AgraFlora Organics International Inc (CSE:AGRA) (OTCPINK:AGFAF) announced that it has closed a non-brokered private placement offering consisting of 28,750 unsecured convertible debentures with an aggregate face value of $1,000 for gross aggregate proceeds of $28,750,000.
The diversified international cannabis company said the proceeds will be used as general working capital and to continue the company's continuing capital expenditures at its 2.2 million square foot Delta greenhouse complex, as well as its 51,500 square foot Winnipeg edibles facility.
“While Tier 1 LP peers continue to encounter challenges in remaining adequately capitalized throughout these dynamic market conditions, this material cash infusion at a substantial premium to market is indicative of AgraFlora's pole position through the next phase of cannabis normalization,” Agraflora's CEO Brandon Boddy said in a statement.
“The immense potential of our portfolio of accretive upstream and downstream assets is once again validated by this strategic investment from Canada’s premier cannabis fund,” he added.
The company said the debentures were issued at a deemed value of $0.30 per share, which is a 66.67% premium to the company’s closing share price on November 25, 2019. The debentures will bear interest at a rate of 10% per annum from the date of issue, payable semi-annually in arrears on June 30 and December 31 of each year, starting on December 31, 2019, added the company.
Interest will be computed on the basis of a 360-day year composed of 12 30-day months. The debentures will mature on December 31, 2021.
The debentures will be convertible at the holder's option into the number of shares of the company calculated on the basis of the aggregate principal amount of the debentures being converted, divided by the conversion price of $0.30 per share, and a cash payment equal to the additional interest amount that a holder would have received if the debenture had been held from the date of conversion to the maturity date.
AgraFlora added that holders converting their debentures will receive “accrued and unpaid interest” for the period from and including the date of the latest interest payment up to, but excluding the date of conversion. “If converted the debentures will convert into approximately 95,833,333 common shares,” said the company.
All securities issued pursuant to the offering are subject to a statutory four-month-and-one-day hold period from the date of issuance pursuant to applicable securities laws of Canada.
AgraFlora also owns an indoor cultivation facility in London, Ontario, as well as an edibles manufacturing facility in Winnipeg, currently being retrofitted. The company is also a joint venture partner in Propagation Services Canada Inc, which operates the greenhouse complex in Delta, British Columbia.
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