Vancouver-based Aurora Cannabis Inc. (ACBFF) announced that it has entered into an agreement with a syndicate of underwriters, led by Canaccord Genuity Corp. in which Canaccord Genuity has agreed to purchase, on a bought deal basis, 200,000 convertible debentures at a price of $1,000 per convertible debenture, for gross proceeds of $200 million. The deal is expected to close on or about January 31.
“This is the largest bought deal financing to date in the Canadian cannabis sector, and represents a tremendous vote of confidence in Aurora’s business strategy, consistent execution and accretive deployment of resources,” said Terry Booth, CEO. “Our unparalleled balance sheet, capital markets strength, and consistently decreasing the cost of capital position us ideally to execute on multiple attractive opportunities in Canada and around the world.”
Aurora has also granted Canaccord Genuity an option to purchase up to an additional 30,000 convertible debentures for additional gross proceeds of $30 million. If the option is exercised, the total deal will be $230 million.
A Deal With The Green Organic Dutchman
In addition to the bought deal, Aurora Cannabis (ACBFF) and private company The Green Organic Dutchman Holdings Ltd. (TGOD) announced that the companies have completed a definitive agreement covering a strategic investment in TGOD by Aurora, as well as a supply contract. Aurora will acquire a 17.62% interest in TGOD through a private placement consisting of 33,333,334 units, priced at $1.65 per unit. The total gross proceeds will be $5 million.
As part of the agreement, the companies will enter into a supply contract, providing Aurora with the right to purchase up to 20% of TGOD’s annual production of organic cannabis from TGOD’s Ancaster and Valleyfield facilities. According to the company statement, “Aurora anticipates being able to procure in excess of 20,000 kg per annum of premium organic products once TGOD`s Valleyfield and Ancaster facilities are completed and at full capacity. The supply contract provides Aurora with the right to purchase up to 33% of TGOD’s production at the two facilities if Aurora increases its ownership interest to 31%.”
Combining Efforts For Facility
In addition to the supply agreement, TGOD will be constructing a greenhouse facility, similar to the Aurora Sky facility, at Valleyfield in Quebec, where TGOD owns a 75-acre property. The facility has been designed by ALPS (Aurora Larssen Projects Inc.), Aurora’s greenhouse design and consulting subsidiary. It will be one of the largest purpose-built cannabis facilities measuring 820,000 square feet.
The statement said that the new TGOD facility will benefit from the latest greenhouse technology as implemented at Aurora Sky. Furthermore, the facility will benefit from some of the lowest cost power in Canada at under $0.04 per kWh. ALPS will assist TGOD with the start-up of its facility, leveraging Aurora’s deep, industry-leading large-scale cannabis cultivation experience. Management anticipates completion of the Valleyfield facility by the fourth calendar quarter of 2018.