CannaRoyalty Corp. (CRZ) has announced that it has entered into an agreement with a syndicate of underwriters. Led by Canaccord Genuity Corp., the underwriters will, on a bought deal basis, purchase a total of 3,750,000 units of the company at a price of $4.00 CSD per unit, for a total value of $15 million.
One unit of the company consists of one common share and one half of one common share purchase warrant. A purchase warrant permits the holder to purchase one common share of the company, for up to a three year period following the closing of the deal, at a price of $5.50 per common share.
Each warrant is subject to adjustment in certain scenarios. If the volume-weighted average trading price of the common shares exceeds a price of $8.00 for a period of 15 days, the company may accelerate the exercise of the purchase warrant, no less than 21 days after the company provides warrant holders notice of the acceleration trigger.
Additionally, the underwriters have been granted an over-allotment option to purchase up to 562,500 units of the company, at a price of $4.00 per unit. The over-allotment option is exercisable 30 days following the closing of the deal. The underwriters have the ability to exercise the over-allotment options to acquire more warrants, common shares, or units.
“2018 is an exciting year for CannaRoyalty shareholders with California already operating under an adult-use recreational cannabis framework and Canada poised to make the transition later this year,” said Marc Lustig, CEO of CannaRoyalty, in a statement. “The Offering will enable us to continue to build on our leading platform of brands and supporting distribution and infrastructure assets in California through strategic acquisitions while driving penetration for our existing CR Brands product portfolio in the state.”
If the option is exercised, it would provide the company an additional $2.25 million, bringing the sum value of the deal to $17.25 million. The offering is expected to close on April 4, 2018.