Creso Pharma to raise A$5.35 million via a series of secured loans

  • April 11, 2019 05:23 PM AEST
  • Team Kalkine
Creso Pharma to raise A$5.35 million via a series of secured loans

Creso Pharma Limited (ASX: CPH) is a pharmaceutical company, working in the medical cannabis sector. It aims to improve the lives of both humans as well as animals. The company strives to make the highest quality products by utilising its expertise and methodological rigor and uses GMP development and manufacturing standards for its products as a benchmark for quality excellence. It develops and manufactures cannabis and hemp derived therapeutic, nutraceutical, and lifestyle products.

On 11th April 2019, the company announced that it has received commitments to raise A$5.35 million through a series of secured loans from sophisticated and professional investors. Some of the investors who gave firm commitments are Parry Capital, Penn Financial and Pheakes Pty Ltd. The interest payable on the loan is 15% per annum and will be paid on a quarterly basis. As it will be a secured loan, it will be backed by general security granted over the cannabis cultivation facility located in Nova Scotia, Canada. This facility is owned by Mernova Medical Inc which is a wholly owned subsidiary of the company and a property mortgage over land held by Mernova.

The company is expecting to repay the principal amount of loan through the issue of 107 secured convertible notes to the debtholders. It is seeking the shareholders' approval for the same in the coming Annual General Meeting (AGM) of the company which is to be held in May 2019. Some of the terms and conditions of the convertible notes are;

  • Each convertible note will have a face value of $50,000.
  • An annual premium of 15% would be payable on a quarterly basis.
  • The maturity period of the convertible notes will be 12 months.
  • The face value of each convertible note is convertible into shares at the conversion price of $0.50, together with three free attaching listed CPHO options for every two shares issued. The investor may elect for the conversion of shares at any time from the date of issue until the maturity date.
  • In the case, the investor chooses not to convert the notes into shares before, or on the maturity date then the company must repay the face value of the convertible notes together with any accrued interest on the maturity date.
  • The convertible notes will be extinguished if and when the Convertible Notes are converted or otherwise repaid in full.

The proceeds from the loan will be used to improve the sales and marketing of CBD based products in Europe and Canada. A debt of approximately A$ 1 million is also intended to be repaid with the proceeds. It is also looking to increase the cannabis cultivation and production build at the Mernova facility, and finally, the working capital requirements of the company will also be fulfilled by the loan amount.

On 3rd April 2019, the company received some queries from ASX regarding the price and volume of its listed securities to which it positively replied on 5th April 2019.

On 2nd April 2019, the company announced its commercial progress report across all segments.

The current market cap of the company stands at $54.17 million. On the technical front, the stock shot up by 9.9% and made a high of A$0.45. It closed the session near to the day’s high at A$0.44 as of 11th April 2019 compared to the previous closing of A$0.40 on 8th April 2019. The stock was put on trading halt on 9th April 2019 owing to pending release of capital raising announcement. Post the announcement, the securities resumed the trading today.

In the last six months, the stock has given a negative return of 25.7% while YTD return is negative at 25%.


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