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 issue of 175 million fully paid ordinary shares at A$0.04 per share.
The total amount raised includes commitments totalling A$1.74 million cornerstoned by the company’s directors Bruce Linton, Adam Blumenthal and William Lay, subject to shareholder approval.
Creso anticipates that funds raised will be used to progress further expansion into the US with pending acquisition target, Sierra Sage Herbs LLC.
The company also continues to reduce cash burn across the entire business in line with its objective to be cash flow positive in three to four quarters.
“Value 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 the commitments from Creso Pharma directors.
“We continue to focus on value accretive acquisition opportunities, reducing operating expenses and accelerating product uptake through each operating division and are confident that fund commitments from the recent placement will support Creso Pharma’s objective to achieve a group cash flow positive position.
“Creso Pharma anticipates to be well funded to advance several near term opportunities and I look forward to providing updates as opportunities continues to materialise.”
Placement summary
Subject to shareholder approval, investors will also receive one option for every one placement share subscribed, exercisable at A$0.08 and expiring four years from the date of issue.
It is anticipated that the equity placement to unrelated parties will settle in two tranches, with about 109 million shares to settle on or around August 8, 2022, and 22.5 million to settle on or around August 11, 2022.
EverBlu Capital Corporate Pty Ltd acted lead manager and Perth-based CPS Capital Group Pty Ltd acted as co-manager of the placement.
The issue price represents an 18.37% discount to the last closing price of A$0.049 on July 26, 2022.