By Stephanie N. Rotondo
Seattle, June 27 – Hydropothecary Corp. announced a C$20 million bought deal salen of convertible debenture units led by Canaccord Genuity Corp. on Tuesday.
There is a C$5 million over-allotment option, according to a press release.
Each unit holds C$1,000 principal amount of 8% senior unsecured convertible debentures due 2019 and 313 common share purchase warrants.
The debentures are convertible at any time at a conversion price of C$1.60 a share, a slight premium over the June 26 closing share price of C$1.58.
After four months and one day, the company can force a conversion should the stock’s volume weighted average price exceed C$2.25 for 15 consecutive days.
Interest on the debentures is payable semi-annually.
The convertibles are putable upon a change of control at 104% of par plus accrued interest. If 90% or more of the issue is outstanding after 90 days’ notice of the change of control, the company can call the issue at par.
As for the warrants, they are exercisable for two years at a strike price of C$2.00 each. The warrants may be accelerated if the stock trades at a VWAP at or above C$3.00 for 15 days.
Proceeds will be used for the expansion of a production facility in Gatineau, Québec and for working capital and general corporate purposes.
Hydropothecary is a Toronto-based licensed producer and distributor of medical cannabis.
| Issuer: | Hydropothecary Corp.
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| Securities: | Convertible debenture units
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| Amount: | C$20 million
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| Greenshoe: | C$5 million
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| Bookrunner: | Canaccord Genuity Corp.
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| Price: | C$1,000 per unit
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| Pricing date: | June 27
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| Settlement date: | July 13
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| Stock symbol: | TSXV: THCX
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| Distribution: | Private placement in Canada, Rule 144A in United States
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| Stock price: | C$1.58 as of June 26 close
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| Market capitalization: | C$77.592 million
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| Convertible debenture
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| Coupon: | 8%
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| Maturity: | June 30, 2019
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| Par: | C$1,000
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| Initial conversion price: | C$1.60
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| Provisional call: | Forced conversion after four months and one day from issuance if the stock’s VWAP exceeds C$2.25 for 15 consecutive days.
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| Call options: | Within 90 days of a change of control notice at par plus accrued interest
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| Put options: | Upon a change of control at 104% of par plus accrued interest
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| Warrants
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| Amount: | 313 warrants per unit
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| Strike price: | C$2.00
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| Expiration: | 2019
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