Breaking News: CLS Holdings USA, Inc. Announces up to US$40 Million Brokered Private Placement

CLS Holdings USA, Inc. (OTCQB: CLSH) (“CLS” or the “Company“) today announced that it has entered into an agreement with a Canadian agent (the “Agent“), whereby the Agent will assist the Company in selling on a commercially reasonable efforts private placement basis, up to US$40 million aggregate principal amount of senior unsecured debentures (“Debentures”) with an issue price of US$1,000 per Debenture, convertible into units of the Company (the “Units”) at the option of the holder at a conversion price of US$0.80 per Unit (the “Conversion Price”) at any time prior to the close of business on the earlier of: (i) the last business day immediately preceding the maturity date of the Debentures, being the date that is three (3) years from the closing date of the Offering (the “Closing Date”), and (ii) the date fixed for redemption (as set out in the Debentures (the “Offering”).

Each Unit shall be comprised of one common share of the Company (a “Common Share”) and one-half of one common share purchase warrant (each whole warrant, a “Warrant”).  Each Warrant shall be exercisable into one Common Share at a price of US$1.10 per Warrant (the “Exercise Price”) for a period of 36 months from the Closing Date.

The Debentures will be unsecured obligations of the Company and will rank pari passu in right of payment of principal and interest and will be issued pursuant to the terms of a debenture indenture to be entered into between the Company and a debenture trustee to be determined. The Debentures shall bear interest at a rate of 8% per annum from the Closing Date, payable on the last business day of each calendar quarter.  For a period of 18 months from the Closing Date, any interest payable shall automatically accrue and be capitalized to the principal amount of the Debenture and shall thereafter be deemed to be part of the principal amount of the Convertible Debenture.

Beginning on the date that is four (4) months plus one (1) day following the Closing Date, the Company may force the conversion of all of the principal amount of the then outstanding Debentures at the Conversion Price on not less than 30 days notice should the daily volume weighted average trading price of the common shares be greater than US$1.20 per common share for the preceding 10 consecutive trading days.

Upon a Change of Control (as defined in the Debentures) of the Company, holders of the Debentures will have the right to require the Company to repurchase their Debentures, in whole or in part on the date that is 30 days following notice of the Change of Control, at a price equal to 105% of the principal amount of the Debentures then outstanding plus accrued and unpaid interest thereon (the “Offer Price”). If 90% or more of the principal amount of the Debentures outstanding on the date of the notice of the Change of Control have been tendered for redemption, the Company will have the right to redeem all of the remaining Convertible Debentures at the Offer Price. The Debentures will also contain standard anti-dilution provisions.

Closing of the Offering is expected to occur in tranches on such dates as the Agent and the Company may agree and is subject to certain conditions including, but not limited to, the receipt of all necessary approvals of the securities regulatory authorities.

Pursuant to the terms of the Offering, the Agent has been granted an option to increase the Offering by 15%, which option is exercisable by the Agents at any time up until the Closing Date.

The Company will pay a cash commission to the Agent equal to 6.0% of the aggregate gross proceeds of the Offering (the “Agent’s Fee”) payable in cash or Debentures. The Agent will receive a corporate finance fee equal to 2.5% of the gross proceeds of the Offering divided by the Conversion Price, payable in Units on the Closing Date. The Company will also issue warrants to the Agent exercisable for a period of 36 months from the Closing Date to acquire that number of Units which is equal to 6.0% of the aggregate gross proceeds of the Offering divided by the Conversion Price, at an exercise price that is equal to the Conversion Price.

The Company intends to use the net proceeds of the Offering to fund the upfront loan payment to In Good Health Inc., to fund construction activities at the Leicester facility, to complete improvements to the North Las Vegas cultivation facility and for general working capital purposes.

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1 Comment
  1. Trent Williams 2 months ago
    Reply

    what will CLS put this $40 million towards?

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