Cann Group is looking to raise another A$20 million to strengthen its extraction, laboratory and manufacturing capabilities and boost working capital.
The funding will take the form of a $10 million placement and a $10 million Share Purchase Plan (SPP). Cann directors have elected to participate in the placement and subscribed for $1,070,000 worth of shares. It was expected to settle on Wednesday (July 28), with the new shares trading the next day.
However, on Wednesday, Cann issued an update to the market advising that “due to administrative issues beyond the company’s control”, settlement has been delayed by two days.
It will now take place on Friday July 30 with the allotment and normal trading of new shares on Monday August 2. A further announcement will be made on Monday once the placement has been completed.
The company will be seeking shareholder approval for the SPP at an Extraordinary General Meeting in early September.
Cann told the ASX proceeds from the capital raise will be used to invest in cost-saving initiatives at its Mildura manufacturing facility and to expand and grow wholly-owned subsidiary business, Satipharm.
This includes fast-tracking applications to register Satipharm’s low-dose CBD capsules on the Australian Register of Therapeutic Goods as Schedule 3 (over-the-counter) medicine.
CEO Peter Crock said: “The Mildura facility provides the company with a platform for sustainable and profitable growth as we scale up with improved supply chain security and a reduced reliance on third parties.
“We expect that the funding we are seeking via this capital raising will be sufficient to support our operations and expansion as we build our revenue base and move towards sustainable profitability,” he added.
In November 2020, Cann announced it had received credit approval from National Australia Bank for a $50 million secured debt facility. Prior to that, the company raised $40m from investors to shore up funding for its Mildura production facility.