Anyone who thought former Canopy Growth (CGC 3.82%) CEO Bruce Linton would fade away into retirement is clearly mistaken. On Tuesday the company for which he is executive chairman, Vireo Health International (GDNS.F 0.21%), announced that it stands to raise up to $10 million in a new round of fundraising.
Vireo issued nearly 13.7 million of its units at a price of $0.77 Canadian ($1.06) apiece, in the first tranche of an apparently multi-tranche issue. Each unit consists of on subordinate voting share of the company, plus a single warrant. Each warrant grants the holder the right to buy one share of stock for CA$0.96 ($0.70) per share. This right is in place for three years from date of issuance.
Vireo does reserve the right to force warrant holders to exercise their conversion rights if, in its words, "the five-trading-day volume weighted-average price of the Shares equals or exceeds CA$1.44 [$1.06], subject to adjustment in certain events." It did not go into detail about those "certain events."
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The marijuana company said it will use the funds to finance a number of growth initiatives, in addition to working capital and "general corporate purposes."
Vireo said further tranches of units might be issued before April 17.
Linton, who vacated the CEO seat at Canopy Growth last July, indirectly subscribed for just over 1.7 million units of Vireo's first tranche. The company says this action is compliant with Linton's employment agreement and meets the approval of its board of directors.
The share price of Vireo, which had almost 23.7 million shares outstanding before the announcement, fell by nearly 5% on Tuesday against a strong bull market. By comparison, Canopy Growth's stock rose more than 7%.
