- Chemesis International Inc (CSE:CSI) has agreed to spin out its Colombian Cannabis company La Finca Interacviva-Arachna MED SAS
- The company will become a wholly owned Chemesis subsidiary, named SpinCo
- By allowing SpinCo to operate independently in the Colombian market, Chemesis believes it will generate better shareholder returns with localised strategy and leadership
- Upon completion of the agreement, SpinCo will own 100 per cent of the shares to La Finca
- Chemesis International Inc (CSI) is holding steady, with shares trading at C$0.77 and a market cap of $22 million
Chemesis International Inc (CSE:CSI) is spinning out its Colombian subsidiary La Finca Interacviva-Arachna MED SAS into the new entity SpinCo.
The deal, according to Chemesis, will give the company a wholly owned subsidiary, in SpinCo, which in itself will have La Finca as a wholly owned subsidiary.
This will allow SpinCo to appoint a new management team and focus on the Colombian market, while Chemesis focuses its attention on the US and Puerto Rico.
The hope is that as Latin American cannabis laws are relaxing and more companies enter the market, a strong grounding in the region will give Chemesis an arm’s length presence in the emerging markets.
The arrangement will require Chemesis transferring 100 per cent of the issued shared in La Finca to SpinCo. Each Chemesis shareholder will be entitled to one Spinco share for every Chemesis share they hold.
This will in effect give Chemesis shareholders 100 per cent of the offered shares of SpinCo.
This arrangement is subject to a regulatory approvals process, along with a vote of approval by two thirds at Chemesis annual general and special meetings. The meeting is currently scheduled for the second half of 2020, when coronavirus pandemic restrictions are hopefully relaxed enough for a face-to-face meeting to take place.
The company has appointed Eli Dusenbury to be the sole director, CEO and President of Spinco until such time as the company can properly set up its board and management team.
SpinCo will also need to apply for its own listing on the Canadian Securities Exchange. Chemesis have committed to undertaking this process and have committed to making SpinCo compliant with all CSE regulations and requirements for listing.
Chemesis International Inc (CSI) is holding steady, with shares trading for C$0.77 at 2:09 pm EDT.
