Debra Borchardt
It seems investor interest in the cannabis sector is returning. Cannabis heavyweights Canopy Growth Corporation (TSX: WEED) (Nasdaq: CGC) and Columbia Care Inc. (NEO: CCHW) (OTCQX: CCHWF) both inked large private placements with institutional investors. Capital has been especially tight in the industry for the past two years and these deals could indicate that investors are feeling more positive about the future of cannabis companies.
Canopy Growth
Canopy Growth reported it entered into subscription agreements, dated September 18, 2023, with certain institutional investors in a private placement offering of 22,929,468 units at a price per Unit of $1.09 to raise approximately $25 million. In addition to that, the investors also hold an over-allotment option to buy up to an additional 22,929,468 at the same price for another $25 million on or before Nov. 2, 2023.
Canopy Growth said the money would be used to further strengthen its financial position and is expected to be used for working capital and other general corporate purposes.
Columbia Care
Columbia Care announced that it also entered into subscription agreements with institutional investors for the purchase and sale of 22,244,210 units at a price of C$1.52 per Unit to raise C$33.8 million or approximately $25 million. Columbia Care said it plans to use the proceeds from the offering to reduce its outstanding indebtedness and for general corporate purposes.
In addition to the first $25 million, the investors will have the option to buy another $25 million in additional units at a price equal to the Issue Price, upon written notice to the Company at any time up to 45 days following the initial purchase. The units will be subject to limited lock-up requirements.
Columbia Care also entered into a non-binding agreement with the investors with respect to the repurchase by the company of up to $25 million of the principal amount of their holdings in the 6.0% senior secured convertible notes due June 2025, the purchase price of which would be payable in common shares.
In addition, Columbia Care said it is in continued discussions with certain holders of its 13% senior secured notes due May 2024 to exchange their 2024 Notes for the 9.5% senior secured notes due February 2026 on a one-for-one basis.
