C21 Investments To Issue $4.0 Million In Convertible Debt To Fund Dispensary Purchase

C21 Investments (CSE: CXXI) is looking to expand its Nevada-based operations, however it must raise debt to do so.

The firm this morning indicated that it has entered into an agreement for its Nevada subsidiary, Silver State Relief, to acquire a 6,500 square foot retail cannabis dispensary in Southern Reno, Nevada, from that of Deep Roots Harvest. The purchase comes with a price tag of US$3.5 million, which is to be paid in cash. US$100,000 of that figure is due upon signing, with the remainder due on closing.

Historical financial performance of the dispensary was not provided, nor was any form of price multiple for the price paid.

To fund the acquisition, C21 is looking to issue C$4.0 million in secured convertible debentures, with each unit being pegged at C$1,000. Each unit is to come with 1,000 detachable common share purchase warrants priced at $0.55 per share, and an expiry 30 months from the date of issuance. The debt meanwhile is convertible at $0.45 per share, is due 30 months from the date of issuance, and bears interest at 12.0% per annum, payable quarterly in cash.

Funds from the debt offering are to be used to fund the purchase of the dispensary.

“We plan to integrate and rebrand this dispensary, purpose-built in 2021, under the Silver State Relief banner. With the dispensary’s desirable location in a high traffic, flourishing area of Southern Reno, we anticipate strong revenue growth from this acquisition, along with the added benefit of allowing us to expand the portion of our cultivation capacity sold through our retail channel,” commented Sonny Newman, CEO of C21.

The asset purchase remains subject to regulatory approvals.

C21 Investments last traded at $0.415 on the CSE.

Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.