Creso Pharma Ltd (ASX:CPH, OTCQB:COPHF) has secured firm commitments to raise approximately A$7 million from institutional, professional and sophisticated investors through the issuance of 175 million fully paid ordinary shares at 0, 04 Australian dollar per share.
The total amount raised includes commitments totaling A$1.74 million assumed by company directors Bruce Linton, Adam Blumenthal and William Lay, subject to shareholder approval.
Creso anticipates that the funds raised will be used to continue its expansion in the United States with the pending acquisition target, Sierra Sage Herbs LLC.
The company also continues to reduce cash burn across the business, in line with its goal of having three to four quarters of positive cash flow.
“Accretive acquisition opportunities”
Creso CEO and Managing Director, William Lay, said: “The company has received strong support from a range of new and existing investors for this placement, which is reinforced by commitments from Creso Pharma’s directors. .
“We continue to focus on accretive acquisition opportunities, reducing operating expenses and accelerating product adoption across each operating division, and we are confident that the funding commitments from the recent placement will support the Creso Pharma’s objective of achieving a positive cash flow position for the group.
“Creso Pharma expects to be well funded to advance several near-term opportunities and I look forward to providing updates as the opportunities continue to materialize.”
Subject to shareholder approval, investors will also receive one option for each investment share purchased, exercisable at A$0.08 and expiring four years from the date of issue.
The equity investment with unrelated parties is expected to settle in two tranches, with approximately 109 million shares to be settled on or about August 8, 2022 and 22.5 million shares to be settled on or about August 11, 2022.
EverBlu Capital Corporate Pty Ltd acted as lead manager and Perth-based CPS Capital Group Pty Ltd acted as co-investment manager.
The issue price represents a discount of 18.37% from the last closing price of AU$0.049 on July 26, 2022.