Sugarbud Announces $2.4M Marketed Public Offering Of Secured Convertible Debenture Units

Sugarbud Craft Growers Corp. SBUDF SUGR has entered into an agreement with Research Capital Corporation, acting as sole agent and sole bookrunner, in connection with a marketed public offering of convertible debenture units at a price of $1,000 per debenture unit for aggregate gross proceeds to the company of up to $2.4 million, which is expected to include management participation.

Each debenture unit will consist of: one 12.0% secured convertible debenture and 719 common share purchase warrants of the company. Each Warrant will entitle the holder to purchase one common share of the company at an exercise price of $1.39, for a period of 5 years following the closing of the offering.

The debentures will bear interest at a rate of 12.0% per annum from the date of issue and will be paid in-kind in common shares on a quarterly basis based on the daily volume weighted average trading price for the 20 trading days preceding the date of interest payment. The debentures will mature 5 years from the closing of the offering. The principal amount of each debenture will be convertible into common shares at the option of the holder at a conversion price equal to $1.39.

The obligations of the company under the debentures and the notes will be secured by a security interest in the company's cannabis cultivation facility in Stavely, Alberta and will be subordinate in priority and ranking to current senior indebtedness of the company, including any additional credit extended pursuant to such indebtedness, or the assignment, assumption, transfer or replacement of existing indebtedness with any other form of credit arrangement and any capital equipment financing in respect of the HVAC, lighting and other equipment at the Stavely Facility.

The net proceeds from the offering are intended to be used for additional processing and production equipment purchases, facility upgrades and working capital and other corporate purposes.

Upon a change of control of the company, holders of the debentures and notes will have the right to require the company to repurchase their debentures and notes, in whole or in part, on the date that is 30 days following the giving of notice of the change of control, at a price equal to 104% of the principal amount of the debentures and notes then outstanding plus accrued and unpaid interest thereon. If 90% or more of the principal amount of the debentures and notes outstanding on the date of notice of the change of control have been tendered for redemption, the company will have the right to redeem all of the remaining debentures and notes at the offer price.

The closing of the offering is expected to occur on or about April 6^th, 2022 and is subject to certain conditions including, but not limited to, the execution of an agency agreement and the receipt of all necessary regulatory approvals, including the approval of the TSXV.

In connection with the offering, the company intends to file a prospectus supplement to the company's short form base shelf prospectus dated February 26, 2021, with the securities regulatory authorities in each of the provinces of Canada, except Quebec.

John Kondrosky president & CEO of Sugarbud Craft Growers Corp, will be one of the speakers at the Benzinga Cannabis Capital Conference in Miami. There’s still time to sign up for the event that will host many top names in the cannabis industry. Click here for more info.

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