MedReleaf $100mm IPO Priced at $9.50

After initially filing its preliminary prospectus in April, ACMPR licensed producer MedReleaf (TSX: LEAF) has filed the final prospectus for its $100.7mm initial public offering and secondary offering, selling shares at $9.50 in a syndicate led by GMP Securities as the underwriter that also included Clarus Securities, Canaccord Genuity, Cowen and Company, Eight Capital and PI Financial. This is the second TSX IPO for a Canadian LP, with CanniMed Therapeutics (TSX: CMED) (OTC: CMMDF) having conducted its IPO in December. Canopy Growth (TSX: WEED) (OTC: TWMJF) and Aphria (TSX: APH) (OTC: APHQF) trade on the TSX along with the Horizons Medical Marijuana Life Sciences ETF (TSX: HMMJ) (OTC: HMLSF). The pricing was at the lower end of the $9.50-10.50 range shared earlier this month.

The company, which produced sales in excess of $30mm in the first three quarters of its Fiscal 2017 year, is selling 8.49mm of the 10.6mm shares, with the balance being sold by prior investors, including “Zola Finance Inc. (a corporation controlled by Tarik Ouass),
MENA Investment Network Inc. and AJA Holdings 2013 Inc. (corporations each controlled by Stephen Arbib), Rayray Investments Inc. (a corporation controlled by Raymond Leach), Tikun Olam Ltd. (a corporation controlled by Tsachi Cohen), Baronford Heights Limited (a corporation controlled by Theodore Wine), Eva Fashion Limited (a corporation controlled by Vadim Soiref), MedMen Opportunity Fund, LP and Neil Closner (collectively, the “Selling Shareholders”) .” The underwriters stand to earn approximately 6% of the gross proceeds, or $5.892mm. The offering also includes an over-allotment option that could increase the size by 1.59mm shares, with 40% to be sold by the company and 60% by the selling shareholders with 30 days of closing, which is expected to take place on June 7th.

The company intends to use the proceeds to build out its facility in Bradford, which was recently licensed by Health Canada, to expand its existing manufacturing capacity and to conduct clinical research and product development. Directors and officers are subject to a 180-day lock-up on half of their holdings and a year on the balance.

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Breaking News by Alan Brochstein, CFA
Alan Brochstein, CFA
Based in Houston, Alan leverages his experience as founder of online community 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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