Hydropothecary Announces $20 Million Bought Deal Private Placement of Convertible Debenture Units
TORONTO, June 27, 2017 /CNW/ – The Hydropothecary Corporation (“THCX” or the “Company”) (TSXV: THCX) (OTC: HYYDF) announced today that it has entered into an agreement with Canaccord Genuity Corp. and a syndicate of underwriters (the “Underwriters”) pursuant to which the Underwriters have agreed to purchase, on a bought deal private placement basis, 20,000 convertible debenture units of the Company (the “Convertible Debenture Units”) at a price of $1,000 per unit for aggregate gross proceeds of $20,000,000.
Each Convertible Debenture Unit will consist of $1,000 principal amount of 8.0% senior unsecured convertible debentures of the Company (the “Convertible Debentures”) and 313 common share purchase warrants (the “Warrants”) of the Company (the “Offering”).
The Company has also granted the Underwriters an option to purchase up to an additional 5,000 Convertible Debenture Units under the Offering at a price of $1,000 per unit at any time prior to the closing of the Offering. If the Underwriters’ option is exercised in full, the aggregate gross proceeds of the Offering will be $25,000,000.
The Convertible Debentures will bear interest from the date of closing at 8.0% per annum, payable semi-annually on June 30 and December 31 of each year and will mature on June 30, 2019 (the “Maturity Date”). The Convertible Debentures will be convertible at the option of the holder into common shares of the Company at any time prior to the close of business on the Maturity Date at a conversion price of $1.60 per share (the “Conversion Price”). Beginning on the date that is four months and one day following the closing date, the Company may force the conversion of all of the principal amount of the then outstanding Convertible Debentures at the Conversion Price on 30 days prior written notice should the daily volume weighted average trading price of the common shares of the Company be greater than $2.25 for any 15 consecutive trading days.
Upon a change of control of the Company, holders of the Convertible Debentures will have the right to require the Company to repurchase their Convertible Debentures, in whole or in part, on the date that is 30 days following the giving of notice of the change of control, at a price equal to 104% of the principal amount of the Convertible Debentures then outstanding plus accrued and unpaid interest thereon (the “Offer Price”). If 90% or more of the principal amount of the Convertible Debentures outstanding on the date of the notice of the change of control have been tendered for redemption, the Company will have the right to redeem all of the remaining Convertible Debentures at the Offer Price.
Each Warrant will be exercisable to acquire one common share of the Company for a period of two years following the closing date of the Offering at an exercise price of $2.00 per share, subject to adjustment in certain events, and subject to the Company’s right to accelerate expiry of the Warrants if, beginning on the date that is four months and one day following the closing date, the closing trading price of the common shares of the Company equals or exceeds $3.00 for any 15 consecutive trading days.
The Convertible Debenture Units shall be offered and sold by private placement (i) in Canada to “accredited investors” within the meaning of National Instrument 45-106 and other exempt purchasers in each province of Canada, as agreed upon by the Company and the Underwriters, (ii) in the United States to Qualified Institutional Buyers (within the meaning of Rule 144A) in compliance with applicable United States federal and state securities laws, and (iii) outside Canada and the United States on a basis which does not require the qualification or registration of any of the Convertible Debentures or Warrants comprising the Convertible Debenture Units. The Convertible Debentures and the Warrants comprising the Convertible Debenture Units and any common shares of the Company issuable upon conversion or exercise thereof, as applicable, will be subject to a statutory hold period lasting four months and one day following the closing date.
The Company intends to use the net proceeds of the Offering for expansion of its production facility in Gatineau, Québec and for working capital and general corporate purposes. Closing of the Offering is expected to occur on or about July 13, 2017. The Offering is subject to certain conditions including, but not limited to, the receipt of all necessary regulatory and stock exchange approvals, including the approval of the TSX Venture Exchange.
About The Hydropothecary Corporation
The Hydropothecary Corporation is an authorized licensed producer and distributor of medical cannabis licensed by Health Canada under the Access to Cannabis for Medical Purposes Regulations (Canada). Hydropothecary provides naturally grown and rigorously tested medical cannabis of uncompromising quality. Hydropothecary’s branding, cannabis product offering, patient service standards and product pricing are consistent with THCX’s positioning as a premium brand for a legal source for medical cannabis within this new marketplace. In addition to medical cannabis production and sales, Hydropothecary explores various research and development opportunities for cannabinoid extracts, drugs and combinatory chemistry. In addition, the company is investigating the development and patenting of novel technologies related to medical cannabis, as well as the import and export of medical cannabis.