The Green Organic Dutchman Ltd. (TGODF) entered into an engagement letter with Canaccord Genuity Corp. on behalf of a syndicate of underwriters including PI Financial Corp. and Mackie Research Capital Corporation to purchase 3,910,000 special warrants of the company, on an bought deal basis. The price per special warrant is $6.40 generating an aggregate gross proceed of approximately C$25 million. The offering is expected to happen on June 26, 2018.
The warrants will be made up of one common share and one-half of one common share purchase warrant. Each warrant will entitle the holder to purchase one common share at an exercise price of c$9.50 for a period of 36 months from the date of closing. The stock was lately trading at C$6.99 on the Toronto Exchange, a sharp increase from its initial pricing of C$3.65 when the company went public in April.
The swift ascent in pricing grabbed the attention of the Investment Industry Regulatory Organization of Canada (IIROC) who asked the company to comment on the recent increase in the trading volume and price of the shares on the TSX Exchange. TGOD said it was “Not aware of any material change in its business or affairs that has not been publicly disclosed and that would account for the recent increase in volume or price.”
However, it did include a tantalizing bit of detail saying, “The company is in advanced negotiations with multiple international companies, one of which is a completely vertically integrated company. No definitive agreement has been entered into at this time and there can be no assurance that a transaction will be consummated.”
TGOD said that it intends to use the net proceeds to fund strategic investments and international expansion opportunities. So, it seems that a big deal is in the making and the word is leaking out. Investors that weren’t able to capitalize on the Constellation Brands (STZ) investment in Canopy Growth (CGC) or the MedReleaf/Aurora deal, look eager to get the jump on this one.