Grown Rogue International Inc. (“Grown Rogue” or the “Company”) (CSE: GRIN) (OTC: GRUSF), a craft cannabis company operating in Oregon and Michigan, is pleased to announce it has closed a non-brokered private placement of convertible debentures (the “Convertible Debentures”) with an aggregate principal amount of USD$2.0M. The Convertible Debentures bear an interest of 9% per year, paid quarterly, and mature 36 months from the date of issue. The principal use of funds will be to accelerate expansion efforts and for general corporate purposes.
The Convertible Debentures are convertible into common shares of the Company (the “Common Shares”) at a conversion price of $0.20 CAD per Common Share. Additionally, on closing, the Company issued to the purchasers of the Convertible Debentures (the “Purchasers”) an aggregate of 6,716,499 warrants (the “Warrants”), that represent 50% coverage of each purchaser’s Convertible Debenture investment. The Warrants are exercisable for a period of three (3) years from issuance into Common Shares at an exercise price of $0.25 CAD per Common Share. The Company has the right to accelerate the warrants if the closing share price of the Common Shares on the Canadian Securities Exchange is $0.40 CAD or higher for a period of 10 consecutive trading days.
“This financing was led by Mindset Capital, a private investment firm that has been focusing on the cannabis industry and is aligned with our strategy to become a leading craft cannabis producer,” said Obie Strickler, Grown Rogue’s Chief Executive Officer. “The debt converts at an approximate 43% premium to current share price and bears 9% interest, which we believe are fantastic terms in current market conditions. This financing allows us to continue expansion efforts while fulfilling all our current obligations,” continued Mr. Strickler.
“Grown Rogue has demonstrated operational excellence and the ability to grow and sell high quality cannabis in the toughest, most competitive markets while expanding market share and generating free cash flow,” said Aaron Edelheit, CEO of Mindset Capital. “I’m excited to provide capital that will enable the company to not only grow into its existing footprint, but also to bring additional markets online as well.”
The Convertible Debentures and Warrants issued pursuant to the private placement (and the underlying Common Shares) are subject to a statutory hold period of four months and one day from the closing date.
Insiders of the Company invested $0.05M in the Convertible Debentures. The Company has relied on the exemptions from the valuation and minority shareholder approval requirements under Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”) contained in section 5.5(b) and 5.7(a) of MI 61-101 in respect of such insider participation.
The Convertible Debentures and Common Shares have not been registered under the United States Securities Act of 1933, as amended, and may not be reoffered or resold in the United States absent registration or an applicable exemption from the registration requirements.
News Source: Yahoo Finance
