One of companies we provide coverage on, Green Organic Dutchman Holdings Ltd., just recently announced a private placement financing, this is open to accredited investors. I suspect this is the last financing the company plans on doing before going public. Below is a brief summary of the offering and what TGODH has accomplished so far.
Terms: Unit price: C$1.65 includes 1 common share + ½ a warrant (good for 36 months, @ C$3) The shares will have a 6 month hold period from the day of the IPO (planned for January 2018) a big attraction to this financing is that the warrants will be listed and tradeable on TGOD's IPO date. In theory, this means that if the stock trades at C$4.50, the warrant should trade at C$1.50 ($4.50 - $3 = $1.50). And that doesn't take into account the time value of the warrant, three years. In this kind of scenario, one could pay C$1.65 for the units but get back the equivalent of 75 cents/share which would give you a purchase price of C$0.90 per share. Last financing was done at $1.15
Retail Investors Only - No Hedge Funds What TGOD has achieved so far is extremely rare. As a private company, we have raised $40M+ and have done it without including a single institution. Before this last round has even started, TGOD already have over 2,400 shareholders.
TGOD – Valuation The closest comparable in the sector would be Aurora Cannabis, a company with a fully diluted Mkt Cap of ~1.1B. Aurora is doing a similar build-out as TGOD has planned, 800,000 sq.ft to reach a production capacity of 100,000 kg By the time TGOD is listed, it will be fully funded for production facilities totaling 970,000 sq.ft., which will produce 116,000 kg annually.
TGOD has partnered up with Eaton Power Corp (NYSE, 32B Mkt Cap) which has helped TGOD to get the cheapest power in the entire industry, $0.045/kwh in Ontario and $0.035/kwh in Quebec. This will put TGOD in the forefront as the lowest cost marijuana producer in all of Canada. Remember, energy is the largest part of the cost equation to produce cannabis.
Supply and Demand *please refer to slide 5 of the Investor Deck
Organic marijuana sales price currently averages $11/gram. Lets assume $8/gram. With the already funded (post-IPO) production capacity of 116,000 kg/yr, TGOD will see yearly sales of $928,000,000, not taking into account the potential in oil extraction and edibles. Today, the market values these LP's at a 2-3x future sales which in theory would give TGOD a Mkt Cap of $.............. In the number-crunching above, oil extraction to be commissioned in Q4-17 is not considered. This is expected to bring in an additional yearly revenue of $170M with plenty of room to grow. TGOD is also planning for expansion into edibles, a market that is likely to grow even faster than oils and flowers. For more information, please read the Investor Deck below.
If you are interested in participating in the finacing, please contact us or the company to be added to the expression of interest list.
September 11, 2017 The Green Organic Dutchman Holdings Announces $20 Million Placement
NOT FOR DISTRIBUTION INTO THE UNITED STATES OR TO UNITED STATES WIRE SERVICES
The Green Organic Dutchman Holdings Ltd. (the “Company" or "TGODH") is pleased to announce that it has entered into an agreement with a syndicate (the “Syndicate”) led by PI Financial Corp. (“PI”) to complete a private placement offering of units (the “Units”). The Syndicate will offer on a commercially reasonable effort basis 4,242,500 Units of the Company (the "Unit Offering") at a price of C$1.65 per Unit (the "Issue Price") for aggregate gross proceeds of C$7,000,125 or such other amount as mutually agreed upon by the Company and PI.
Concurrent with the Unit Offering, the Company will engage in a non-brokered offering of 7,879,000 Units (the “Non-Brokered Offering”) with each Unit being offered at C$1.65 for aggregate gross proceeds of $13,000,350. The Units offered pursuant to the Non-Brokered Offering will have the same terms as the Units offered pursuant to the Unit Offering.
Each Unit will consist of one common share of the Company (a "Common Share") and one-half common share purchase warrant of the Company (a "Warrant"). Each whole Warrant is exercisable into one Common Share (the "Warrant Share") at the exercise price of $3.00 per share and has an expiry date that is the earlier of (a) 36 months from the date the Common Shares commence trading on a recognized stock exchange (the “Listing Date”), and (b) February 28, 2021. The Company will make all reasonable efforts to ensure the Warrants are listed on the same exchange on which the Common Shares are listed.
The Common Shares comprising part of the Units will be subject to a six (6) month contractual escrow period from the Listing Date. The Common Shares issuable upon the exercise of the Warrants will be subject to a twelve (12) month contractual escrow period from the Listing Date.
The Company intends to use the net proceeds of the Unit Offering and the Non-Brokered Offering to advance the Company’s cannabis facilities in Ontario and Quebec, and for general working capital purposes.