Organigram Announces C$65.2 Million BAT Private Placement Investment in Connection with the Acquisition of Sanity Group

Executive Summary

• Organigram entered a Subscription Agreement with BAT for a private placement of 23,924,430 shares at an average price of C$2.72, generating total gross proceeds of approximately C$65.2 million.
• Proceeds (together with cash on hand and existing senior secured credit facilities) will fund the cash portion of the pending acquisition of Sanity Group GmbH and related transaction expenses.
• The deal includes issuance of both common and non‑voting Class A convertible preferred shares to keep BAT’s post‑closing ownership below the 30 % threshold, with conversion terms that increase at 7.5 % per annum until a 49 % ownership cap is reached.

Key Details

• Subscription Agreement: BAT subscribes for 14,027,074 common shares @ C$3.00/share (C$42.08 M) and exercises top‑up rights for 9,897,356 shares @ C$2.335854/share (C$23.12 M).
• Total Gross Proceeds: C$65.2 million from the private placement.
• Use of Proceeds: Fund cash consideration for Sanity acquisition, transaction expenses, and general working capital.
• Share Structure Post‑Closing:
• BAT would receive 2,353,379 common shares and 21,571,051 preferred shares (non‑voting Class A convertible) under the private placement.
• Preferred shares convert one‑for‑one to common shares, with a conversion rate that escalates 7.5 % annually until BAT’s ownership would reach 49 % of voting common shares.
• Regulatory & Shareholder Approvals Required: TSX approval, German foreign direct investment clearance, and disinterested shareholder approval (≥50.1 % excluding BAT‑held shares).
• Related Party Transaction: The private placement and acquisition exceed 25 % of Organigram’s current share count and >10 % of market cap, triggering “majority of the minority” approval under NI 61‑101.
• Board & Governance: BAT holds nomination rights for up to 30 % of the Board subject to ownership thresholds; a second amendment to the investor rights agreement will be executed on closing.
• Closing Conditions: Completion of the private placement is contingent upon closing of the Sanity acquisition and satisfaction of customary conditions, including regulatory approvals.

Notable Quotes

(No direct quotes were provided in the release.)