Arizona-based, multistate cannabis company Harvest Health & Recreation Inc HRVSF announced Monday that it closed the first tranche of its brokered private placement for gross proceeds of $100 million.
What Happened
The company offered unsecured convertible debentures at a price of $1,000 per unit. The debentures have a maturity date of May 9, 2022, and bear interest at 7 percent per year. The interest is paid semi-annually on June 30 and December 30.
At the option of the holder, the debentures can be converted into subordinate voting shares at a conversion price of $11.42 per share. The buyer of the debentures also received around 3.5 million warrants to acquire one share of Harvest Health & Recreation at CA$18.17 ($13.48) each for a period of 36 months from the issue date.
Why It's Important
Harvest said it plans to use the net proceeds from the offering to fund working capital and for general corporate purposes.
"This is a particularly acquisitive time in the industry and access to significant capital with favorable terms is crucial to long-term success," CEO Steve White said in a statement.
What's Next
In addition, Harvest Health & Recreation said it entered into an investment agreement with an institutional investor and an agency agreement with Eight Capital. Under the terms of the deal, Eight Capital agreed to sell to the institutional investor up to four additional tranches of 100,000 convertible debentures, resulting in additional gross proceeds of up to $400 million.
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