The company will issue around 309 million fully paid ordinary shares at 2.91 cents per share.
Institutional, professional and sophisticated investors have committed A$7.992 million and A$1 million has been committed by Creso Pharma chairman Adam Blumenthal, subject to shareholder approval.
The issue price represents a 25% discount to the closing price of $0.0388 on September 30.
"Strong level of demand"
Non-executive chairman Adam Blumenthal said: “We are delighted with the strong level of demand among from investors in this placement and this support is very pleasing.
“Importantly, we will emerge from this placement with a much stronger balance sheet.
“This provides the company with significant financial flexibility to exercise many of its key short-term strategic initiatives.”
"Cutting-edge pharmaceutical initiatives"
Blumenthal continued: “With the recently announced proposed regulatory changes in Australia regarding the status of cannabidiol products, Creso Pharma is well-placed to accelerate growth in the near-term, and we look forward to providing further updates in due course.
“We are also looking into other cutting-edge pharmaceutical initiatives that can be complementary to Creso Pharma’s IP and, again, will provide any further updates to the market when appropriate.”
Funds raised will be spent towards repayment of debt and amounts owed to secured lenders to redeem outstanding convertible notes, development of the company’s business units in Canada and Switzerland and operational expenses.
This will assist the company to accelerate growth across its existing human and animal health CBD product lines
Creso Pharma will issue shares to participants in the placement on the following basis:
- 61,626,676 shares issued pursuant to the company’s available placement capacity under Listing Rule 7.1;
- 41,209,433 shares pursuant to the company’s available placement capacity under Listing Rule 7.1A;
- 171,821,305 shares pursuant to shareholder approval which was obtained on October 2, 2020; and
- 34,364,261 shares to chairman Adam Blumenthal, subject to obtaining prior shareholder approval.
The company also intends to seek shareholder approval to issue the participants in the placement one option for every four shares issued.
Options will be exercisable at $0.05 each on or before the date that is 24 months after their date of issue.
The company will, subject to meeting minimum spread and other requirements, seek to have the options listed.
EverBlu Capital Pty Ltd acted as lead manager and corporate advisor for the placement.