Neptune Wellness Solutions Inc. (NASDAQ:NEPT) (TSX:NEPT) announced Thursday an $8 million registered direct offering. The company has entered into a definitive agreement with a single strategic consumer-focused institutional investor for the purchase and sale of (i) 18.5 million company's shares and (ii) 6.5 million pre-funded warrants, with each pre-funded warrant exercisable for one common share.
The common shares and the pre-funded warrants are being sold together with series A warrants to buy 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 the accompanying common warrants are being sold together at a combined offering price of $0.32, and each pre-funded warrant and accompanying common warrants are being sold together at a combined offering price of $0.32, for aggregate gross proceeds of approximately $8.0 million before deducting fees and other estimated offering expenses.
The company expects to use the net proceeds from the offering for working capital and other general corporate purposes. The offering is expected to close on or about March 14, 2022, subject to the satisfaction of customary closing conditions.
A.G.P./Alliance Global Partners is acting as sole placement agent for the offering.
Letter to Shareholders
In addition, the company on Thursday released a letter from the company's chair of the board, Julie Phillips, CEO, Michael Cammarata and interim CFO, Randy Weaver, wanting to explaintheir "decision to raise additional equity through the registered direct offering with a single strategic consumer-focused institutional investor." Letter highlights include:
- Financial Positioning - With geopolitical risks rising, we are taking the steps necessary to shore up cash reserves in the immediate term and position our balance sheet properly to fund our growth initiatives as we push towards profitability. To this end, we have entered into a definitive agreement with a single strategic consumer-focused institutional investor for the purchase and sale of shares of our common stock and pre-funded warrants. Taking into account all considerations, we believe this is in the best interest of the company and will benefit shareholders in the long-term. We also continue to explore additional financing options, including debt. We expect to come to terms with a lender, or lenders, that will result in cash proceeds to the company in the amount of $20-$25 million, further supplementing our existing cash position. While we cannot assure that current negotiations will lead to an agreement, we are presently having positive discussions with multiple lenders.
- Growth Drivers - 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.
Neptune’s president and CEO, Michael Cammarata, will be one of the speakers at the Benzinga Cannabis Capital Conference in Miami. There’s still time to sign up for the event that will host many top names in the cannabis industry. Click here for more info.
