Investment IdeasNewsStock NewsStocksFlower One Offers Another Round of Unsecured Debt Financing, Following Industry Trend

As pot stocks race to the bottom, more companies are turning to debt financing for quick cash
Avatar Nick LabaNovember 6, 20194 min

Nevada’s biggest producer of legal cannabis is about to undergo another round of unsecured debt financing.

On Wednesday, Flower One Holdings Inc. (CSE:FONE) (OTCQX:FLOOF) shared the details of their previously announced public offering of convertible debenture units.

With pot stocks falling like spent roaches, many companies are turning from equity to debt financing to drum up extra capital. Even blitzed beefcake Dan Blizerian and Ignite International Brands, Ltd. (CSE:BLIZ) coughed up $50 million in unsecured convertible debenture units in October.

Flower One, which owns a total 480,000 square feet of operable space in the Sagebrush State, is putting up to 20,000 units up for sale at $1,000 each, which could amount to $20 million in new funding.

In the press release, Flower One stated it would use the cash to advance its ambitious brand partnership campaign in Nevada, to accelerate plans to enter California’s market, for working capital and for general corporate purposes.

Sour market, sweeter deal

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The current round of debt financing is considerably sweeter than its March offering, when the company put up 50,000 convertible debenture units for sale.

At the time of the March offering, when Flower One was valued at $2.38 a share, the company gave up 192 common share purchase warrants per debenture unit. Now, at $1.48 a share, each debenture unit comes with 666 common share purchase units. Roughly speaking, each warrant entitles the holder to one share in the company.

According to the release, the offering is being led on a “best-efforts” basis by Mackie Research Capital Corporation and Canaccord Genuity Corp., as co-lead agents and joint bookrunners, and on behalf of a syndicate of agents, including Industrial Alliance Securities Inc., Haywood Securities Inc., PI Financial Corp., Eight Capital, and Echelon Wealth Partners Inc.

Need an introduction or refresher on convertible debentures? Our pals at Investopedia have got you covered.

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