In a key move for Michigan's marijuana business, a company named SunStream Bancorp Inc. is helping organize the sale of important parts of Greenpeak Industries Inc., which does business as Skymint. These parts are being sold to a newly created company named Skymint Acquisition Co., which was carefully set up with the help of another company named Tropics LP. Tropics is entirely owned by an affiliate of SunStream. This deal is a crucial step in reshaping Skymint's business and future operations.
On March 3rd, Tropics, fully enveloped by Sunstream, which is co-sponsored by SNDL Inc. (Nasdaq: SNDL), maneuvered through the legal and financial labyrinth to procure a court-appointed receiver for Skymint's assets from the Circuit Court for Ingham County, Michigan. Trust Street Advisors, LLC, the appointed receiver, efficiently helmed an auction for Skymint's assets, culminating in the selection of Skymint Acquisition Co. as the winning bidder. On October 12th the ensuing Sale Order sanctioned the asset transition to Skymint Acquisition Co., with the final closing projected for the first quarter of 2024. The culmination of this deal hinges on acquiring the nod from regulatory bodies, such as the Cannabis Regulatory Agency of Michigan and several local municipalities.
The agreed asset purchase encompasses the acquisition or assumption of 21 retail leases with dispensaries, boasting an impressive annualized sales figure of approximately $68 million as of September 2023. Additionally, it involves taking on essential cultivation and equipment leases to ensure continuity in operations. A noteworthy aspect of the receivership process involves the intentional rejection of cultivating, equipment, and retail leases, which collectively represented over $12 million of annual fixed obligations, ensuring they are neither purchased nor assumed by Skymint Acquisition Co.
Circling back to September 2021, Tropics extended a loan of $70 million to Skymint, which was secured by a first-priority lien on nearly all assets of Skymint. Despite initial assurances and subsequent acquisitions, like that of the Michigan-based cannabis business 3Fifteen, Skymint found itself ensnared in financial difficulties by March 2022. Efforts to mitigate these fiscal challenges, including a first amendment of the Skymint Loan and an additional $5 million loan from Tropics, did not bear the desired fruits, ultimately paving the path towards the aforementioned transaction.
Guidance through this complex transaction was provided by Honigman LLP, Miller Johnson, and The Dragich Law Firm, acting as legal counsels to Tropics, Skymint, and Trust Street Advisors, LLC, respectively.
SNDL, publicly traded under the symbol "SNDL" on Nasdaq, stands out as the largest private-sector liquor and cannabis retailer in Canada, offering a broad spectrum of products through varied retail banners and housing an expansive portfolio in the cannabis industry. Sunstream, on the other hand, strategically aligns its financial and operational expertise to target fruitful opportunities within the cannabis industry, having deployed approximately $450 million to seven companies from its inception until June 30th, 2023.
The prospective closing of the Skymint Transaction and the anticipated leverage and future performance of Skymint Acquisition Co. remains enveloped in a myriad of forward-looking statements, intertwined with various risk factors and uncertainties. As we collectively navigate through these transitional phases within the cannabis industry, continuous updates and critical analyses will be paramount in understanding the unfolding landscape.
For in-depth information on SNDL, interested parties can visit SNDL.com.
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