Acreage Holdings, Inc. (CSE:ACRG, ACRG.B.U))) (OTCQX:ACRHF, ACRDF))) announced on Wednesday it is seeking to secure $10 million in funding.
What Happened
The New York-based company said in a press release that it has entered into subscription agreements with certain institutional investors to issue units by way of a brokered private placement for $833.33 per unit.
Each unit will consist of the following:
- 1,000 principal amount of non-recourse unsecured convertible notes, reflecting a 16.67% original issue discount, convertible into that number of Class E subordinate voting shares of the company at the conversion price; and
- Fixed share purchase warrants, with each warrant exercisable to acquire one fixed share at the exercise price at any time on or before the date which is 60 months after the closing date of the offering.
The news comes on the heels of Canopy Growth Corporation's (TSX:WEED) (NASDAQ:CGC) announcement that the option to acquire all of the issued and outstanding Class E subordinate voting shares of Acreage Holdings has been exercised. That's in connection with Canopy's deal to acquire Acreage through its U.S. subsidiary, Canopy USA.
The Canadian cannabis giant also said on Tuesday that it exercised its option, in part, to acquire certain outstanding debt of Acreage. That's in connection with the option agreement dated November 15, 2022, among a wholly-owned subsidiary of Canopy Growth and the lender's party to Acreage's credit agreement dated December 2021, as amended on October 24, 2022, and April 28, 2023.
See also: Acreage's Q1 Revenue Slips 19% YoY But CEO Foresees 'Significant Growth Opportunities' As Canopy Growth Strategy Moves Forward
Why It Matters
Acreage said in a press release that it has been "unable to secure any such debt or equity funding, due to ongoing unfavorable capital markets conditions, the Company's high debt levels, its increasingly distressed financial condition and constraints under the fixed share arrangement agreement."
"The board of directors of the company determined it was in the best interests of the company to enter into the offering given the immediate working capital needs of the business, the distressed position concerning accounts payable, and the need to ensure that it would continue to meet ongoing payroll obligations.," Acreage continued.
What's Next
Closing of the offering is expected to occur on or about Thursday, June 6, 2024 and is subject to customary closing conditions.
Now read: Canopy Growth Expands U.S. Reach By Acquiring These Two Key Cannabis Brands
To learn more about cannabis stocks, join the Benzinga Cannabis Market Spotlight in New Jersey on June 17th! Grow your business, raise money and capitalize on the booming NJ recreational market. Don't miss this must-attend event in New Brunswick. Secure your tickets now. Very few spots are left. Use the code "JAVIER20" for 20% off!
