Canadian cannabis giant Canopy Growth Corporation (WEED: TSX, CGC: NASDAQ) announced on Monday that it has entered into subscription agreements with certain institutional investors. The investors will participate in a private placement offering of 22.93 million units at a price of $1.09 per unit. The total gross proceeds from this offering are expected to be approximately $25 million.
Additionally, the investors have the option to acquire an additional 22.93 million units at $1.09 per unit, which could lead to another $25 million in gross proceeds. This option can be exercised at any time on or before November 2, 2023.
The purpose of this offering is to provide Canopy Growth with additional liquidity of up to $50 million. The company intends to use this funding to strengthen its financial position, primarily for working capital and other general corporate purposes.
David Klein, the CEO of Canopy Growth, is scheduled to speak at the Benzinga Cannabis Capital Conference in Chicago in September. It is likely that he will discuss this news and share more information about the company’s future plans during the conference.
Each unit offered in the private placement consists of one common share of Canopy Growth and one common share purchase warrant. The warrant grants the holder the right to acquire one common share of the company at a price of $1.35 within five years of issuance. Canopy Growth has also agreed to provide the investors with customary registration rights.
The closing of the private placement is expected to occur on or about September 19, 2023, subject to customary closing conditions.
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As of the time of publishing during Monday’s pre-market session, Canopy shares were trading 14.91% lower at $1.15 per share.