Invictus (IMH.C) takes off with $15m bought deal

The market is off the hook these days with bought deals being announced everywhere. What’s a bought deal, you ask? It’s basically a guarantee form the sponsoring broker that they have raised your dough because they love it so much. They haven’t even called their clients yet: they just know it is a no-brainer sell to the client. Heck, if the client won’t buy it the house will gladly take it for its own investment purposes: they like the company that much. Bought deals are a very bullish signal, and if you see them get increased in size it means people are backing up the truck because they love it so much.

Today Invictus MD announced, “Invictus MD Strategies Corp. has entered into an agreement with Canaccord Genuity Corp. and Eventus Capital Corp. as co-lead underwriters, pursuant to which the underwriters have agreed to purchase, on a bought-deal private-placement basis, 9.1 million units of the company at a price of $1.65 per unit for aggregate gross proceeds to the company of $15,015,000.

The company has agreed to grant the underwriters an overallotment option to purchase up to an additional 1,365,000 units at the offering price, exercisable in whole or in part at any time for a period of 48 hours prior to the closing of the offering. In the event the overallotment option is exercised in full, the aggregate gross proceeds of the offering will be $17,267,250.

Each unit will comprise one common share of the company and one-half of one common share purchase warrant. Each warrant will be exercisable to acquire one common share for a period of 18 months following the closing date of the offering at an exercise price of $2.35 per warrant share. In the event that the company’s daily volume-weighted average share price on the Canadian Securities Exchange (or such other stock exchange the company may be trading on) is greater than $3.75 for 10 consecutive trading days, the company shall, within five days thereafter, issue to the warrant holders a written notice advising of the accelerated expiry of the warrants, which shall not be more than 30 days after the mailing date of such notice. Net proceeds from the offering will be used for expansion plans for the company’s assets and for general working capital purposes.”

Equity.Guru first discussed Invictus MD back in August 2016 when the company was limping along at around $0.30 and struggling to find its way. CEO Dan Kriznic got a rough ride, but he was a bit of a rock star in an industry with some massive upside potential which we have all seen. Then the market started to talk about IMH back in October when they declared a $1.0 dividend. That woke people up.

Well, the company is chugging along buying land, making investments and developing apps. It will be interesting to see how they deploy the proceeds of this deal. As the financing is priced at $1.65, the stock has sold off on the news so people can load up on the financing. It’s expected that once the sellers are done, it is back to business for IMH.

The market started selling off from today’s opening bell, with the stock dropping 31 cents from its previous close of $2.12 to $1.81 at 10 a.m. Eastern Standard Time. It rallied midway through the trading session back to the $2.00 level before plunging again to around $1.85 by 2 p.m. At the time this story was posted, IMH was rocketing back up to $2.

(Full disclosure: IMH is a client of Equity.Guru)

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