Organigram Files Half A Billion Dollar Offering

Organigram Holdings Inc. (TSX: OGI) (NASDAQ: OGI) announced after the market close on Thursday that it has filed a preliminary short form base shelf prospectus with the securities commissions in each of the provinces and territories of Canada. The Base Shelf Prospectus will allow Organigram to qualify the distribution of up to C$500 million of common shares, preferred shares, debt securities, subscription receipts, warrants, and units during the 25-month period that the Base Shelf Prospectus remains effective. Shares were falling slightly in early trading.

In May, Organigram announced that Greg Engel was stepping away from his role as CEO and director. Peter Amirault, current Board chairman, was appointed by the Board to serve as executive chair on an interim basis until a new permanent CEO was appointed.

In April, Organigram said it had repaid all outstanding balances (approximately $58.5 million) under its credit agreement with BMO and a syndicate of lenders which would result in annual interest savings of $2.7 million. At that time it had $232 million in cash and short-term investments.

The specific terms of any future offering of securities will ‎be established in a prospectus supplement filed with the applicable Canadian and US regulatory authorities. The Base Shelf Prospectus when final and effective will provide flexibility for financing options to pursue the company’s objectives. A corresponding shelf registration statement on Form F-10 has been filed with the United States Securities and Exchange Commission but is not yet effective.

In April, Organigram reported revenue for the second quarter ending February 28, 2021, fell 29% to $19.2 million from last year’s $27.3 million for the same time period.  The company attributed it to significantly lower wholesale revenue and lower average selling prices. The company said that last year’s better revenue was due to higher wholesale revenues that were opportunistic in nature and primarily to a single licensed producer.

The company went on to say that the net revenue was also lower due to missed sales opportunities, as certain employees tested positive for COVID-19 which resulted in a significant number of facility staff having to isolate. Organigram said it was unable to fulfill certain demands for its products totaling approximately $7 million in the quarter due to production and processing constraints. The revenue was also negatively impacted by certain provincial boards aiming to manage lower levels of inventory such as Alberta.

The net losses grew by 872% to $66 million from last year’s net loss of $6.8 million. The company said this was largely due to the negative change in the fair value of the derivative warrant liabilities and the negative gross margin in the second quarter.

Debra Borchardt

Debra Borchardt is the CEO, Co-Founder, and Editor-In-Chief of GMR. She has covered the cannabis industry for several years at Forbes, Seeking Alpha and TheStreet. Prior to becoming a financial journalist, Debra was a Vice President at Bear Stearns where she held a Series 7 and Registered Investment Advisor license. Debra has a Masters degree in Business Journalism from New York University.


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