Grown Rogue completes acquisition of Rogue EBC interest

Executive Summary

• Grown Rogue International Inc. has completed the acquisition of the 30% minority interest in its Illinois subsidiary, Rogue EBC LLC, effectively gaining 100% ownership of the project.
• The total transaction consideration is $1.5 million, structured with staggered payments to manage liquidity.
• The acquisition allows Grown Rogue to fully consolidate the Illinois project, which is currently subject to final approval by the Illinois Department of Agriculture.

Key Details

• Transaction Structure: Acquisition of 30% minority interest in Rogue EBC LLC (Illinois subsidiary).
• Total Consideration: $1,500,000.
• Payment Schedule:
  • $500,000 paid at closing.
  • $500,000 due in six months.
  • $500,000 due at the earlier of 15 months from closing or the date of the first harvest.
• Strategic Rationale: CEO Obie Strickler cited a partner's request for liquidity (unrelated to Grown Rogue) as the catalyst for the opportunistic acquisition, allowing the company to increase ownership at an attractive price before becoming operational.
• Regulatory Status: The deal is subject to final approval by the Illinois Department of Agriculture.
• Operational Context: Grown Rogue cites recent success in producing craft-quality flower in multiple markets, including a recent launch in New Jersey, as support for the Illinois expansion.

Notable Quotes

• "We are pleased to have this consolidation complete, setting the stage for the development of our Illinois project to continue," said Obie Strickler, chief executive officer of Grown Rogue.
• "When we first struck our partnership in Illinois, we were excited about managing the cultivation operations in partnership with an operator who would run the manufacturing operations. However, owing to a request for liquidity from our partner for reasons completely unrelated to Grown Rogue, we decided to opportunistically acquire 100 per cent of this project. Increasing our ownership at an attractive price before we're operational is a logical step, supported by the success we've had in efficiently producing craft-quality flower in multiple markets, most recently with our recent launch in New Jersey, which has a market structure that we believe resembles Illinois."