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On the heels of Mettrum (TSXV:MT) (OTC:MQTRF) closing its $8.6mm stock sale, OrganiGram (TSXV:OGI) (OTC:OGRMF) has announced a $9mm “bought deal” through a group of underwriters led by Dundee Securities that also includes GMP Securities L.P., Mackie Research Capital Corporation and PI Financial Corp. The underwriters are offering 8.58mm Units, which include a share of common stock and a warrant to buy a half-share of common stock at $1.40 within 18 months following the closing of the transaction, at $1.05 per unit. The company raised capital in late 2015 in a non-brokered private placement using a similar structure, with the units priced at that time at $1.04.
The underwriters have an option to increase the size of the offering by an additional 1.287mm units, which, if exercised, would increase the size of the deal to $10.36mm gross proceeds. OrganiGram will be issuing a short-form prospectus that will provide details such as the underwriters’ discount for the deal, which is expected to close on June 2nd.
The company intends to use the proceeds for capital expenditure as well as working capital and general corporate purposes. In a recent interview with 420 Investor, CEO Denis Arsenault stated that the company could use internal resources to increase capacity to support $25mm in annual sales, but that the 5.5 acre site in Moncton, New Brunswick could produce annual sales of $150mm if fully developed.
OrganiGram’s stock has recovered sharply from the lows in October, but the deal was priced well below recent highs and the $1.23 closing price from 5/10:
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