A MAKE-or-break deal for Jersey-based medicinal cannabis producer Northern Leaf to ensure its “survival” – by merging with Scottish CBD firm Voyager – has collapsed following failed fundraising efforts.
The merger’s collapse has been described as “hugely disappointing” by Voyager founder and chief executive Nick Tulloch, in an announcement by the firm on the Aquis Stock Exchange.
The news comes after Economic Development Minister Kirsten Morel said the Island’s medicinal cannabis industry was still on course to become a “significant” part of the economy – despite growers contending with high start-up costs and strict regulatory standards.
It could spell disaster for Northern Leaf, which previously warned shareholders that its board of directors would have “no choice but to consider ceasing to trade with immediate effect” if the merger was not completed in a timely manner.
Last year, the cannabis cultivator also failed to secure enough interest to float independently on the London Stock Exchange with an initial public offering, while its chair – Frank Walker – previously stated that the business had faced “a challenging time”.
Now valued at £3.7m, the firm had invested around £30m building a 100,000sq-ft cultivation and processing facility.
Announcing the merger last month, Mr Walker said that the company would seek to start the merger fundraising process “to secure the funding necessary to ensure Northern Leaf’s survival”.
However, Voyager yesterday announced that it had ended discussions with the Jersey grower, explaining that the fundraising process “could not be completed in line with Northern Leaf’s requirements for financing its business plan”.
The statement continued: “Voyager commenced discussions with Northern Leaf towards the end of 2023 at a time when Northern Leaf’s business was severely cash constrained. Northern Leaf subsequently raised £1.75 million in a rights issue from shareholders in December 2023 and, in January 2024, supplied Voyager with its forecasts for 2024 and beyond.
“The parties agreed terms for the proposed merger on the basis of these forecasts which included a plan to undertake a fundraising to provide working capital for the enlarged group. As Northern Leaf was likely to need financing by April 2024, the parties agreed to work towards this timetable for completion.”
But it added that a combination of “the Easter holiday period” and “slower investor response times” had stunted fundraising efforts, which meant that Voyager then had “no option but to terminate the proposed merger”.
Mr Tulloch said: “Needless to say, it is hugely disappointing to bring our proposed merger with Northern Leaf to an end. As we look back over the past few months, a transaction well received by the industry and investors has been prevented by circumstances outside of our control.”
He added that the deal “was always about bringing together two businesses that could be leaders in their respective halves of the cannabis industry”.
The JEP has asked Northern Leaf for comment.
