Neptune Wellness Solutions Inc. (NASDAQ: NEPT) (TSX: NEPT) announced a registered direct offering of $8 million on Thursday. The Company has entered into a definitive agreement with a single consumer-focused strategic institutional investor for the purchase and sale of (i) 18.5 million shares of the company and (ii) 60.5 million pre-funded warrantseach pre-funded warrant exercisable for one common share.
Common shares and pre-funded warrants are bsold with Series A Warrants to purchase up to an aggregate of 25 million common shares and Series B Warrants to purchase up to an aggregate of 25 million common shares. Each Common Share and accompanying Common Warrants are sold together at a combined offering price of $0.32, and each Prefunded Warrant and accompanying Common Warrants are sold together at a combined offer price of $0.32, for aaggregate gross proceeds of approximately $8.0 million before fees and other estimated offering expenses.
The company intends to use the net proceeds of the offering for working capital and other general corporate purposes. Offering is expected close on or around March 14, 2022subject to satisfaction of customary closing conditions.
Global AGP/Alliance Partners is acting as sole placement agent for the offering.
Letter to shareholders
Additionally, the company released a letter from the chairman of the company’s board of directors on Thursday, Julie PhillipsCEO, Michael Cammarata and Acting Chief Financial Officer, Randy Weaver, wanting to explain their “decision to raise additional equity through the registered direct offering from a single consumer-focused strategic institutional investor.” Highlights of the letter include:
- Financial positioning – With increasing geopolitical risks, we are taking the necessary steps to shore up our immediate cash reserves and properly position our balance sheet to fund our growth initiatives as we strive to achieve profitability. To that end, we have entered into a definitive agreement with a single consumer-focused strategic institutional investor for the purchase and sale of common stock and pre-funded warrants. Taking all considerations into account, we believe this is in the best interest of the company and will benefit shareholders over the long term. We also continue explore other financing options, including debt. We expect to enter into an agreement with a lender or lenders which will result in cash proceeds to the company in the amount of $20-25 million, further supplementing our existing cash position. Although we cannot guarantee that the ongoing negotiations will lead to an agreement, we are currently having positive discussions with several lenders.
- Growth engines – we are driving consumer relevance by pursuing the right strategic partnerships for co-branded product lines and expanding our product offerings in key wellness categories, including cannabis.
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