By Timothy S. Donahue
Top Takeaways:
- BAT backs deal: British American Tobacco will invest C$65.2 million through a share subscription and top-up rights to help fund Organigram’s acquisition of Sanity Group GmbH.
- Ownership capped: Organigram may issue non-voting preferred shares to ensure BAT does not exceed a 30% ownership threshold.
- Shareholder vote pending: The acquisition and private placement will go before shareholders on March 30 and remain subject to TSX and related-party approvals.
Organigram Global Inc. is tapping British American Tobacco to help finance its planned acquisition of Sanity Group GmbH.
The Canadian cannabis producer said it entered into a subscription agreement with BT DE Investments Inc., a wholly owned subsidiary of British American Tobacco, under which BAT will purchase 14,027,074 common shares at C$3.00 per share and exercise top-up rights to acquire 9,897,356 additional shares at C$2.335854 per share.
The combined transactions will generate total gross proceeds of approximately C$65.2 million ($47.6 million).
Organigram said the proceeds, together with cash on hand and funds drawn from a previously arranged senior secured credit facility of up to $60 million, will be used to finance the cash portion of the Sanity Group acquisition, cover transaction costs, and support general working capital.
To ensure BAT does not exceed a 30% ownership threshold after the share issuances, Organigram said it may issue non-voting Class A convertible preferred shares if required. Those shares would be convertible into common shares under specified conditions.
The proposed acquisition and private placement remain subject to shareholder approval at Organigram’s annual and special meeting on March 30. The transaction is also subject to Toronto Stock Exchange rules and related-party transaction requirements.
Organigram said its board of directors unanimously approved the agreements, while BAT’s board nominees abstained from voting.
