Canadian cannabis grower and processor Safari Flower Group is insolvent and has received an initial creditor protection order under Canada’s Companies’ Creditors Arrangement Act (CCAA).
Fort Erie, Ontario-based Safari described itself in a Jan. 11 court filing as a bulk supplier of cannabis products to other licensed producers as well as a producer of white-label products for marijuana retail brands.
International medical cannabis shipments have also “become a major focus” of the company, according to the filing, “as the margins can range anywhere from two to three times higher than the average price in Canada.”
However, Safari reported liabilities of 55.2 million Canadian dollars ($41 million) as of Dec. 31.
The company said “its financial success has, unfortunately, become difficult to maintain,” citing ongoing cannabis price compression in Canada among other factors.
Safari said it tried to arrange a sale process “outside of the CCAA in order to maximize value.”
However, the only bid “was lower than the amount of total secured debt owed to (Safari’s) lenders,” who declined the offer.
Safari’s two secured creditors, Blacksail and Gray Jay, have discussed buying each other’s debts in the company.
Currently, Blacksail intends to buy the secured debt owned by Gray Jay, “although negotiations between the lenders are ongoing,” according to Safari’s court filing.
An Ontario judge granted the company’s initial creditor protection order on Jan. 12.
Safari employs 29 full-time workers.
Creditor protection filings and subsequent restructurings under the CCAA are a regular occurrence in the Canadian cannabis industry.
Solomon Israel can be reached at firstname.lastname@example.org.