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Sundial Growers Inc (NASDAQ: SNDL) Increases Commitment To Its Joint Venture Sunstream To $538 Million Despite Struggled 1Q2021 Results

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Sundial Growers Inc (NASDAQ: SNDL) recently announced to increase commitment to its joint venture initiative, with the SAF Group, SunStream Bancorp Inc., to $538 million. Previously, Sundial had announced the commitment of $188 million. SunStream synergizes a strategic operational and financial partnership to target “asymmetrically enhanced risk-return opportunities” in the cannabis industry. Sundial, headquartered in Calgary, Alberta in Canada, seeks to deploy strategic capital through direct and indirect investments and partnerships. 

Sundial reported earnings of $1.7 million for 1Q2021 ended March 31, 2021, compared to a loss from operations of $32.7 million QoQ. The company reported a net loss of $134.4 million attributed to $130 million of non-cash amounts, continued price compression, and challenges in the industry dynamics.

Sundial’s strategic capital partnership

Sundial and SAF Opportunities LP, a member of the SAF Group, announced a 50:50 joint venture in March 2021 to focus on cannabis-related verticals to tap the local and international opportunities and investments. Through a new corporation named SunStream, the Joint Venture will look to the formation of an exceptional opportunities fund with an initial commitment of $100 million from Sundial and commitments from third-party limited partners. In April 2021, Sundial announced to increase its commitment to SunStream by $88 million to $188 million. Zach George, Chief Executive Officer for Sundial, expressed that the company will continue to identify innovative ways to deliver shareholder value, and this Joint Venture follows the early success with Sundial’s internal capital investment program. 

Sundial’s 1Q2021 financial & operational highlights

Sundial reported gross cannabis revenue of $11.7 million for 1Q2021, marking a 30% sequential decrease. The company’s investment balance was $96 million as of March 31, 2021, in cannabis-related loans. Sundial reported an income of $15.7 million from the marketable securities. For the first time in history, the company reported a positive adjusted EBIDTA of $3.3 million, compared to a loss of $5.6 million reported in 4Q2020. The company also announced a contract for the acquisitions of Inner Spirit Holdings and Spiritleaf retail cannabis network in May 2021. Mr. George expressed that the company has the right team, a world-class facility, and strong financials to get through the pandemic while focusing on growth.

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