Little Green Pharma has entered a $7.8 million sale and leaseback agreement for its Western Australia production site, aiming to fuel growth in Australia and Europe while maintaining operational control.
- Sale and leaseback of WA production facility for $7.8 million
- Facility includes 1.3tpa GACP indoor cultivation and GMP-compliant production
- Leaseback agreement to continue operations for approximately 3.5 years
- Proceeds earmarked for expansion in Australia and European markets
- Transaction subject to buyer due diligence, financing, and council approvals
Strategic Asset Sale to Unlock Growth Capital
Little Green Pharma Ltd (ASX:LGP), a prominent player in the medicinal cannabis sector, has announced a significant transaction involving the sale and leaseback of its production facility located in South-West Western Australia. The deal, valued at $7.8 million, covers the land, buildings, and cultivation equipment of a facility capable of producing approximately 1.3 tonnes per annum under Good Agricultural and Collection Practice (GACP) standards, alongside a GMP-compliant production setup.
Maintaining Operational Continuity Through Leaseback
Despite the sale, Little Green Pharma will continue to operate the site under a head lease for around 3.5 years, ensuring uninterrupted production and supply chain stability. This leaseback arrangement allows the company to retain operational control while unlocking capital tied up in fixed assets. The buyer, Lauana Pty Ltd acting as trustee for the Lauana Trust, will assume ownership subject to several conditions precedent, including due diligence, financing, and council approvals.
Funding Expansion in High-Growth Markets
The company plans to deploy the proceeds from the sale to pursue growth opportunities both domestically and in Europe, where it already operates multiple production facilities and holds a strong market position. Little Green Pharma is among the top three medicinal cannabis suppliers in Australia and a leading supplier in key European markets such as France, Germany, and the UK. This strategic move aligns with its ambition to scale operations and capitalize on expanding global demand.
Transaction Details and Next Steps
The contract is based on standard REIWA 2022 conditions, with settlement targeted for mid-April 2026, following the satisfaction of all conditions precedent. These include buyer financing arrangements, amendments to existing leases with cultivation subcontractors, and necessary council approvals for site works. Should these conditions not be met, the agreement may be terminated, underscoring the conditional nature of the transaction.
Positioning for Future Growth
Little Green Pharma’s decision to monetize a key asset while maintaining operational continuity reflects a pragmatic approach to balancing capital efficiency with strategic expansion. By freeing up capital from fixed assets, the company enhances its financial flexibility to invest in emerging opportunities across its diversified portfolio and international footprint.
Bottom Line?
This sale and leaseback deal marks a pivotal step for Little Green Pharma as it repositions to accelerate growth in competitive medicinal cannabis markets.
Questions in the middle?
- How will the leaseback terms impact Little Green Pharma’s operational costs and margins?
- What specific growth initiatives in Australia and Europe will the sale proceeds fund?
- Could this transaction signal further asset monetization or restructuring within the company?