Medipharm Secures $37.8 Million In Convertible Notes

Medipharm Labs (TSX: LABS) this morning announced that it has secured aggregate gross proceeds of $37.8 million via a private placement conducted with an institutional investor. The placement has taken the form of two separate offerings, one of which is a convertible note, while the other is a subscription receipt.

The first portion of the financing consists of $18.9 million going towards a $20.5 million unsecured convertible note. The note also contains a warrant to purchase 3,601,427 common shares, at an effective price of $2.28 per share until October 9, 2023. The convertible notes also convert at a price of $2.28 per share, and have an original issue discount of 7.75%.

The notes amortize via bi-monthly installment payments of $320,000, payable in the form of common shares at a 10% discount of the market price of the equity based on a 5 day volume weight average price.

The other half of the funds raised, $18,911,250, has been placed into escrow in relation to a subscription receipt that enables the holder to receive a second $20.5 million convertible note along with an additional warrant to purchase 3,601,427 common shares. These funds will be released upon shareholder approval. Once granted, the funds will convert automatically into what is being called the second note. It was not indicated what percentage of the company the investor would hold upon full conversion.

Proceeds from the financing will be used for general corporate purposes. The company has indicated that this includes the launch of 2.0 cannabis products, and expanding product and pharmaceutical exports.

Roth Capital Partners was the placement agent for the offering, and will receive a cash fee of 5.5% of the gross proceeds.

Medipharm Labs last traded at $1.87 on the TSX.

Information for this briefing was found via Sedar and MediPharm Labs. 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.

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