Voyager Life plc has increased its manufacturing capacity and gained a bricks-and-mortar presence in the European Union through the acquisition of a CBD extraction and manufacturing facility in Bilcza, Poland from Goodbody Health Ltd for £1.5 million, comprising £0.5 million cash and £1 million convertible loan notes (CLN).
Nick Tulloch, Voyager’s CEO, outlines what the deal brings to his company: “It turns us into a vertically-integrated and pan-European business with, significantly, products we formulate in Scotland now able to be made and sold across Europe. We now also control the supply chain from extraction to manufacture to retail, providing us with multiple revenue streams, but also considerable price protection.”
AQSE growth market-listed Voyager was founded in 2020 in Perth, and began in the business of formulating and supplying CBD and hemp seed oil branded health and wellness products, but not manufacturing them itself. As well as selling online and through third party retailers, Voyager opened three shops, in St Andrew’s, Edinburgh and Dundee. A year ago, Voyager acquired a neighbouring CBD manufacturing business from the liquidators, and relaunched it as a white-label division, voyagerCann. That division is growing, according to Mr Tulloch, and the aim is to make the same products in Scotland and Poland.
The thinking behind Voyager’s decision relates to the total CBD market, rather than simply to the position of its own branded products within that market, as Mr Tulloch explains. “It has become apparent to us this year that, although the CBD market is growing strongly, there is no clear brand champion and shelf space is still very competitive.
“As much as we like our own brands and believe in their success, we think a better strategy is to position ourselves as a service to the industry—providing extraction, product formulation, manufacturing, testing, accreditation, label design (basically everything to get a product shelf-ready). We already provide this for customers but this acquisition brings more of those services in house.
“In other words, regardless of which brand becomes the ‘Coca Cola’ of the CBD world, we aim to be providing services across the supply chain.”
Voyager anticipates revenue streams from sales of CBD isolate and distillate, manufacturing and sales of white label and private label topical, skincare and ingestible CBD products, trade sales of finished products, and direct to retail sales through its own stores and online channels. The company maintains that controlling the entire supply chain should reduce costs for individual product lines, making Voyager more competitive. This may allow for a reduction in retail prices, and higher margins for retail partners stocking Voyager products. Customers in the EU will be supplied without the constraints of border controls and customs fees.
The plant in Poland is an HACCP, GMP and GHP-compliant and ISO 22000 accredited CBD extraction and manufacturing facility. Voyager has no plans to extend its vertical integration into growing cannabis—“best left to large scale specialists, I think” says Mr Tulloch. The Polish facility buys in cannabis. “Any prospective suppliers are tested before purchase and then dried macerated hemp is delivered. This is then processed into CBD isolate and distillate. The quality is very high with isolate being 99.5% pure for example. There is also a small product manufacturing capability which we intend to expand over time. The facility is on freehold land with plenty of space available so any expansion of our requirements will be very cost effective.”
According to a statement from Voyager published today, “the majority of the facility was built in the last two to three years. It was bought in 2019 for approximately £13 million (C$22 million) by Stillcanna Inc. (which subsequently merged with Goodbody), and significant amounts have been invested in the facility since that purchase. The land on which the facility is built is owned freehold and comprises its own electricity substation for security of energy supply. There is also extensive unused capacity which will allow for additional manufacturing and testing capabilities to be added on… As well as CBD extraction from hemp, the facility in Bilcza can be used for production of other plant-based products, such as essential oils and cold-pressed hemp seed oil. Voyager intends to expand the facility’s operations to include fulfilment for its European customers.”
Regarding the financial arrangement, Mr Tulloch states that shareholders are supportive: “We spoke to a number of shareholders ahead of our acquisition and fundraising and we have a high level of support for what we are doing.”
Voyager’s statement sets out the details of the financial arrangement, including changes to its own share option scheme, issuing new shares, voting rights and more. “The acquisition comprises the shares of Sativa Wellness Poland Sp. z.o.o. and Olimax NT Sp. z.o.o., subsidiaries of Goodbody, that combined provide CBD extraction and manufacturing at a facility in Bilcza, Poland. The company has raised a total of approximately £0.55 million from new investors, existing shareholders and from Nicholas (‘Nick’) Tulloch, CEO, and Eric Boyle, non-executive chairman, who have irrevocably agreed to subscribe for £200,000 (the ‘director subscriptions’) of the £0.55 million. The director subscriptions, which are on the same terms as the fundraise…are subject to the granting of a Rule 9 waiver under the takeover code and shareholder approval at a forthcoming general meeting of the company.
“Voyager intends to publish a shareholder circular in due course, following approval by the takeover panel, and the general meeting is expected to be held early in 2023. Accordingly, the company will issue 2,899,992 new ordinary shares at a price of 12 pence per new ordinary share (the ‘fundraise’), raising gross proceeds of approximately £0.35 million to partially fund the acquisition, with admission of shares to trading on Aquis Stock Exchange growth market expected to occur at 8am on or around 3 January 2023. Voyager will assume full operational control of the CBD extraction and manufacturing facility on 1 January 2023.”
Under the terms of the CLNs, Voyager has three years to pay Goodbody, plus annual interest of 7.5% payable quarterly. According to Goodbody, it has the right to convert the principal amount plus interest into up to approximately 2.5 million Voyager ordinary shares, and until payment of the CLNs is made in full, Goodbody will retain security over the fixed assets of Sativa Wellness Poland Sp. z.o.o. and Olimax NT Sp. z.o.o.
Nick Tulloch says that Voyager approached Goodbody about the acquisition, but they had already been considering a sale. Goodbody (previously called Sativa Wellness Group) describes itself as “a UK-based aggregator of health and wellness products and services”. Alongside its CBD operation, it developed a diagnostic testing and screening business, including covid-testing for travellers, and screening for cholesterol, diabetes, heart and prostate, operated through a network of over 200 clinics in the UK. Goodbody states that its business grew nine-fold from 2020 to 2021. Earlier this year, the firm changed the location of its incorporation from British Columbia, Canada to Guernsey, de-listing from the Canadian Securities Exchange, and retaining its listing on the AQSE growth market in London and the OTCQB in North America.
A statement from Goodbody published today sets out the reasons for the divestment: “The directors believe this to be a sound commercial decision allowing further funds to be directed towards the growing diagnostic and wellness sector of the company which represents over 90% of revenues for 2021 and for 2022 YTD. It was determined that the levels of CBD sales undertaken by Goodbody Health were insufficient justification for meeting the costs of running a full extraction plant and the level of management input. This divestment also allows the management team to focus fully on the new opportunities available in the health and wellness business.
“Goodbody will use the funds generated to continue to develop and expand its health and wellness operations. The company continues to roll out its strategy of becoming a leading aggregator of innovative technology and innovative tests, including blood and genome, while identifying additional products to enable consumers to take more control of their life time health and wellbeing.
George Thomas, CEO of Goodbody, says, “This transaction is great news for both Goodbody and Voyager, with each party moving closer towards their strategic goals. The cash Goodbody receives will be used to further both the expansion of the clinic network, investing into innovative testing technology, and into the range of available blood, genome and other diagnostic testing and minor treatment services.”
Goodbody has retained its UK testing lab which will continue to operate as a separate business unit within the company.
Voyager and Goodbody had not worked closely together before negotiating this acquisition, but that is changing, as Mr Tulloch describes: “We are building a closer relationship. We sell Goodbody blood tests in our shops, we’ll supply them with CBD following the deal, and we will use their Phytovista testing laboratory for all of our testing requirements.”