Yesterday Canopy Growth Corporation announced that it was seeking to raise up to $50m in additional funding via a ‘private placement offering’.
The Canadian cannabis giant announced that it entered into a subscription agreement on September 18, 2023, with ‘certain institutional investors’.
The placement will see the company offer 22.9m new units at a price of $1.09 per share, a significant discount on the $1.35 share price clocked as of market close on Friday.
This initial placement will net the company aggregate gross proceeds of $25m, but Canopy is set to hold an ‘over-allotment option’ of an additional 22.9m for a further potential $25m, meaning if demand is strong enough it could raise up to $50m.
Aside from being able to purchase shares at a discount of around 20%, private investors will also receive a warrant for each share purchased enabling them to purchase an additional share for $1.35 at any time over the next five years.
According to Canopy, the funds will be used ‘for working capital and other general corporate purposes’.
The news follows a run on Canopy and other major North American cannabis companies following the news that the US Department of Health and Human Services (DHHS) has recommended a rescheduling of cannabis in the US.