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Flowr aims to raise C$43.5 million in bought deal financing

The cannabis company said it intends to use the net proceeds to fund, in part, its acquisition of about the 80% equity interest in Holigen Holdings that it does not already own

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Flowr operates large-scale, GMP-designed facilities that utilize proprietary growing methods to produce high-quality cannabis for recreational and medicinal use

The Flowr Corporation (CVE:FLWR) (OTCQB:FLWPF) announced Monday that it is aiming to raise C$43.5 million via a bought deal financing agreement with a syndicate of underwriters.

The agreement stipulates that the underwriters led by GMP Securities LP will purchase, on a bought deal basis, 10,610,000 units of Flowr at C$4.10 per unit, according to a statement. 

The cannabis company intends to use the net proceeds from the offering to fund, in part, its acquisition of the about 80% equity interest in Holigen Holdings Limited that it does not already own, as working capital required for the construction and development of both Holigen's and Flowr’s cultivation and production facilities, and for general corporate purposes.

READ: Flowr says it is not proceeding with equity offering; shares soar

That said, each unit will be comprised of one common share and one-half of one common share purchase warrant. Each warrant will be exercisable to acquire one common share for 24 months following the closing of the offering at an exercise price of C$5 per warrant share.

In the event that the volume-weighted average trading price of the common shares for 10 consecutive trading days exceeds C$6.15, Flowr has the right to accelerate the expiry date of the warrants upon not less than notice of 15 trading days.

Flowr also said it has agreed to grant the underwriters an over-allotment option to purchase up to an additional 1,591,500 Units at the offering price, exercisable in whole or in part, at any time, on or prior to the date that is 30 days following the closing. If this option is exercised in full for additional units, an additional C$6,525,150 in gross proceeds will be raised pursuant to the offering, and the aggregate gross proceeds of the offering will be C$50,026,150.

The units will be offered by way of a short-form prospectus to be filed in all provinces of Canada, except Quebec. The offering is expected to close on August 8.

Shares resume after halt

Trading in the company’s shares in Canada and New York, which were halted earlier on Monday pending the news, were down 13.5% at C$4.17 following the resumption of trading at 12.30pm Pacific Time.

Flower shares had soared on Friday after the company announced that it had decided not to proceed with an equity offering to raise C$125 million for its acquisition of Holigen.

The Toronto-based firm builds and operates large-scale, GMP-designed facilities that utilize proprietary growing methods to produce high-quality cannabis for recreational and medicinal use.

 -- Updates with share price --

Contact the author: [email protected]

Follow him on Twitter @PatrickMGraham

Quick facts: The Flowr Corporation

Price: 2.1 CAD

TSX-V:FLWR
Market: TSX-V
Market Cap: $224.66 m
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Buds & Duds: Cannabis stocks roll up Wednesday, with freshly-named Mojave...

Buds today are Mojave Jane Brands Inc (CSE:JANE), The Flowr Corporation (CVE:FLWR) (OTCMKTS:FLWPF). Duds are Canopy Growth Corporation (TSX:WEED) (NYSE:CGC), Innovative Industrial Properties (NYSE:IIPR). 

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