Aurora Cannabis Takes 19.9% Stake in Cannabis Retailer Choom As Part Of Debt Restructuring And Raises $3.5M

Canadian cannabis retailer Choom Holdings Inc. CHOO CHOOF reported Thursday that it has finalized the restructuring of its roughly $25.9 million in outstanding debt. This includes the $21.8 million that the company owes to Aurora Cannabis Inc. ACB.

As part of the agreement, the Canadian cannabis giant opted to convert the outstanding debt into 79,754,843 of Choom's common shares, resulting in Aurora taking a 19.9% stake in Choom. The price per share, however, remained undisclosed.

In addition, Choom agreed to issue a new $6 million convertible debenture to Aurora, which will carry an annual interest rate of 7% and will mature on December 23, 2024.

Choom also entered into an amending deal with the convertible debenture holders for the remaining $4.1 million outstanding debt to extend the maturity date of the 2019 debentures to December 23, 2024.

The companies also revised their investor rights agreement, under which Aurora gets to elect two seats for Choom's board and participate in securities offerings that Choom plans to undertake in the future.

Choom is also poised to operate retail cannabis stores on behalf of Aurora, under a services agreement between the two companies.

Hillcrest Merchant Partners Inc. served as a financial counsel to Choom in connection with the restructuring of Aurora's debt.

Choom Secures $3.5M In Financing, Closes Public Offering Of Its Units

Simultaneously, Choom raised some $3.5 million through a public offering of 43.75 million of its units at $0.08 per unit.

Under the offering, each unit consisted of one of Choom's common share and one-half of one common share purchase warrant. Warrants allow holders to buy one additional common share at $0.12 per share for each warrant held, until July 8, 2024.

Canaccord Genuity Corp. acted as the lead agent and sole bookrunner for the transaction, with a syndicate comprised of Leede Jones Gable Inc.

The company intends to utilize the proceeds to fund the operation and construction of cannabis retail locations, as well as general corporate and working capital purposes.

Price Action: Choom shares traded 3.31% lower at $0.052 per share at the time of writing.

Photo by Ibrahim Rifath on Unsplash


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