Aurora Sun Facility Sale to Bevo Farms
The Aurora Sun facility in Medicine Hat has been sold to Bevo Farms. The parent company Aurora Cannabis owns a controlling interest in Bevo AgTech which owns Bevo Farms.
History
April 16 2018 The City of Medicine Hat (COMH) announced that they had signed an MOU with Aurora This included a 10 year Pay or Play contract for 42 MW power so even if they did not use that power they would still pay for it. (Unit 17 completed in 2020 produces 43 MW.) Aurora stock price closed at $85.876 USD April 2 2018 down from a closing of $129.72 USD on Jan 22 2018. The stock was down to $62.64 USD by Dec 31 2018
https://www.medicinehat.ca/en/news/city-signs-mou-with-aurora-cannabis-inc-subsidiary.aspx
“A fair agreement would provide significant benefit to all parties:
The City of Medicine Hat would secure a long-term, large-sized utilities customer, helping to offset potential risks due to future market changes and providing long-term value to the residents of Medicine Hat. The community would see approximately 450 permanent jobs. Aurora would have access to stable, cost competitive utility rates.”
In the meantime, the City borrowed $66,000,000 to build Unit 17, they also gave Aurora a $6,000,000 for the off-sites levies they would normally have to pay. (City Staff recommended AGAINST the subsidy at the time, Council went ahead with it anyway.)
It was anticipated that the $6 million in subsidies would be repaid by the 450 new jobs and increased property tax revenue on previously unused land. Here’s some pics of that the $6,000,000 paid for, - a beautiful 4 lane dead end road, water, sewer and power connections, a partial sidewalk, full curbs and some lovely street lights for businesses that are not yet in operation.
At the time of the original deal the AB gov’t had started to phase out taxes on farm buildings starting in 2018 leading to a 100% exemption by 2022.
As cannabis had only been recently legalized, cannabis growing was still considered to qualify as agricultural and therefore paid much lower property taxes.
Nov 13 2019 The Province of Alberta announced that municipalities would be able to start charging taxes to cannabis growers starting in 2020.
Nov 15 2019 Aurora Cannabis (which has never made a profit as yet), stopped construction. Stock closed on Nov 18 2018 at $32.40 USD
Did You Know?
Taxes are only paid on completed buildings in the City. If the building is unfinished, you only pay taxes on the land.
Sept 2020 Aurora posts $3.3 billion in losses for their fiscal year. This is the company that IMH thought would bring prosperity to Medicine Hat. Stock closed at $4.58 USD Sept 28 2020.
March 5 2021 Aurora Sun was put up for sale. Stock price closed at $9.60 USD on March 1 2021
August 27 2021 IMH published a Case Study on their FB page defending the whole Aurora mess. Stock price closed at $7.39 USD on Aug 30 2021.
2022 Aurora Sun is still unsold. A deal with an unnamed buyer for a significantly lower amount than Aurora spent on it in 2022 ($250 million vs sale price of $47 million) fell apart.
August 25 2022 Aurora Cannabis buys a controlling interest in Bevo AgTech, which owns Bevo Farms. They sell the Aurora Sky facility in Edmonton to Bevo for $25 million, one tenth of what it cost to build. Stock price closed at $1.51 USD on Aug 29 2022
Sept 2022 Deal for the Sale of Aurora Sun collapses
Mar 24 2023 Aurora reports receiving a warning letter from NASDAQ, that their share price has dropped below $1.00 USD for more than 30 days in a row. Stock closed at $0.705 USD on M ar 24 2023
July 24 2023 Aurora “sells” the Medicine Hat building to Bevo; no price is given. The City of Medicine Hat in their infinite wisdom lets Aurora Sun out of their “Pay or Play” contract to facilitate the deal. Stock closed at $0.499 USD Jul 24 2023
The building will be repurposed for vegetable and ornamental flowers. It will be taxed at an agricultural rate and they will only pay taxes on the office buildings. The City has not said if any of the $6,000,000 in subsidies will be repaid at any point or exactly what the COMH will gain for this deal other than a bunch of minimum wage jobs in an area that our bus system does not even go to.
Did You Know?
Bevo is currently looking for workers at their plant in Langley. They pay minimum wage, no benefits.
Aurora Stock Closing Price Change
Jan 18 2018 $129.72 USD
August 6 2023 $0.5471 USD
The City of Medicine Hat is trying to resurrect Invest Medicine Hat (IMH)
Let’s hope they make better decisions than the past two iterations.
