Celadon Pharmaceuticals
The London Stock Exchange-listed medical cannabis operator saw its stock drop by nearly 60% this week, resulting in a dramatic downturn in its market capitalisation, after announcing that it has been forced to weather numerous delays in funding.
The UK-based company announced this week that it was now managing a precarious cash position, with just £48,000 in liquidity as of August 09, 2024.
Despite reporting ongoing shipments of product to clients as part of multi-million pound supply agreements, Celadon says payment from two separate sources of credit has now been delayed, forcing it to ‘manage its cash position’ even more tightly.
The first relates to a £2.1m equity fundraise launched in May this year, in which one investor agreed to purchase £1m in new shares, with the payments set to be split into four separate tranches.
The first two tranches were completed as scheduled, raising £600,000. However, the third tranche, expected in July 2024, has been delayed. Due to this delay, the final tranche (fourth admission) of £250,000 has also been postponed until all funds from the third tranche are received.
Meanwhile, a £7m credit facility secured in May 2023, before being extended a year later, moving the expiry date from May 2025 to November 2025, has also been delayed.
On June 27, 2024, Celadon submitted a request for a drawdown of an initial £1m from the committed credit facility, entered into with a ‘high net worth investor’ and major shareholder in the company, giving the lender three days in which to provide the committed funds.
#CEL’s the dog ate my homework excuses regarding payments underline the way the company has squandered its initial stock market goodwill. While it may yet come up with the goods on an operational basis, as far as comms are concerned, it has missed the target @ZaksTradersCafe https://t.co/rqicCuBcZy pic.twitter.com/9yfSsOr4mv
— Share_Talk ™ (@Share_Talk) August 12, 2024
As of August 09, just £100k of this drawdown has been received, with the remaining £900k reportedly dependent on a pending property sale by the lender.
In a May update, the company stated that the funds from the raise, alongside the potential £7m credit facility will be used for ‘additional working capital’ which will ‘be sufficient for its present requirements’ for at least 12 months from the date of first admission.
As for the aforementioned credit facility, Celadon also announced that its directors have decided ‘not to pursue the CLN financing’, given that product supply to customers has now commenced.
Celadon is reportedly in discussions with a ‘number of potential institutional lenders’ about securing longer term debt facilities in efforts to refinance the credit facility.
Despite reassurances from the company that their cash position will soon improve, investors remain skeptical about the company’s current financial footing, seeing significant sell-offs of its stock, devaluing the company to a point where further furndraising may be made even more difficult.
James Short, Chief Executive Officer of Celadons, commented: “Celadon continues to make good operational progress, including the recent supply of our cannabis Active Pharmaceutical Ingredients to UK Specials Manufacturers for supply to UK Private Pain clinics, which is reflected in positive discussions with potential lenders about substantial new, longer term debt facilities.
“Whilst there have been delays in receiving funding, both the investor and lender have re-confirmed their commitments to, and support for, the Company.”
Hellenic Dynamics
Its LSE-listed stablemate, Hellenic Dynamics, has managed to avoid imminent liquidation after reaching an payment agreement with its legal advisors Hill Dickinson LLP.
Last week, Business of Cannabis reported that Hill Dickinson had filed a ‘winding-up’ petition due to an outstanding debt of £85k.
According to an update from August 14, Hellenic has now secured two small loans from its directors to make an initial and immediate payment to Hill Dickinson, which has now withdrawn the winding-up petition.
The first of these loans came from Non-Executive Director Joseph Colliver, who provided an unsecured, non-interest bearing loan of £5000, due to be repaid by September 30, 2024 without incurring a 5% interest.
Director and President of Hellenic Dynamics SA, a wholly owned subsidiary of the company, has also extended a €11,000 cash facility, similarly unsecured and interest-free barring missed repayment by October 31, 2024.
Now a repayment schedule has been agreed between the two parties, a court hearing scheduled for August 28, 2024 has been averted.
The situation underscores the company’s precarious financial position, as it also waits on a €1 million loan expected by mid-August to stabilise its operations.
The company’s shares had been temporarily suspended from trading due to delayed financial results, and this recent development provides some breathing room, though concerns about its financial stability remain.
Hellenic’s management reportedly continues to engage with potential lenders to secure longer-term financial solutions and ensure the company’s future viability.
Flora Growth
International NASDAQ-listed cannabis company Flora Growth has announced a new listing on the Frankfurt stock exchange as it seeks to increase exposure to the booming European market.
In a press release published last week, the consumer-packaged goods and pharmaceutical distributor, which operated in 50-states and 28 countries, announced that its common shares will now be traded on the German exchange under the symbol “7301”.
“The Frankfurt listing will provide a path for new European investors to gain exposure to the Company in addition to increasing our liquidity and trading. We welcome the opportunity to connect with our shareholders and European investors,” said Clifford Starke, Chief Executive Officer.
Flora Growth is the latest of a string of large international cannabis companies to announce further moves into Europe.
With numerous companies releaseing their Q2 results this week, several North American MSO’s like Canopy Growth highlighted strong demand in Germany’s medical cannabis market, with prescriptions and cannabis volume increasing by over 20% post-legalization. The company also noted growth in Poland.
Tilray Brands is also strengthening its position in Germany, where it operates a cultivation facility through its subsidiary Aphria RX.
