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The BRN Group Inc., which is based in Toronto and New York, has agreed to acquire Green Growth Brands Inc.’s cannabidiol business. Columbus-headquartered GGB and an affiliate of BRN have executed a “stalking horse” asset purchase agreement, where the BRN affiliate will acquire all assets and assume the current liabilities and certain other obligations of the CBD business.

GGB expects to hold up to a 20 percent carried interest in the CBD business following the transaction’s completion.

The stalking horse agreement includes a 30-day go shop period, which permits GGB, with the assistance of its financial advisor, to actively solicit, evaluate and enter into negotiations with third parties that express an interest in acquiring the CBD business. The go-shop period expires March 25, 2020.

GGB CEO Peter Horvath stated that his company remains confident of the nascent CBD business’s future potential.

“With high-potential in the future comes material overhead costs and other obligations in the near term,” Horvath said, in a statement. “These near-term overhead costs and other obligations, together with constraints on liquidity, have posed significant challenges that have hindered us from growing the CBD business to its full-potential.”

GGB’s multi-state operator segment continues to generate positive EBITDA, despite constraints on its ability to fully execute its plans due, in part, to legal challenges in Nevada, he added.

“In light of these factors, we have determined it necessary and appropriate to sell the CBD business and focus on executing our MSO business plan,” Horvath stated. “The board has also formed a special committee to commence a strategic review, which will include consideration of other cost savings measures, designed to position the company on a pathway to achieve financial stability and ultimately a platform through which we can achieve sustainable profitability and growth.”

GGB is looking to significantly reduce its overall operating costs and extend its cash runway, while better positioning the company to refinance its debt and raise additional financing in the future.

In addition, to help GGB achieve financial stability, sustainable profitability and growth, holders of its outstanding $23,717,000 aggregate principal amount of 8 percent secured convertible debentures that mature one year from issue, with the earliest debenture maturing on Oct. 18, 2020 have agreed to extend the maturity to 2024. In addition, the interest rate payable on each backstop debenture will be reduced to 5 percent.

GGB also intends to raise up to $30 million through a non-brokered private placement of common shares to support working capital and buildout requirement of the MSO segment. The company has received $10 million from a key stakeholder of the proposed equity financing.