Vireo Growth Inc. Secures $75 Million Financing for Expansion

Vireo Growth Inc. Secures $75 Million Financing for Expansion

— $75 million equity financing at $0.625 per Vireo share will result in combined new entity having an industry-leading balance sheet —

— Transactions would expand Vireo’s operating footprint to 7 states, 9 cultivation facilities, and 48 dispensaries —

— Combined new entity would have an estimated 2024 proforma revenue and EBITDA of approximately $394 million and $94 million, respectively —

— Transaction includes proprietary Arches technology platform with demonstrated success driving legal market share —

— Executive appointments announced —

Vireo Growth Inc. (CSE: VREO; OTCQX: VREOF), a leader in the cannabis industry, has recently executed definitive documentation with select investors for a $75 million equity securities offering priced at $0.625 per share. This financing, which is awaiting completion subject to applicable notice periods, is pivotal as it sets the stage for major expansions through the acquisition of multiple businesses.

Expanding its operational reach is a significant objective for Vireo. The planned merger activities will see the company extend its footprint to seven states and will include the merger with four established single-state operators. This move is set to integrate operations across nine cultivation sites and 48 retail dispensaries, significantly enhancing the company’s market presence.

Among the companies being acquired are Proper Brands in Missouri, Deep Roots Harvest in Nevada, and WholesomeCo Cannabis in Utah. Additionally, Vireo is looking to finalize a binding Memorandum of Understanding (MOU) with The Flowery in Florida. By joining forces with these successful operators, Vireo will strengthen its market position and capitalize on established profitability.

With the integration of these acquisitions, Vireo projects a combined proforma revenue of approximately $394 million and an EBITDA of around $94 million for 2024. This financial performance positions the new entity not only for immediate growth but also establishes a robust baseline for future expansions. The expected balance sheet would reflect around $99 million in cash against $78 million in net debt, resulting in one of the lowest EBITDA leverage ratios in the industry at about 0.8x.

Leadership Changes to Drive Strategic Growth

Vireo has made key appointments to its leadership team, with John Mazarakis becoming CEO and Co-Executive Chairman, and Tyson Macdonald stepping into the role of CFO. These changes are expected to enhance strategic direction and operational expertise as the company moves forward with its ambitious expansion plans. Amber Shimpa will continue as the President of Vireo and maintain her CEO roles in Minnesota, Maryland, and New York.

What Management Says About The Future

Expressing enthusiasm about the merger and expansion, Co-Executive Chairman Kyle Kingsley remarked, "We are thrilled to announce this expansion and welcome well-established operators to our family. Completing these transactions will significantly transform our financial standing and operational capabilities. Our focus will be on delivering long-term value to all stakeholders involved."

CEO John Mazarakis shared his excitement about the strategic shift that Vireo is implementing, emphasizing the decentralized approach which leverages local expertise while ensuring operational excellence through shared resources.

Details of the Merger Transactions

The ongoing merger discussions will materialize through a series of all-stock transactions aimed at acquiring the operations, assets, and licenses from the targeted companies. Each of these entities has been selected for their individual merit and contribution potential to Vireo’s broader ambitions.

Among the acquired entities, Proper Brands operates eleven retail locations in Missouri, while Deep Roots Harvest boasts a strategic footprint in Nevada with robust performance metrics. WholesomeCo has established itself as a major player in Utah's market, and The Flowery, a family-operated business in Florida, is seen as a quality-focused cultivator aiming for significant growth.

The Arches Technology Advantage

The merger will also incorporate Vireo’s proprietary Arches technology platform, presenting an analytical and delivery model that aims to adapt to changing consumer demands. This technology is anticipated to provide existing operators with improved operational capabilities and stronger market position.

Prospective Benefits of the Acquisition

The term structures of the merger agreements position each operator to maintain their independent operations while benefiting from Vireo’s comprehensive support. Vireo expects these acquisitions will further enrich its portfolio and enhance profitability across the board.

Final Notes on Growth Strategy

Vireo aims to maintain a strong growth profile through strategic acquisitions and investment in technology and infrastructure enhancements. By integrating these successful businesses, Vireo is poised to evolve as a leading player in the cannabis market — one that prioritizes efficient operations while fostering local expertise and tailored customer experience.

Frequently Asked Questions

What is the significance of Vireo's recent financing?

The $75 million financing will enhance Vireo's financial resources, enabling strategic acquisitions and expanding its operational footprint.

How many states will Vireo operate in after the merger?

Vireo's operations will expand to seven states following the successful completion of the merger transactions.

Who are the new executives at Vireo?

John Mazarakis is the new CEO and Co-Executive Chairman, with Tyson Macdonald taking over as CFO.

What technology will Vireo use post-merger?

The proprietary Arches technology platform will be integrated to enhance delivery and analytics across the operational network.

What will be the anticipated revenue for the new entity?

The combined entity projects a proforma revenue of approximately $394 million for the 2024 fiscal year.

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