The Supreme Cannabis Company, Inc. announced today that it has entered into an agreement with a syndicate of underwriters co-led by GMP Securities L.P. and BMO Capital Markets as joint bookrunners, pursuant to which the Underwriters have agreed to purchase, on a bought deal basis pursuant to the filing of a short form prospectus, $90,000,000 aggregate principal amount of convertible debentures of the Company at a price of $1,000 per Convertible Debenture. The Convertible Debentures shall bear interest at a rate of 6.0% per annum from the date of issue, payable semi-annually in arrears on June 30 and December 31 of each year, commencing December 31, 2018. Interest shall be computed on the basis of a 360-day year composed of 12 30-day months. The Convertible Debentures will mature on the date that is 36 months from the closing date.
The Company has agreed to grant the Underwriters an over-allotment option to purchase up to an additional $10,000,000 aggregate principal amount of convertible debentures on the same terms as the Convertible Debentures pursuant to the Offering, 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 the Over-Allotment Option is exercised in full, the aggregate gross proceeds of the Offering will be $100,000,000.
The Debentures will be convertible at the option of the holder into common shares of the Company at any time prior to the close of business on the Maturity Date at a conversion price of $2.45 per Common Share.
The Company may force the conversion of the principal amount of the then outstanding 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 $3.43 for any 10 consecutive trading days.
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The Debentures will be offered by way of a short form prospectus to be filed in all provinces of Canada. The Company intends to use the net proceeds from the Offering for capital expenditures for capacity expansion, working capital and general corporate requirements. In addition, the Company views the completion of the Offering as an important milestone in qualifying for graduation to the Toronto Stock Exchange alongside other leading mature licensed producers in the Canadian cannabis industry.
The Offering is expected to close on or about October 19, 2018. The Offering is subject to certain conditions including, but not limited to, the receipt of all necessary regulatory and stock exchange approvals, including the approval of the TSX Venture Exchange and the applicable securities regulatory authorities.
The securities being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons absent registration or an applicable exemption from the registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any State in which such offer, solicitation or sale would be unlawful.
Date: October 1, 2018
Source: Supreme