Golden Leaf (GLH.C) successfully closes the book on $35.0 million PP financing in wake of financials

Golden Leaf Holdings (GLH.C) plowed through a tough market in 2016 and as a reward, announced closing a tasty $35.0 million-dollar private placement financing on Friday.

According to the news release, the company sold 125,892,857 subscription receipts at a rate of $0.28 per subscription receipt.

The transaction, led by Canaccord Genuity, hauled in a cool $35.25 million. Other members of the syndicate included Echelon Wealth Partners and Mackie Research Capital Corporation.

Gross proceeds in escrow, less 50% of the Agents’ commission and all of the Agents’ estimated expenses. Beyond customary regulatory, shareholder and third-party approvals, GLH has to ink a definitive acquisition agreement with Chalice LLC. Meeting these conditions should pull the trigger and release the funds, and any interest earned, from escrow.

Once that pin is pulled, each issued subscription receipt will be automatically converted into one common share and one-half of one common share purchase warrant. Each full warrant can be exercised for the purchase of one common share in GLH at a price of $0.37 per warrant share, until June 2, 2019, subject to adjustment in certain events.

GLH intends to direct a portion of net proceeds from the transaction toward the cash component of the purchase price of the proposed Chalice acquisition. The rest will go to fund other recently announced acquisitions as well as existing operations.

If the company is unable to meet the escrow release conditions by September 30, 2017, the subscription receipts will be deemed cancelled and subscription holders will receive a cash amount equal to the offering price of the subscription receipts. Any shortfall will be handled by the company.

All securities issued by the company pursuant to this transaction are subject to a statutory four-month hold period, expiring on October 3, 2017, so there might be a temporary dip as profit takers do their thing.

GLH is also looking to offer a brokered PP offering for up to $5.0 million worth of units in the company. Each unit will be comprised of one common share and one-half of one warrant. The company expects its first tranche to close in the next few weeks with net proceeds heading toward other previously announced acquisitions as well as existing operations.

If GLH is able to pull this off, money won’t be a problem for the company and investors may see the market reflect that independence.

The company is flying high on the its recently announced unaudited financials released less than a week ago, which painted a positive picture for GLH’s Q1 2017 after a difficult 2016 in Oregon, due to regulatory challenges.

It seems the markets were impressed with sales of GLH’s brands in Oregon and Washington State which almost totalled $6.0 million during the quarter – a 33% bump from Q1 2016 and a 70% increase compared to the company’s sales during Q4 2016.

But wait, there’s more to come…

The Chalice acquisition is just one of a strategy which includes three other acquisitions involving JuJu Joints, a vape company, Medical Marijuana Group Corporation, Canadian LP applicant, and NevWa, Nevada-based cultivation and extraction license holder.

Don Robinson, CEO of GLH, commented on the company’s performance, “Although revenue in Oregon for our first quarter of 2017 was flat year-over-year, we did show a significant increase in revenue growth as compared to the fourth quarter of 2016, and the Company remains optimistic for future quarters when it will be able to expand its wholesale product mix to include value priced cartridges, dabbable oils, edibles, and a wider variety of flower options. The new licensing and product line additions we launched in the beginning of 2017 have begun to bear fruit, and we are seeing this growth within both the Oregon and Washington state markets. We expect to launch the GLH Oregon brands in Washington and the BMF Washington brands in Oregon later in 2017. In addition, the Company plans to launch its portfolio of brands in Nevada upon completion of the NevWa, LCC acquisition. Moreover, we have made great strides executing on the strategic acquisition program we announced in early January that we believe will drive financial and shareholder value for our Company and our stakeholders.”

GLH is also bolstering its brain power with some important Board nominations for the company’s AGM to be held June 28, 2017 in Toronto. Nominations include Gary Yeoman for Chairman. Yeoman is a business development veteran who led TSX-listed Altus Group from revenues of $75.0 million to approximately $325.0 million in just seven years.

If that isn’t enough growth smarts for you, GLH has also nominated Bob McKnight to the Board. McKnight is no slouch, co-founding Quiksilver in 1976. Then as Chairman, CEO and President of the company, he moved from start-up to $2.5 billion in revenues in 2015.

If the company is able to seal the Chalice deal, this could be a breakout year for GLH.

FULL DISCLOSURE: Golden Leaf Holdings is an EQUITY.GURU client.