Highlands Natural Resources PLC (LON:HNR) has announced that chairman and chief executive Robert Price is leaving the company to pursue other interests as the AIM-quoted firm confirmed it was becoming a vertically integrated CBD company.
Having said last month that it was focusing its attention on growing its recently-launched cannabis business, the group confirmed on Wednesday that it aims to conduct an orderly sale or closure of its natural resources businesses over the coming months.
This will be overseen by new chief executive by Nick Tulloch, who joined the company earlier this year as finance director, and with Price staying on to assist in the disposal process.
Highlands is actually negotiating with Price over a possible sale of some or all of the natural resources assets to him, as part of his severance arrangements.
A new chairman will be sought later this year, the company noted.
Asset sales and pure-play on CBD
Highlands said that over recent months it has "become clear" that the cannabis operation is now the company’s core business driver and the interests of the company and its shareholders were "best served" by becoming a pure-play CBD company.
Highlands noted that the natural resources business has several liabilities that will need to be satisfied, particularly taxes on production at its East Denver project and potential plugging and abandonment costs at its Montana operations.
Whilst cashflow and the potential capital value of the East Denver project exceeds such liabilities the company said it is likely that the net future capital contribution from the natural resources assets may be limited, in the absence of any potential upside from its earlier-stage projects.
Highlands added that it has in recent weeks received a number of invoices for work done in its natural resources business, primarily by external consultants and legal advisers. Such costs will not be repeated, it said.
Expansion of CBD business and loan drawdown
The company highlighted that it has increased CBD inventories at the Zoetic business ahead of several significant presentations to potential customers.
Highlands emphasised that it is imperative that Zoetic is in a position to fulfil orders quickly, if the round of meetings are successful.
It has therefore decided to draw down in full a US$500,000 bank facility. The company expects that any sale of natural resource assets will generate sufficient surplus funds to repay bank facilities.