Negotiations and administration work that will see production continue at its Ukusekela cannabis business are expected to be completed before end-May, says embattled investment holding company Nutritional Holdings.
Nutritional Holdings acquired Ukusekela Holdings in October 2020 and the fulfilling of licence requirements may be just what the company needs to stage a long-awaited turnaround.
In a scant statement on Friday, the board of the controversial penny stock announced it has begun negotiations with little-known company Alvero. It said the talks are over finalising the regulatory aspects of the SA Health Products Regulatory Authority (Sahpra) licensing requirements “in order for the production to continue at Ukusekela” but did not expand or give details on the discussions.
An entity of the national department of health, Sahpra regulates all health products in SA.
Ukusekela holds an offtake agreement with one of the largest cannabis pharmaceutical companies based in Europe, which has a licence to distribute CBD oils and infused products in more than 15 countries.
In September 2020 the company announced Ukusekela had signed an agreement to supply “The Ultimate Immune Booster” to a leading manufacturing and distribution company in Germany over three years.
The contract was initially scheduled to begin in the middle of October 2020 with an initial volume of 50,000 units per month for the first year, which was expected to grow to 200,000 units per month by the third year. The total contract value would be in excess of R1bn.
But the dysfunction that has gripped the company and caused it to be suspended from the JSE in May last year left investors wondering whether its plans to sell a cannabis supplement to unnamed German and Japanese buyers in deals worth R1.7bn had materialised.
The group’s results have been delayed since 2021 after high-level board resignations, including those of its CFO and CEO.
Amid a string of hiccups, the Durban-based company — previously known for manufacturing dry food products such as soya mince, milk powder and instant porridge — was granted some relief last month when it managed to convince previous sponsor AcaciaCap to come on board in the short term.
This was after the JSE warned that it was considering terminating its listing if it did not find a legally required sponsor. A sponsor helps companies comply with the financial requirements of being listed on the JSE.
It is not yet clear what Nutritional’s business model is as it no longer sells maize-based food. At one point it intended to dispose of its food interests, but more recently there have been indications the company wants to retain the food segment.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.