TerrAscend issued 13,646 units at an issue price of US$2,000 per unit.
TerrAscend Corp. (CSE: TER), a leading North American cannabis operator, today announced the closing of the first tranche of its previously announced non-brokered private placement issuing 13,646 Units at an issue price of US$2,000 per Unit resulting in proceeds to the Company of US$27.3 million.
Each noninterest-bearing Unit is comprised of one convertible preferred share in the capital of the Company and one convertible preferred share purchase warrant. The Convertible Preferred Shares convert to 1,000 common shares at an issue price of US$2.00 per common share and the economic equivalent in proportionate voting shares, for U.S investors. Each Warrant will entitle the holder thereof to purchase one Convertible Preferred Share in the capital of the Company at an exercise price of US$3,000 per share, or the equivalent of US$3.00 per common share, as adjusted from time to time pursuant to the terms of the Warrants, at any time prior to 5:00 p.m. (Toronto time) on May 22, 2023.
Subject to the satisfaction of customary closing conditions, the Company currently anticipates a second closing of approximately USD$3.8mm on or around May 29, 2020. For further details concerning the Offering, please refer to the Company's news release dated May 19, 2020.
As previously announced, the initial closing included a US$20 million lead order from funds advised by JW Asset Management, LLC, affiliates of Mr Jason Wild, Chairman of TerrAscend. This investment may, therefore, constitute a "related party transaction" within the meaning of Multilateral Instrument 61-101 – Protection of Minority Shareholders in Special Transactions. TerrAscend relied on exemptions from the formal valuation and minority approval requirements of MI 61-101 contained in Section 5.5(a) and Section 5.7(1)(a), respectively, on the basis of the fair market value of the transaction being not more than 25% of the market capitalization of TerrAscend. The terms of the Offering were unanimously approved by the disinterested members of TerrAscend's Board of Directors, with Mr Wild abstaining in light of his disclosed interest in the transaction. TerrAscend was not in a position to file a material change report 21 days prior to closing because the terms of the Offering and insider participation were not yet established by that time, and TerrAscend elected to expedite the closing of the Offering for sound business reasons.
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