Cronos Group Secures $100 Million Bought Deal

On March 22, 2018, Cronos Group Inc. (CRON) announced that it had entered into an agreement with a series of underwriters, which was co-led by GMP Securities L.P. and BMO Capital Markets, to sell 10,420,000 common shares of the company. Priced at $9.60 per common share, the total value of the deal is approximately $100 million.

This is just the latest good news for Cronos, who has been moving aggressively to consolidate its position in both US and Canadian markets. Earlier in the week, the company announced that it would form a joint venture with MM Enterprises USA, LLC, a cannabis produced and owner of one of the largest retail cannabis dispensaries in the state of California, to develop branded cannabis products and dispensaries.

The company has also granted the underwriters an over-allotment option to purchase an additional 1,563,000 common shares, exercisable up to 30 days following the closing of the deal. If the over-allotment option is exercised, the valued of the deal would be raised to $15 million.

Completion of the deal is contingent upon receiving approval from securities regulatory authorities in both the United States and Canada, including the NASDAQ Global Market and the TSX Venture Exchange. The deal is expected to close on April 6, 2018.

Upon closing the offering, the company hopes to use the proceeds to fund its international operations, expand its capacity, and for general working capital; which includes seeking potential new investment opportunities.

In addition to the bought deal, the company also announced its preliminary 2017 financial results. The company reported that it anticipates its 2017 revenue to be between $3.8 and $4.4 million, compared to $0.6 million in 2016.

The massive increase in revenue is due largely to the inclusion of Peace Naturals Project Inc. revenues for the whole year, whereas the company’s 2016 financial results only included Peace Naturals revenue from September 2016 through the end of the year. The company expects to release its consolidated financial results on or around April 30, 2018.