A medicinal marijuana grower on the outskirts of Ottawa has agreed to sell $15 million worth of shares through a bought deal financing agreement with an international securities business.
Smiths Falls-based Tweed Marijuana Inc. (TSX-V:TWD) will be selling 4,687,000 common shares at $3.20 each to a syndicate of underwriters GMP Securities L.P. is leading, according to a press release.
The money will go towards “facility expansion and general corporate purposes,” the Tweed press release said.
The agreement also provides an option for the underwriters to purchase another 703,125 shares. That would result in another $2.25 million being raised, which would bring the total proceeds to $17.25 million.
The company expects the deal to close around May 14, according to the release.
A bought deal refers to a securities offering in which an investment bank agrees to buy the entire offering from a company, according to the website Investopedia. It creates less risk for the company selling the shares but also often means it gets a lower price.
Tweed’s stock was trading at $3.39 on the TSX Venture Exchange at market close on Wednesday.
The company has been in the news a lot since it entered Canada’s new regulated medicinal marijuana market in early April. Its stock price shot up during its TSX debut, paying early dividends for investors.
Higher than expected demand, meanwhile, forced the company to announce earlier this week that it would temporarily stop taking on new customers as it worked to expand its output.