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Medipharm Labs Corp T.LABS

Alternate Symbol(s):  MEDIF

MediPharm Labs Corp. is a Canada-based full-service pharmaceutical company. The Company specializes in the development and manufacture of purified, pharmaceutical-quality cannabis concentrates, active pharmaceutical ingredients (API) and advanced derivative products. Through its wholesale and white label platforms, the Company formulates, develops (including through sensory testing), processes, packages and distributes cannabis extracts and advanced cannabinoid-based products to domestic and international markets. It also provides GMP flower sourcing, packaging, and distribution services for select international clients. In addition, it cultivates cannabis to sell as dried flower, pre-roll and other cannabis products for the adult use and medical markets. It also sells metered dose inhalers and aerosol sublingual sprays. Through Harvest Medicine, it provides clinic services to Canadian patients requiring medical cannabis education and prescriptions.


TSX:LABS - Post by User

Bullboard Posts
Post by Finalsayon Jun 09, 2020 1:46pm
282 Views
Post# 31129577

Consensus - Financing

Consensus - FinancingJust looking to gage the reaction of the financing deal LABS signed yesterday. I havent personally been analyzing stocks for long enough to know what the common response (or if there is such a thing as a common response) is to announcement of this kind. Obviously there are some positive takeways. There is the obvious institutional interest (or a very wealth private individual), and the fact its an unsecured note (suggests the creditor is okay ot atleast optimistic about LABS, its financial position and its prospects). The potential opportunities (and returns) for the cash on hand now available should return more than the 7.5% annual interest costs and 5.5% flat fee. Deal could be potentially dilutive if interest payments are made with stock at 90% of market price, unless again that cash is used very productive to outweigh those dilutive effects. Obviously the uncertainty surrounding their financial statements doesn't help score this financing as a resounding positive. Is there cash flows stress at LABS, and if so, how significant is it? I'm not familiar enough with these types of financing deals or with LABS' financials to comment or grade the deal (very good/good/bad/etc.). I did like the comment on another post here asking about why the unnecessarily complicated financing? If someone could articulate the incentive of the two parties (Roth Capital's incentives are clear - the more complicated the better so they can continue to rake in these large cash fees for highly specialized and overly-complicated deals to keep themselves relevant) that would be helpful. I'm guessing a straight equity purchase was off the table as it wasn't attractive enough to the financier. Convertible notes with escrow qualifications, decent annual interest return and warrants at pretty attractive prices sounds like a pretty good deal to me. To compete with that you would need to find the equivalent value in terms of the current share price, which would likely of been well below current shares prices, and which would effectively alienate management even more from the shareholders. I'm assuming this complex financing deal avoids the shareholder blowback from a below market equity purchase despite this deal being equivalent in value to the theoretical straight equity purchase. I'm also not familiar with some of the accounting gymnastics you can do with more complex arrangements as compared to the more simplified equity purchase, which could provide some extra management flexibility in reporting company financials. 
Bullboard Posts