Australis Capital Inc (CSE:AUSA, OTCQB:AUSAF)., which is doing business as Audacious, revealed that it has struck a term sheet with LDA Capital LLC (LDA) for committed funding in tranches of up to $20 million.
In addition, the community-based cannabis company announced it has closed the first tranche of a non-brokered private placement for proceeds of around $3.1 million.
In a statement, Australis Capital CEO Terry Booth said: "We are very pleased with the response to both our private placement and the work done by DelMorgan securing the funding. The proceeds of the funding will go predominantly towards growth initiatives, including immediately scaling up our ability to deliver product into the Nevada and California markets where our brands are finding great resonance with consumers.”
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He added: “The tranche-based nature of the LDA instrument provides us with the opportunity to withdraw funds at higher valuations as we continue to execute on our business plan.”
Booth said he expected the funding to help the company “accelerate development”.
“I am also pleased and am proud of the significant participation of company insiders, including senior management, board members and employees, reflecting our belief in the upside of the company," said Booth.
Under the terms of the agreement with LDA, Audacious has the right to draw up to $10 million in tranches, with an option to draw down up to $20 million after completion of the first five tranches of $2 million each, with certain provisions for accelerated, or larger tranches.
The funding is structured as a convertible bond with a zero coupon, issued at a 15% discount to the 5-day volume-weighted average price (VWAP) on the date a tranche is exercised. Maturation of the instrument is 24 months, said the company.
Rob Delgado, Chairman of DelMorgan & Co., the strategic transaction advisor to Audacious, described the capital raise as “transformative” and “an important step” in Audacious realizing its vision of becoming “a leading multi-state operator in the US market.”
According to DelMorgan CEO Neil Morganbesser, the capital raise it is also indicative of a broader trend the firm is seeing of “increased interest from institutional investors looking to identify and support future winners in the cannabis sector."
Audacious also closed the first tranche of its private placement of units at a price of $0.17 per unit. In the first tranche, the company issued 18,428,584 units for gross proceeds of $3.13 million.
Each unit consists of one share and one share purchase warrant, and each warrant is exercisable into one additional share at an exercise price of $0.35 per warrant share on or before December 8, 2023.
The warrants have an accelerated option clause noting that if the daily VWAP of the shares is greater than $0.50 for 10 consecutive trading days on the Canadian Securities Exchange, then the warrants must be exercised within a 30-day period starting on the date notice is provided for the same, or failing which, the warrants shall expire as null and void.
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
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