Creso Pharma Ltd (ASX:CPH, OTCQB:COPHF) has secured commitments to raise A$2.5 million through the issue of secured convertible notes to SBC Global Investment Fund, consisting of one tranche with an aggregate purchase price of A$1.7 million in line with a convertible securities agreement.
The funds will be used to support marketing and sale of CPH’s products in Canada, Europe and the US, further advancement of Halucenex’s Phase II clinical trial, completion of pending M&A opportunities and general working capital.
Increased financial flexibility
“We are pleased to have commenced this relationship with SBC,” Creso Pharma CEO and managing director William Lay said.
“SBC has a successful track record of supporting ASX-listed growth companies and we are confident that this financing will allow us to continue progressing various opportunities being presented in the current macroeconomic environment.
“The new funding, alongside the rollover and extinguishment of existing debt provides the company increased financial flexibility as it pursues its strategic objectives.
“Creso remains well positioned to deliver shareholder value via ongoing penetration into the various, high growth, plant-based verticals that it currently resides in, and we look forward to providing additional updates to our shareholders as these opportunities materialise.”
Loan payoff and rollover
Creso has also executed a payoff letter to repay the entire balance owing to Obsidian GP, LLC of about US$1.1 million.
Under the terms of the payoff letter, CPH will make a cash payment of about US$485,000 from proceeds of the SBC secured notes.
The company will also issue 13,440,924 shares to Obsidian in satisfaction of the balance of the First Purchase Convertible Notes, after which the convertible notes and the agreement governing them will be cancelled.
In a similar vein, Creso has agreed to roll over the entire remaining balance (US$467,500) of La Plata Capital, LLC’s existing loan to the company’s subsidiary, Sierra Sage Herbs, LLC into Creso secured convertible notes.
Creso says this rollover results in an extension of maturity of the La Plata loan of six months, providing additional financial flexibility and strengthening the alignment between CPH and La Plata.