Village Farms International Inc (OTCMKTS: VFFIF) In A Bought Deal Offering Worth $13.5 Million
Village Farms International Inc (OTCMKTS: VFFIF) and Beacon Securities Limited have reached an agreement which will see the latter become the lead underwriter in the efforts of the former to raise $13.5 million in a bought deal offering. Following the news, shares of Village Farms International Inc rose by 9.29% to close the day at $5.68 per share on Wednesday. The offering will however be subject to regulatory approval including that of the stock exchange.
The offering’s proceeds will be utilized in the repayment of a loan issued by a financial institution in Canada. Consequently the greenhouse facility measuring over one million square feet that Village Farms International has used as collateral against the loan will be removed as a security. The offering’s proceeds will also be used for general working capital and corporate purposes.
Commercial cannabis production
“With this financing complete, we look forward to a very busy and very productive 2018 as Pure Sunfarms anticipates starting commercial cannabis production at the initial 1.1 million square foot Delta 3 greenhouse in the Spring of 2018,” said Village Farms International in a statement.
Once the offering closes the number of outstanding and issued common shares of Village Farms International will be 42,032,612 shares.
The joint venture between Pure Sunfarms Corp and Village Farms was formed earlier this year and is aimed at pursuing production of high quality cannabis at low cost and on a large scale. Initially Village Farms International contributed the 25-acre Delta 3 greenhouse located in British Columbia. The facility will now be used to produce medical marijuana as well as recreational marijuana if applicable laws permit.
Pure Sunfarms Corp is on the other hand making a contribution of approximately $20 million. This cash amount will be used to meet the costs involved in converting the Delta 3 facility. An application license has already been submitted to the regulator for Delta 3 greenhouse and approval has already been granted. Consequently works on converting the facility have already started and the initial 0.25 million square feet quadrant is expected to be completed by February next year.
Once sales and cultivation licenses are received selling of dried cannabis should begin next year by July. All four quadrants are also expected to be engaging in commercial production by 2019. According to conservative forecasts of Pure Sunfarms, yearly production is expected to reach at least 75,000 kilograms of dried cannabis. This target is expected to have been hit by 2020.