PharmaCielo Layoffs And Voluntary Salary Reductions To Decrease Its Annualized Fixed Costs By ~25%

Zinger Key Points
  • Steady progress against the efficiency plans initiated in mid-2021 with the transition to the current senior management team.
  • Intends to amend the terms of warrants, reducing the exercise price from CA1.44 to CA0.65 per common share.

PharmaCielo Ltd. PCLOF PCLO provided a corporate update, regarding progress against the efficiency initiatives it began to implement in mid-2021, which are designed to accelerate the company's path to profitability. The company also announced its intention to amend existing warrant terms, and issue shares for debt.

Efficiency Initiatives and Issuance of Shares for Debt

PharmaCielo has initiated steps, which it expects will result in a reduction of its annualized fixed costs by approximately 25% compared to 2022. These efficiencies will be achieved by outsourcing certain production processes, eliminating unnecessary legacy costs, such as its Medellin corporate office, as well as by voluntary salary reductions and headcount reductions. The company also announced that, to pay a portion of the severance costs, estimated to not exceed CA$450,000 ($337,000), it intends to issue, subject to the approval of the TSX Venture Exchange, up to 1.55 million common shares of the company, at an effective price to be determined based on a 10-day volume weighted average price at the time of issuance.

The payment shares will be issued in reliance on certain prospectus exemptions available under securities legislation and will fall within the four-month plus one day statutory hold period.

Amendment of Warrant Terms

PharmaCielo has applied to the TSXV to amend the terms of 2.82 million common share purchase warrants of the company that were issued pursuant to the non-brokered private placement of debenture units over multiple closings. The warrants currently have an exercise price of C$1.44 per common share and will expire on December 24, 2024. The purpose of the proposed amendments is to reduce the exercise price of the warrants from CA$1.44 to CA$0.65 per common share, and add an acceleration clause. In accordance with the terms of the warrant indenture under which the warrants were issued, the amendments must be approved by the holders of the outstanding warrants. Therefore, in order to give effect to the amendments, the company will be promptly seeking the written consent of the holders of warrants to such amendments.

Subject to the approval of the TSXV, the warrant terms will include an amended clause whereby, if for any 10 consecutive trading days during the unexpired term of the warrants, the closing price of the common shares on the TSXV is equal to or greater than CA$1.00, the expiry date will be accelerated to 30 calendar days. All other terms and conditions of the warrants remain the same. The amended warrant terms remain subject to the final acceptance of TSXV.

Benzinga's Cannabis Capital Conference Is Back

The most successful cannabis business event in the world, the Benzinga Cannabis Capital Conference, returns to Miami for its 16th edition. This is the place where DEALS GET DONE, where money is raised, M&A starts, and companies meet investors and key partners. Join us at the Fontainebleau Miami Beach Hotel in Florida on April 11-12. Don’t miss out. Secure your tickets now. Prices will surge very soon.

Photo by Richard T on Unsplash

Market News and Data brought to you by Benzinga APIs
Posted In: CannabisNewsPenny StocksMarketspremium
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

The Benzinga Cannabis Capital Conference is coming to Florida

The Benzinga Cannabis Capital Conference is returning to Florida, in a new venue in Hollywood, on April 16 and 17, 2024. The two-day event at The Diplomat Beach Resort will be a chance for entrepreneurs, both large and small, to network, learn and grow. Renowned for its trendsetting abilities and influence on the future of cannabis, mark your calendars – this conference is the go-to event of the year for the cannabis world.

Get your tickets now on – Prices will increase very soon!