Six months after signing an initial memorandum of understanding (MOU), Amir Marketing & Investments in Agriculture Ltd. (TASE:ARMK) has announced the contracting of an agreement with BOL Pharma, owned by chairperson Hagai Hillman and CEO Dr. Tamir Gedo. BOL produces and markets cannabis for the Israeli market.
As part of the agreement, Amir Marketing is establishing a company in which it will hold a 67% share, with Super-Pharm controlling shareholder and chairperson Leon Koffler holding the rest.
According to Amir Marketing's announcement to the TASE, Koffler and Amir Marketing will jointly invest $30 million in the company, with Amir Marketing's share of the investment not exceeding $20 million. $10 million will be invested in the first stage, including $6 million by Amir Marketing. The total amount of the loan may be increased to $38 million if another investor enters the partnership between Koffler and Amir Marketing.
Repayment of the loan, which bears 8% interest, will begin in four years and take place over 18 months. Amir Marketing and Koffler will have the right to convert the loan into equity under certain unspecified conditions, while BOL will have the right to require conversion of the loan to equity under certain conditions.
BOL began marketing its products through the Super-Pharm drugstore chain in April, after the Ministry of Health signed a reform changing the method of distributing cannabis in Israel. The current deal points to a more formal connection with Super-Pharm, which will strengthen BOL in the Israeli market.
The companies also announced that BOL would take action to have its shares listed on one of the main stock exchanges for cannabis companies in the US or Canada.
BOL figures revealed
Financial information on BOL was revealed for the first time in the framework of Amir Marketing's report to the TASE. The figures are the first revealed by an active cannabis company in Israel about the volume of its activity.
Technically, BOL's activity is not completely a continuation of the activity of the original Breath of Life company, which was one of the eight companies that grew cannabis and marketed it directly to consumers before the Ministry of Health's cannabis reform last April. Yesterday's announcement to the TASE stated that Breath of Life had closed down and BOL had been founded in its place.
Since BOL's activity is nevertheless that of the founders and the same brand, Amir Marketing reported stated that Breath of Life had a NIS 100,000 profit on an NIS 8.7 million revenue turnover in 2016. Breath of Life had NIS 5.5 million in assets and NIS 6.4 million in liabilities.
In 2017, before the cannabis reform, Breath of Life lost NIS 17 million on NIS 10.8 million in revenue, due among other things to construction of a production plant. Assets totaled NIS 12 million, and liabilities NIS 22.2 million. Amir Marketing emphasized that BOL had no audited figures for 2018.
The published figures shed some light on the volume of the Israeli cannabis market, in which BOL was one of the leading players before the cannabis reform. The reform is designed to thoroughly change the numbers in the cannabis field. Additional users should gradually enter and enlarge the market. The pricing per gram of cannabis will change: up until now, every patient received whatever quantity of cannabis the doctor prescribed for him or her at a fixed price of NIS 360 per month. Pricing will now be per gram, and the price per gram will rise, to the benefit of the companies. Marketing, however, will be at pharmacies, not the companies' distribution points, which will involve additional costs for the companies for shipping, marketing (each consumer can choose between cannabis brands in the pharmacies), packaging as stipulated in the reform, and sharing the profit with the pharmacies.
Published by Globes [online], Israel business news - en.globes.co.il - on October 15, 2018
© Copyright of Globes Publisher Itonut (1983) Ltd. 2018