Organigram Holdings (TSXV:OGI) has announced that it has entered into a letter of engagement with Eight Capital where Eight Capital will purchase with a syndicate of underwriters 100,000 convertible debentures of Organigram on a bought deal basis for gross proceeds of $100 million.
As quoted in the press release:
The Company has agreed to grant the Underwriters an over-allotment option to purchase up to an additional 15% of the Convertible Debentures at the Issue Price, exercisable in whole or in part, at any time on or prior to the date that is 30 days following the closing of the Offering. If this option is exercised in full, an additional $15,000,000 will be raised pursuant to the Offering and the aggregate proceeds of the Offering will be $115,000,000.
The Convertible Debentures will have a maturity date of two years from the closing date of the Offering (the “Maturity Date”) and will bear interest from the date of closing at 6.0% per annum, payable semi-annually on June 30 and December 31 of each year. The Convertible Debentures will be convertible, at the option of the holder, into common shares of the Company (“Common Shares”) at any time prior to the close of business on the last business day immediately preceding the Maturity Date at a conversion price of $5.42 per Common Share (the “Conversion Price”). The Company may force the conversion of the principal amount of the then outstanding Convertible Debentures at the Conversion Price on not less than 30 days’ notice should the daily volume weighted average trading price of the Common Shares be greater than $7.05 for any 10 consecutive trading days.
The Company intends to use the net proceeds of the Offering to fund its international expansion strategy, and to potentially expand into other regions in Canada and build a presence in the hemp market. In addition, the Company intends to use a portion of the net proceeds of the Offering for working capital and general corporate purposes.
As consideration for their services in connection with the Offering, the Underwriters will receive a cash commission equal to 6.0% of the gross proceeds of the Offering.
The closing date of the Offering is scheduled to be on or about January 31, 2018 and is subject to certain customary conditions including, but not limited to, the receipt of all necessary approvals, including the approval of the TSX Venture Exchange (“TSXV”) and the applicable securities regulatory authorities.