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Canopy Growth Corporation (TSX:WEED) (NASDAQ:CGC) announced on Thursday that it has entered into subscription agreements with certain institutional investors in a private placement offering of 8,158,510 units at $4.29 per unit for aggregate gross proceeds of roughly $35 million.
Each unit will be comprised of the company's one common share and one series A common share purchase warrant or one series B common share purchase warrant, with each warrant entitling the holder to acquire one common share from the company at $4.83.
The series A warrants will be exercisable immediately following the offering’s closing for five years. The series B warrants will be exercisable for five years as well, commencing on the date that is six months following the closing of the offering, the company said in a press release.
See also: Cannabis Giant Canopy Announces $30M Private Placement, Here’s Where The Money Will Go
With the offering, the Ontario-based company seeks to further strengthen its financial position by paying down debt. Canopy also said it will use proceeds for working capital and other general corporate purposes.
In its second-quarter earnings report announced in November, Canopy said it reduced overall debt by $364 million to $681 million during the period, resulting in a total debt reduction of approximately $1 billion since the start of fiscal 2023.
The company also reported an additional cost reduction of $54 million during the second quarter, bringing the total reduction to $226 million since the beginning of fiscal 2023. At the time, the company said it was going for a cost reduction of $270 million to $300 million by the end of fiscal 2024.
The closing of the private placement under the subscription agreements is expected to occur on or about Friday, Jan. 19, 2024.
Canopy's shares traded 2.78% lower at $4.55 per share during the pre-market session on Thursday morning.
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