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Thursday, Jun 30, 2022
Mugglehead Magazine
Alternative investment news based in Vancouver, B.C.


Leafly to raise US$30M in convertible notes ahead of public listing

The new financing deal will delay a vote by Merida shareholders to approve its merger deal with Leafly

Leafly to raise US$30M in convertible notes ahead of public listing
Leafly features a large database of cannabis cultivars, with reviews and links to local retailers. Screenshot by Nick Laba

Pot media giant Leafly Holdings Inc. is set to receive a large cash infusion, alongside its plans to become a public company via takeover of a shell corporation.

In a statement Tuesday, Leafly and Merida Merger Corp. I (Nasdaq: MCMJ), the shell entity sponsored by Merida Capital Holdings, said they entered into a deal with investors led by Cohanzick Management LLC who will buy US$30 million in convertible notes.

The companies say the financing will be secured immediately before the planned merger, and will help fund Leafly’s multi-year business plan.

But Merida is delaying its shareholder meeting to vote on the combination, which was slated for Jan. 14, to give its investors more time to evaluate the terms of the financing and “certain additional information.”

Read more: Cannabis media giant Leafly is going public

Read more: Cannabis 5th most valuable crop in US, Leafly report shows

The unsecured convertible notes will be due in 2025 and bear 8-per-cent interest to be paid twice annually. The notes will be convertible by the holders at any time before maturity at an initial conversion share price of US$12.50.

As per the deal, Merida Capital will pay Cohanzick a 1.25 per cent commitment fee via common stock and an aggregate of 300,000 private warrants. These payments will count towards Merida’s cash conditions for the combination with Leafly.

Leafly CEO Yoko Miyashita says the additional funding provides additional certainty as the company prepares to go public.

“Having accelerated our growth trajectory in 2021, we look forward to using this significant new capital to expand our leading cannabis marketplace and further enhance our technology platform, delivering more personalized consumer shopping experiences and driving more value to our retail partners,” she said in a statement.

David Sherman, president and founder of investment firm Cohanzick, noted that Leafly is a rapidly growing platform with strong brand loyalty and market leadership

“This investment demonstrates our confidence in the Leafly team and in the strategy they are implementing to create significant long-term value for stakeholders across the cannabis ecosystem.”

Last August, Leafly said it was going public, trading under the symbol LFLY and expecting an initial valuation of US$532 million.


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