ECS Botanics Holdings has signed a binding share purchase agreement to divest its Tasmanian business to US-based pet nutrition company Blue Buffalo for A$3 million.
Blue Buffalo has paid a $300,000 deposit for the 100%-owned subsidiary ECS Botanics Pty Ltd (TasCo). Settlement is scheduled for October 31, or another date agreed upon by both parties, at which time ECS will receive the remaining balance.
Back in June, ECS announced a significant strategic overhaul, which included plans to offload its Tasmanian operation and hemp food and wellness division in order to concentrate on medicinal cannabis production at its Victorian facility.
In July, the company agreed to sell its hemp food and wellness business to Ecofibre subsidiary Ananda Food for $250,000.
Managing Director Nan-Maree Schoerie said: "The sale of TasCo completes the third and final step in the group's restructure and streamlining announced to the market on June 14 this year.
"This allows us to focus on the expansion at our Victorian operation which is proceeding rapidly. We continue to experience very healthy demand for our medicinal cannabis products and this transaction provides important access to growth capital."
As a consequence of the reduced secured property, the company's maximum loan limit with NAB Australia will be lowered following the sale, with the upper limit expected to fall to approximately $800,000.
Net proceeds from the transaction will go toward continued expansion of the Victorian facility.
