Cannabis Wheaton Income Corp. (TSXV: CBW) has agreed to purchase $15 million of ABcann common shares at $2.25
SmallCapPower | July 12, 2017: Commenting on his Company’s recent stock price decline, Cannabis Wheaton Income Corp. (TSXV: CBW) CEO Chuck Rifici stated, “As a life-long entrepreneur I am always disappointed when people try to tear things down rather than build them. The success of Cannabis Wheaton has made the Company a target for the spread of a great deal of deliberate misinformation easily delivered in the digital age, and with an unacceptable impact on our supporters. We are focused on continuing to implement our vision and actively defending ourselves against elements wishing to destroy value for our shareholders and stakeholders across the country.”
In other news, Cannabis Wheaton and ABcann Global Corporation (TSXV: ABCN) announced on July 10, 2017, the signing of a definitive subscription agreement pursuant to which Cannabis Wheaton has agreed to purchase $15 million of ABcann common shares at $2.25. The news follows the binding interim agreement between the two companies on May 29, 2017. The first tranche of $15 million is part of the larger $30 million phased investment by Cannabis Wheaton to fund the construction of a 50,000 sft of cultivation space at ABcann’s proposed cannabis cultivation facility to be located in Napanee, Ontario. The second subscription of $15 million, to be subscribed once Cannabis Wheaton raises an aggregate of $150 million on or before March 31, 2018, will be at a price per ABcann Share equal to the greater of two times the 10 day volume average trading price of the ABcann Shares at the relevant time or $2.25.
The recent capital raise of $50 million by Cannabis Wheaton has provided the much needed capital for the marijuana financier to provide funding for cannabis producers such as ABcann in return for minority interests. The funding adds the sixth license to the Cannabis Wheaton portfolio, and the first publicly-traded producer with a sales license. Once completed, the additional cultivation space will provide Cannabis Wheaton with an estimated 8,000,000 grams annually.
While the agreement provides ABcann the necessary funding for the Kimmett site, it expands Cannabis Wheaton portfolio of cannabis producers to six. The agreement could drive shares of ABcann as the subscription price agreed upon valuation of $2.25 per share is ~150% above the current market price of $0.88 on July 11, 2017. As of 1Q17, ABcann cash balance stood at $2.4 million, which included $600,000 raised from issuance of convertible debentures during the quarter. The Company did not report any revenues for the quarter. The impact of news on the share price of Cannabis Wheaton could be limited. Cannabis Wheaton noted that 90% of the securities issued as part of the $50 million private placement are subject to voluntary 12-month lockup and escrow agreements.
Disclosure: Neither the author nor any of the principals at Small Cap Power, or their family members, own shares in any of the companies mentioned above.
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