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Red White & Bloom Brands (CSE: RWB) announced that the Michigan Circuit Court has approved a receivership order for its indirect subsidiary Pharmaco’s assets. Trust Street Advisors, , through Gene R. Kohut, was appointed as receiver on December 26, 2024. The receivership follows continued defaults under Pharmaco’s senior secured loan agreement.
Pharmaco, acquired by RWB in February 2022, operated medical and adult-use retail outlets and cultivation facilities in Michigan. The company’s operations no longer align with RWB’s core objectives. The receivership is expected to reduce operating expenses, working capital demands, and debt service obligations.
RWB’s remaining operations, including Michigan distribution, continue unaffected. The company maintains focus on growth initiatives in Florida, including expanding medical retail presence and enhancing processing and cultivation facilities, while optimizing its Canadian operations.
Positive
- Expected reduction in operating expenses and debt obligations through Pharmaco’s receivership
- Core operations in Michigan distribution continue without disruption
- Ongoing expansion of medical retail footprint in Florida
Negative
- Subsidiary Pharmaco defaulted on senior secured loan agreement
- Loss of control over Pharmaco’s retail and cultivation assets in Michigan
- Reduction in operational footprint in Michigan market
TORONTO, Jan. 07, 2025 (GLOBE NEWSWIRE) — Red White & Bloom Brands Inc. (CSE: RWB) (“RWB” or the “Company”) confirms that the senior secured lender to Pharmaco Inc. (“Pharmaco”), an indirect subsidiary of RWB, has submitted a stipulated order (the “Receivership Order”) to the Circuit Court in the City of Pontiac, County of Oakland, Michigan (the “Court”), requesting the appointment of a receiver (the “Receiver”) for all of the assets of Pharmaco. On December 26, 2024, the Honorable Circuit Court Judge Michael Warren appointed Trust Street Advisors, LLC, through its agent Gene R. Kohut, as Receiver for Pharmaco’s assets.
Pharmaco, which was acquired by a wholly owned subsidiary of RWB on February 7, 2022, has operated licensed medical and adult-use retail outlets, as well as conducted limited cultivation operations in the state of Michigan. However, Pharmaco’s operations no longer align with RWB’s core business objectives, as previously disclosed in the Company’s public filings. A receivership of this nature is expected to generate incremental savings by reducing operating expenses, working capital demands, and debt service obligations associated with Pharmaco’s operations.
The Company confirms that the remainder of its ongoing operations, including its Michigan distribution operations, continue to operate without disruption during the receivership. RWB remains committed to driving innovation and creating value within its distribution networks across the United States, actively executing growth initiatives in the state of Florida, including expanding its medical retail footprint and enhancing its processing and cultivation facilities, and continuing to optimize its recently acquired Canadian operations.
Background on the Receivership Order
The Receivership Order was issued following continued and uncured defaults under a senior secured loan agreement between Pharmaco and its senior secured lender. The Receivership Order, jointly submitted by Pharmaco and the senior secured lender, was approved by the Court. Under the Receivership Order, the Receiver is authorized to take full control of Pharmaco’s assets (the “Receivership Property”) and ensure their management and/or divestiture. The senior secured lender retains its senior lien position throughout the receivership process and is entitled to proceeds from any sale or may credit bid its secured claim in accordance with applicable Michigan law.
Pharmaco is required to cooperate with the Receiver to ensure orderly operations during the receivership. Select RWB management personnel may provide operational and management support to the Receiver as needed. The senior secured lender will fund the receivership costs, enabling the Receiver to maximize the value of the Receivership Property.
Advisors
The Dragich Law PLLC is legal counsel for the Receiver, while Plunkett Clooney serves as legal counsel for Pharmaco.
About Red White & Bloom Brands Inc.
Red White & Bloom Brands is a multi-jurisdictional cannabis operator and house of premium brands operating in the United States, Canada and select international jurisdictions. The Company is predominantly focusing its investments on major U.S. markets, including California, Florida, Missouri, Michigan, and Ohio in addition to Canadian and international markets.
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