Nothing usually damages an attempted financing more than the share price in a company taking a dip below the financing price. That happened to Tinley Beverage (TNY.C) recently, when a healthy stock price was hit by the lurgy hitting all weed plays right now, as investors are cashing out in the fear that things may not have bottomed out yet.
Companies usually see their stock price fall when they announce a financing, as holders will sometimes sell their stock so they can reinvest in the financing.
But this is a big gap.
“Thanks for the swell offer, Jeff, but why would I buy your financing at $1 per share when the share price of your company is only $0.78?”
Well, there are a few reasons, but the main one would be to get your mitts on $1.35 warrants that are good for the next two years.
The second would be that you’re pretty confident the stock isn’t staying where it is
The Tinley Beverage Company Inc. has closed its previously announced brokered private placement of units, pursuant to an agency agreement dated April 6, 2018, with Canaccord Genuity Corp. and Gravitas Securities Inc., raising gross proceeds of $5,055,000. Pursuant to the offering, Tinley sold an aggregate of 5,055,000 units for aggregate gross proceeds of $5,055,000. Each unit was issued at a price of $1 and comprised one common share of the company and one common share purchase warrant of the company. Each warrant is exercisable to acquire one common share of the company for a period of 24 months following the closing date at an exercise price of $1.35 per common share.
Raising $5 million when your stock is 28% down from the financing price is a herculean effort. Either Tinley CEO Jeff Maser has a silver tongue that convinces wealthy people to take big bets, or there’s something happening with that capital that will make the current share price seem…
The company intends to use the net proceeds from the offering for expansion beyond California, beverage marketing, acquisitions, and working capital.
California right now is a vertical integrator’s dream. The number of companies in the weed space has been shredded as the part timers and dreamers have struggled to get themselves licensed under the state’s new rules, and those who have done their paperwork and hold permits and licenses (and have capital) are being chased by those who don’t to, “please, come buy me.”
Companies like Fincanna Capital (CALI.C) and Lifestyle Delivery Systems (LDS.C) are digging that scene and exploring those opportunities, and Tinley is now cashed up to take advantage of any situations they may stumble upon.
In addition, they’re neck deep in test marketing their new Tinley ’27 de-alcoholized alcohol drinks, with THC in place of the booze. Investors want those drinks out there because they sense ‘Big Alcohol’ is looming with thoughts of takeovers.
Cannabis Wheaton (CBW.V) recently made an investment in this space, and the booze giant Constellation Brands (STZ.NYSE) made a well timed investment into Canopy Growth Corp (WEED.T) just before they went parabolic last year. The as yet un-listed Green Organic Dutchman (TGOD) has a core focus of their business model in bringing beverages to market.
For mine, the weed beverage space is a really interesting spot where consumers who don’t currently smoke will engage as an entry point. But it’s not an easy one to penetrate. Getting on shelves at retail chains takes more than just showing up with a pallet of product. You need bottling plants and logistics and sales networks and, in this case, a steady supply of trustworthy cannabis.
Tinley has execs that cut their teeth at Cott (COT.NYSE), the third largest soda bottler in North America, and that specifically worked on white label programs with supermarkets.
There are plenty of cannabis beverages out there to be had, but not many that are ready for prime time. Tinley has been putting in the work for the last two years on the back end to ensure that it’s products are.
We own warrants from a few Tinley financings ago that we’re executing this week. They’re going to cost us $0.25 per share. Steak will be eaten.
And that, dear readers, is why people with cheques sporting seven digits are saying, “Sure Jeff, I’ll get into your financing. Here’s my money.”
— Chris Parry
FULL DISCLOSURE: Tinley Beverage, Lifestyle Delivery Systems, and Fincanna Capital are Equity.Guru marketing clients.