster/better. (Great for Canopy and great for Livewell)
3) For the $10million, Canopy locks in a price to purchase the Facility (undisclosed) that they "could" buy (option to buy), but of course, will buy. Canopy benefits from knowing exactly what they're going to pay at some point in the future. Livewell hopes that their Canopy shares will be worth more. They're probably right. (Great for Canopy. Good for Livewell.)
4) Canopy doesn't have to put big money down right now (which would take $$'s away from other planned expansion), but absolutely locks up Livewell from being scooped up by someone else, or demanding a higher price in the future once fully operational. (Exceptional for Canopy, good for Livewell.)
So of course, all of the above is conjecture. But it makes total sense to me. The BEST part for Canopy is that they lock up future acquisitions without having to put the money down, and they already have the harvest directed their way via Rivers in the meantime. The dilution for this benefit is absolute chump change.
And this also now makes sense for the boxed price action that we saw this past week.
Overall thought? Freakin' brilliant I think!
Star, good thinking, great analysis and explanation, its in a Bruce's brilliant kind of way so its quite plausible this is the case regarding Livewell.
Bibi