Hill Street Beverage Company Inc (CVE:BEER) closed a C$1 million financing to support the company’s plans to launch cannabis-infused beverages in North America.
CEO Terry Donnelly said in a statement Monday that the financing “demonstrates the confidence leadership team and board have in the company's plans and ability to execute on our vision.”
The financing’s principal subscribers included Donnelly and the Toronto-based company’s largest shareholder, HoldCo St Catharines Ltd.
“In spite of some of the most difficult and challenging economic conditions the world has ever seen, the company continues to make progress towards the planned launch of cannabis infused products for both the consumer and business markets based on its Joint Manufacturing Partnership with Lexaria Bioscience,” Donnelly told investors.
“Our team has taken these challenges in stride, continues to operate the alcohol-free beverages business effectively, delivering superior customer service and care, and is working with our sales, distribution, and supply chain partners to ensure we are able to provide our products to both online and retail customers."
Hill Street Chief Financial Officer Hinta Chambers said the financing will give the company additional resources needed to launch its infused product portfolio.
The beverage company raised gross proceeds of C$1,022,500 at a price of C$1 per unit, comprised of C$1 of secured convertible debt and 20 warrants, each exercisable at $0.05 per share for a two-year period, subject to acceleration.
The debt will mature two years following the date of issue and may be converted any time prior to maturity into Hill Street shares at a price of C$0.05 per share for the first year and C$0.10 in the second. The firm may accelerate the maturity date and decide to convert all or part of the debt into shares at the conversion price if the volume-weighted average price of shares is C$0.12 for a consecutive 20-day period at any time during the two-year term.
The principal amount of the debt will accrue at a rate of 6% per annum.
The company also said it granted options to purchase 3.74 million shares at C$0.05 to employees, officers, directors and consultants under Hill Street’s stock option plan. It also plans to issue up to 1.73 million shares priced at C$0.08 to former senior employees as severance.
Shares of Hill Street traded around C$0.05 on Monday morning in Toronto.
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