NewsSummerway Capital Returns To AIM To Fund £80m Take-Over...

Summerway Capital Returns To AIM To Fund £80m Take-Over Of UK Cannabis Cultivator

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SUMMERWAY Capital’s  (LON: SWC) £80m reverse takeover of one of the UK’s few licenced high-THC cannabis growers has seen it relaunch its shares on the London Stock Exchange (LSE) in order to fund its new acquisition. 

Yesterday it announced that it had completed an £8.5m fundraising as its shares began trading on the Alternative Investment Market (AIM) of the LSE for the first time since September 2021. 

The newly raised cash will be used to fund ‘working capital requirements’ at Vertigrow Technology, Summerway’s recently acquired medical cannabis company which it believes is set to generate revenues of £90m a year, serving some 50,000 patients.  

Vertigrow’s Founder and CEO Jim Short told investors: “I am pleased to be announcing the fundraising today. 

“The opportunity to create a substantial UK based pharmaceutical business contributing to life changing treatments to chronic pain sufferers is as compelling as ever, and I would like to take this opportunity to thank the new and existing investors that are going to support us on our journey.”

£80m Acquisition 

Summerway’s acquisition of Vertigrow is understood to have been in the works for nearly six months, seeing it suspend trading on the AIM market on September 21 2021 as it announced it was in discussions with an ‘immediate opportunity in the healthcare and pharmaceutical sector’. 

This opportunity was revealed to be Vertigrow Technology a month later in October, when Summerway said it planned to issue 48.5m shares at 165p each to fund the £80m acquisition. 

As part of the deal, Summerway said it would make a loan of £4.25m available to Vertigrow to fund ‘capital expenditure’ at its Midlands-based cannabis cultivation and manufacturing facility, operated by its subsidiary Celadon Pharmaceuticals. 

Its recent raise, which saw it place 5.1m new ordinary shares at the same price, will be used to finance the new ‘enlarged group’s’ working capital requirements following the completion of its acquisition, bringing its total net cash to around £12 million. 

According to its release, £5m of this is earmarked to develop Celadon’s Midlands facility, while the remaining £7 will go towards supporting the ‘grow phase’ of the group, ‘culminating in the production of its own medical cannabis supply’. 

Vertigrow Technologies

Vertigrow consists of two main subsidiaries, The Celadon Group and LVL Health, both of which are pre-revenue according to their latest financial accounts. 

Celadon appears to be the key focus for Summerway. It operates a 100,000sq ft facility in the Midlands which currently includes an ‘advanced growing space’ and a laboratory designed to meet UK-GMP standards. 

In July last year Celadon received a Home Office Licence to grow high-THC cannabis in the UK for the purpose of producing test batches of cannabis oil, which was renewed for 12 months in January 2022. 

In order for it to begin bringing in revenues, which it aims to do by the end of 2022, Celadon will need to secure a commercial licence from the Home Office, allowing it supply extracted oils with a high THC content in the UK. 

Should it succeed in securing this licence, it will become only the third company based on the UK mainland to have done so. 

Last year Glass Pharms, which is set to construct a two-and-a-half hectare growing facility in South West England, confirmed that it had received a commercial licence which it believes will allow it to become the first company in the UK to sell high-THC cannabis to third parties.

Since GW Pharma received the first high-THC licence in 1998, only Northern Leaf and 4C Labs, which are based in Jersey and Guernsey respectively, have received high-THC commercial licences.

Alongside Celadon, Vertigrow also owns a majority stake in LVL Health, a specialist pain clinic focused on researching ways in which medical cannabis can help a number of chronic pain disorders. 

It is reportedly in the advanced stages of the approval process to sponsor an MHRA and Research Ethics Committee (REC) authorised clinical trial into the effects of medical cannabis on chronic pain, which it believes to be the only such trial in the UK. 

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