Canadian cannabis company Sundial Growers Inc. SNDL made a strategic investment of $22 million into a cannabis edibles producer, Indiva Ltd. NDVA NDVAF.
The deal requires a brokered private placement directed by ATB Capital Markets Inc. of 25 million Indiva shares with a price of 44 cents per share, to collect gross proceeds of $11 million and a non-revolving loan facility to Indiva in the amount of $11 million.
Sundial projects it will be the only subscriber for the placement, and for the investment to be finalized on or around Feb 23. Issued securities will be under a statutory hold for four months upon completing the placement.
Indiva plans to use the proceeds to pay off debt, for working capital and standard corporate activities.
Under the deal, Indiva is supposed to finance ATB in the amount equal to 3% of the total gross proceeds from the Placement from Sundial, and 6.0% of the total gross proceeds from the placement from subscribers other than Sundial, if applicable.
Also, Indiva aged to pay to the agent the amount equal to 2.0% of total loan commitment.
Currently, Sundial and its partners don’t possess any convertible securities of Indiva, and they plan to obtain it only for investment purposes. Sundial and its partners note they have no plans to obtain control over extra securities of Indiva above 19.9% of the issued and outstanding shares.
"Sundial is pleased to support the development of Indiva's high-quality products," Sundial CEO Zach George said. "This transaction broadens our exposure to the rapidly expanding cannabis edibles category."
Niel Marotta, President and Chief Executive Officer of Indiva, praised the Sundial deal.
"Indiva will now have the ability to make additional capital investments, primarily into automation, which will drive higher throughput and profitability, while ensuring our product quality maintains the best-in-class standard our customers and clients depend upon," he said.
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