New Cannabis Ventures Post Re: Recent APH RaiseClick Here For Article Interesting Tim-Bits:
As we reported earlier this week, the big story for the cannabis capital markets has been a flood of new issues out of Canada. The largest deal, announced on Tuesday morning, is the Aphria (TSX: APH) (OTC: APHQF) offering of over 11mm shares at C$7.25 (C$80mm, with the potential to expand to C$92mm), which represented a 8.5% discount to the close on Monday.
One question investors may have had is why the big capital raise. The company didn’t really address this in the press release, where it offered a generic explanation:
The Company intends to use the net proceeds from the Offering for the development of infrastructure (including the purchase of capital and other equipment), the expansion of its geographic footprint in Canada and other strategic investments, and for general working capital purposes.
Today, though, Aphria filed a preliminary short form prospectus that provided substantial detail regarding the use of proceeds. After a 5% underwriting fee, the $76mm, which represents 26% of the balance sheet equity as of 8/31, will be used for:
Construction or acquisition of domestic production facilities, if required to support provincialism within the Cannabis Act, construction or acquisition of domestic retail facilities for distribution of cannabis under the Cannabis Act, in those provinces which may allow it, strategic investments to enhance the Company’s product offerings or cultivation capabilities, international strategic investments, including direct investment or construction or acquisition of production facilities in new markets, located in federal legal markets, all related to cannabis production facilities.
It further explained four specific reasons:
- It may need to set up additional facilities in other provinces in future adult recreational markets. (Interesting idea, very forward thinking! Oh, wait, hasn't another LP been planning in this way, for like, two years?)
- Its membership in the “Cannabis Co-operative” may require capital contribution. This organization includes more than a dozen LPs and is focused initially on operating retail distribution in Alberta (That's cute! Hope it works out for them!)
- It may develop a second 100-acre site in its hometown of Leamington (better get goin', times a wastin'!)
- It may pursue “attractive international investment opportunities outside of the United States”. (Wait, you mean there are opportunities outside of Canada? GTFO.)
Anyhoo, looks like APH continues to be the industry pioneer! So glad to be on board!