Canopy Growth Corp CGC shares are trading lower Monday after the company announced a private placement of up to $50 million.
What Happened: Canopy said it entered into subscription agreements with institutional investors for a private placement of nearly 23 million units at a price of $1.09 per unit. Each unit will consist of one common share and one warrant, entitling the holder to acquire one common share for $1.35 at any time within five years of issuance.
The private placement is expected to result in gross proceeds of approximately $25 million. Investors have the option to acquire up to an additional 22,929,468 shares at any time on or before Nov. 2, which means proceeds could climb to as much as $50 million.
Canopy intends to use the additional liquidity for working capital and general corporate purposes. The offering aims to further strengthen the company's financial position.
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CGC Price Action: Canopy Growth shares were down 12.6% at $1.17 at the time of publication, according to Benzinga Pro.
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