$20M sale of mill site still not complete, foreclosure possible

Mill site tied up in litigation

The previously-announced $20M sale of the old Weyerhaeuser mill site in Okanagan Falls by a cannabis company remains uncompleted and is now entangled in legal proceedings. 

Sunniva Inc., whose CEO Dr. Tony Holler also owns Naramata Bench's Poplar Grove and Monster wineries, announced in June 2019 that it had sold the old mill site to CannaPharmaRX for $20 million.

That sale has never closed, and last month, mortgagee Shuttleworth Properties Ltd. filed a petition in B.C. Supreme Court seeking to declare the mortgage related to the mill site in default. 

The court filing alleges Sunniva Inc. and its numbered subsidiary still owe a total of $3.2 million on the now-matured mortgage, which is “in breach of its terms and has not been paid.”

The court petition also alleges Sunniva has failed to pay property taxes associated with the site totalling $38,572.

Shuttleworth Properties is seeking an order fixing a time limit for payment of the outstanding balance of the mortgage, and should that deadline not be met, an order to foreclose on the mill site.

Sunniva originally purchased the site for $7M, but made significant investments in construction assets to build a 759,000 square-foot greenhouse on the 114-acre site.

The company later decided to pull out of Canada and focus on completion of another large greenhouse in Cathedral City, California. That greenhouse remains uncompleted and bogged down in litigation as well. 

"We are in survival mode," said Dr. Holler in an update to shareholders on April 28. "We are a company with minimal business operations; a core staff; a board of three individuals; limited capital resources and significant debt due and coming due.”

Sunniva has repeatedly over the past year extended the expected closing date for the sale of the mill site to CannaPharmaRX. 

On March 17, Sunniva announced the deal had been amended to $12.9 million in cash and $7.1 million in shares of shares of CannaPharmaRx. CannaPharmaRx’s Q1 2020 filings show it has a little over $200,000 in cash reserves and $21 million in total assets.

Sunniva's stock price has slid 96 per cent from one year ago when it was $4.15 a share, down to just 16 cents Friday.

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