Staff
Canadian-based Organigram Holdings Inc. (OGRMF) announced a C$50 million deal with Eight Capital. The medical marijuana producer entered into an agreement where Eight Capital has agreed to purchase 14,285,715 units on a bought deal basis at a price of C$3.50 per unit for gross proceeds of C$50 million.
The proceeds will be used over the next 18 months to fund the company’s expansion plan to build one of the largest indoor grow facilities in Canada. The plans are to add an additional 40,000 kilograms per year bringing the company’s total production to roughly 65,000 kilograms per year. In addition to using the money for expansion, Organigram will also pursue strategic investments through international opportunities and use the funds for general working needs. The deal is expected to close on or about December 18.
Organigram CEO Greg Engel commented “This financing provides us with the unique opportunity to extend our expansion plan to develop one of the largest and most impressive indoor growing facilities in the country. We have full confidence that this will allow us to fulfill our domestic and international opportunities well into the future.”
Once the offering is complete, construction is expected to begin at the Moncton location adding 255,000 of additional square feet of space, bringing the company’s total footprint to 429,000 square feet over 17.5 acres. Upon completion, Organigram will be able to produce medical and adult-use marijuana, along with edibles, infused, oils and extract products.
“One of our key operating philosophies is to keep production costs low by centralizing operations” noted Engel. “The simplicity of a single site is part of our focused approach on achieving the highest earning-per-gram in the industry. These production efficiencies will deliver tremendous shareholder value. The plan will allow the Company to commence development of the land and building purchases made at 55 English Drive and 91 English Drive, both natural extensions of Organigram’s original location.”
According to the company statement, Organigram “Has agreed to grant the Underwriters an over-allotment option to purchase up to an additional 15% of the Units at the Issue Price, exercisable in whole or in part, at any time on or prior to the date that is 30 days following the closing of the Offering. If this option is exercised in full, an additional $7,500,000 will be raised pursuant to the Offering and the aggregate proceeds of the Offering will be $57,500,003.”
Organigram is a licensed producer of medical marijuana in Canada. Organigram is focused on solidifying its position as one of the world’s leading producers of indoor-grown marijuana by continuing its expansion and constructions plans and by producing the highest quality, condition-specific medical marijuana for patients in Canada. Organigram’s facility is located in Moncton, New Brunswick and the Company is regulated by the Access to Cannabis for Medical Purposes Regulations.
According to its website, Eight Capital is a 100% principal-owned Canadian, full-service investment dealer. Its primary businesses include investment banking, equity research, and institutional sales & trading. The partnership was established by a group of elite professionals with experience at leading Canadian bank-owned and boutique brokerages.
