Aurora Cannabis Books C$20.6 Million Gain on TGOD Investment

Last Friday after the close, The Green Organic Dutchman  (TSX: TGOD) (OTC: TGODF) reported that strategic partner and investor Aurora Cannabis (TSX: ACB) (OTC: ACBFF) had opted to not exercise warrants that would have allowed it to boost its stake by 8% at a 10% discount to the stock price. The warrants were originally set to expire on September 2nd, but the two parties agreed to extend the expiration to October 12th.

Aurora and TGOD had struck a deal in early January, with Aurora agreeing to buy 33.33 million units at C$1.65, picking up common shares along with 16.67 warrants at C$3.00. Aurora also gained the right to purchase up to 20% of the company’s production from its two pending facilities in Ontario and Quebec. Beyond the 8% option that Aurora declined to exercise, the company could have bought additional shares that would have given it control of the company upon TGOD attaining certain milestones. After the purchase in January, Aurora invested in the TGOD IPO, picking up an additional 6.34 million shares at C$3.65 along with 3.17 million warrants at C$7.00.

Not only did Aurora choose not to invest further in TGOD, but it also moved to reduce its holdings. According to filings at www.sedi.ca, Aurora disposed of over 5 million shares last Wednesday and Thursday that were disclosed after the news that the company had let the option expire unexercised:

The total proceeds of C$28.977 million at a an average sales price of C$5.732 represented a profit of C$20.63 million, based on the first purchase at C$1.65. The company still maintains all 19.84 million warrants as well as 34.62 million shares.

TGOD’s stock has been under pressure lately but still trades at a premium to the May IPO price of C$3.65:

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Exclusive article by Alan Brochstein, CFA
Alan Brochstein, CFA
Based in Houston, Alan leverages his experience as founder of online communities 420 Investor, the first and still largest due diligence platform focused on the publicly-traded stocks in the cannabis industry. With his extensive network in the cannabis community, Alan continues to find new ways to connect the industry and facilitate its sustainable growth. At New Cannabis Ventures, he is responsible for content development and strategic alliances. Before shifting his focus to the cannabis industry in early 2013, Alan, who began his career on Wall Street in 1986, worked as an independent research analyst following over two decades in research and portfolio management. A prolific writer, with over 650 articles published since 2007 at Seeking Alpha, where he has 70,000 followers, Alan is a frequent speaker at industry conferences and a frequent source to the media, including the NY Times, the Wall Street Journal, Fox Business, and Bloomberg TV. Contact Alan: Twitter | Facebook | LinkedIn | Email

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