Emerald Health Announces Another Financing Below Market Rates, Dilutes Sciences Ownership

Emerald Health Therapeutics (TSXV: EMH) is raising money less than a month after it closed its previous financing. This time however, the price per unit is almost half of what it was just mere weeks ago. The issuer this morning announced its intent to raise anywhere from $1.5 to $4.5 million in the latest financing announced by the firm.

The raise will see units sold at a price of $0.29 each, which contains a common share as well as a full warrant. Each warrant will have an exercise price of $0.385 (which is actually a half penny above the last trading price of the equity prior to financing announcement) and be valid for an incredible period of five years from the date of issuance, demonstrating just how bad of a financial position Emerald has found itself in. The warrants have an acceleration clause however, with the company able to accelerate the expiry if the equity maintains a volume weighted average price of $0.75 for a period of ten days.

Interestingly, the firm is diluting its ownership of Emerald Health Sciences to get the raise completed. Sciences, along with certain directors and officers, as well as a control person of the company have agreed to commit at least $1.5 million for the current raise. Of this, $1,359,502 will be committed to by Emerald Health Sciences. Within the same news release, Emerald also announced a secondary offering, whereby a single investor will invest – you guessed it – $1,359,502 in Emerald Health Sciences to increase their stake in the firm.

Finally, as a means of improving its balance sheet, Emerald Health Sciences has agreed to allow the issuer to settle $3.0 million in debt owed to the partially owned subsidiary. As a result, Emerald Health Therapeutics will issue Sciences 10,389,611 common shares of its equity at a price of $0.29 per share. The end result is that the partially owned subsidiary will actually own 23.4% of the public issuer in an absolute mess of a business structure.

Emerald Health Therapeutics last traded at $0.38 on the TSX Venture.

Information for this briefing was found via Sedar and Emerald Health Therapeutics. 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.