Organigram Announces the First Tranche Closing from BAT Investment
- Strategic equity investment of C$124,559,674 by BT DE Investments Inc.
- Creation of a strategic investment pool, named Jupiter, targeting emerging cannabis opportunities for geographic expansion
- Organigram's successful cannabis investments and market leadership position in gummies, hash, and THCV products
- None.
Insights
The recent strategic equity investment by BT DE Investments Inc. into Organigram Holdings Inc. represents a significant infusion of capital into the cannabis sector, which is notable for its potential to catalyze growth and expansion. The commitment of C$124.6 million, with C$41.5 million already transacted, suggests a strong vote of confidence by British American Tobacco in Organigram's strategic direction and operational capabilities.
The creation of the Jupiter strategic investment pool with the majority of this investment underscores Organigram's intention to leverage its industry experience to identify and capitalize on emerging cannabis markets. This move could potentially diversify Organigram's revenue streams and reduce the risk profile of the company by spreading investments across different geographies and product lines.
Investors should consider the implications of the amended and restated investor rights agreement, as it outlines key rights such as registration, pre-emptive and top-up rights, which could affect future equity dilution and investor control dynamics. The ability for Organigram to attract additional strategic partnerships and growth capital could be a harbinger of accelerated industry consolidation, potentially leading to increased competitive advantages for Organigram.
From a legal perspective, the closure of the first tranche and the amended and restated investor rights agreement between Organigram and BT DE Investments Inc. signifies a comprehensive contractual framework that will govern the relationship between the two entities. The inclusion of customary registration rights, pre-emptive rights, top-up rights, information rights, consent rights and nomination rights in the agreement is a standard practice to protect the interests of the investor, in this case, a subsidiary of British American Tobacco.
Investors should note that these rights can have material implications for the governance and future strategic decisions of Organigram. For instance, pre-emptive and top-up rights can enable the investor to maintain their proportional ownership, thereby influencing shareholder voting and corporate direction. Furthermore, the agreement's availability on public databases like SEDAR+ and EDGAR ensures transparency and allows for stakeholder scrutiny, which is crucial for maintaining investor confidence.
Examining the broader market context, the investment into Organigram by a subsidiary of British American Tobacco reflects a strategic alignment within the rapidly evolving cannabis industry. The focus on geographic and technological growth, as well as product expansion, positions Organigram to capitalize on the increasing legal recreational cannabis market, which is experiencing significant growth globally.
The establishment of the Jupiter investment pool indicates a proactive approach to not only enhance Organigram's market position but also to potentially shape the industry's trajectory through strategic investments. This could lead to a ripple effect where other players in the market may also seek to establish or expand their investment arms, further intensifying the competition.
It is critical for stakeholders to monitor how Organigram's investments are managed and how effectively they can integrate new acquisitions into their existing operations. The success of past investments in edibles, hash and THCV products provides a positive precedent, but the challenge will be to maintain this momentum as the scale of operations increases.
Organigram Announces the First Tranche Closing from BAT Investment (Photo: Business Wire)
“With this transformational deal now formally approved by shareholders and with the first tranche funded, we look forward to delivering on our objectives of geographic and technological growth as well as product expansion,” said Paolo De Luca, Chief Strategy Officer of Organigram. “Since we announced this transaction on November 6, 2023 we have seen tremendous interest from cannabis companies looking for strategic partnership opportunities and growth capital. Organigram, with its strong balance sheet and dedicated Jupiter capital pool, is uniquely positioned to take advantage of a growing set of emerging opportunities.”
“Jupiter” Strategic Investment Pool Will Accelerate Organigram’s Growth Ambitions
The majority of the
Organigram has 10 years of experience within the Canadian cannabis market and has already made several successful cannabis investments. The acquisition and integration of the Edibles and Infusions Corporation, Laurentian Organics Inc., and more recently, its investment in Phylos Bioscience Inc. has propelled Organigram to a market leadership position in gummies and hash, as well as enabling the Company to be first to launch THCV products in
Amended and Restated Investor Rights Agreement
In connection with the first tranche closing, the Company and the Investor entered into an amended and restated investor rights agreement (the “Amended & Restated IRA”), which amended and restated the current investor rights agreement dated March 10, 2021 between the Company and the Investor. The Amended & Restated IRA, among other things, grants the Investor certain customary registration rights, pre-emptive rights, top-up rights, information rights, consent rights and nomination rights. A copy of the Amended & Restated IRA will be available under the Company’s profile on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov.
Further details relating to the Investment can be found in the press release issued by the Company on November 6, 2023 and the Company’s management information circular dated December 20, 2023 (the “Circular”).
About Organigram Holdings Inc.
Organigram Holdings Inc. is a NASDAQ Global Select Market and TSX listed company whose wholly owned subsidiaries include Organigram Inc. a licensed producer of cannabis, cannabis-derived products and cannabis infused edibles in
Organigram is focused on producing high-quality cannabis for patients and adult recreational consumers, as well as developing international business partnerships to extend the Company's global footprint. Organigram has also developed and acquired a portfolio of legal adult-use recreational cannabis brands, including Edison, Holy Mountain, Big Bag O’ Buds, SHRED, SHRED’ems, Monjour, Laurentian, Tremblant Cannabis and Trailblazer. Organigram operates facilities in
Forward-Looking Information
This news release contains forward-looking information. Often, but not always, forward-looking information can be identified by the use of words such as “plans”, “expects”, “estimates”, “intends”, “anticipates”, “believes” or variations of such words and phrases or state that certain actions, events, or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. Forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual results, events, performance or achievements of Organigram to differ materially from current expectations or future results, performance or achievements expressed or implied by the forward-looking information contained in this news release. Risks, uncertainties and other factors involved with forward-looking information could cause actual events, results, performance, prospects and opportunities to differ materially from those expressed or implied by such forward-looking information include factors and risks disclosed in the Circular, and the Company’s most recent annual information form, management’s discussion and analysis and other Company documents filed from time to time on SEDAR+ (see www.sedarplus.ca) and filed or furnished to the Securities and Exchange Commission on EDGAR (see www.sec.gov). Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Although the Company believes that the assumptions and factors used in preparing the forward-looking information in this news release are reasonable, undue reliance should not be placed on such information and no assurance can be given that such events will occur in the disclosed time frames or at all. The forward-looking information included in this news release are made as of the date of this news release and the Company disclaims any intention or obligation, except to the extent required by law, to update or revise any forward-looking information, whether as a result of new information, future events or otherwise.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240123036131/en/
For Investor Relations enquiries:
Max Schwartz, Director of Investor Relations
investors@organigram.ca
For Media enquiries:
Megan McCrae, Senior Vice President – Marketing and Communications
megan.mccrae@organigram.ca
Source: Organigram Holdings Inc.
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