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CannTrust Enters Agreement to Raise $15 Million for Facility Expansion

November 1, 2017

 

CannTrust Holdings Inc. (CSE:TRST) (OTC:CNTTF), a licensed producer of medical marijuana under the Health Canada's ACMPR program, announced this morning that it has entered into an agreement with a syndicate of underwriters to raise $15,000,000 CAD. 

 

The underwriters, co-led by Echelon Wealth Partners Inc. and Bloom Burton Securities Inc., have agreed to buy CannTrust common shares at a price of $5.00 CAD per share on a bought deal basis, which will lead to net proceeds equivalent to approximately $11,632,867.20 USD at current exchange rates. 

 

CannTrust also granted the underwriters an over-allotment option to purchase up to 450,000 additional common shares of the company on the same terms as the offering. If the over-allotment option is exercised in full, the aggregate gross proceeds of the offering will be $17,500,000, equivalent to roughly $13,560,750 USDat current exchange rates. 

 

The net proceeds of the offering will be used to fund the Phase 2 build out of CannTrust's recently licensed Niagara Greenhouse Facility and for general corporate and working capital purposes.

 

Eric Paul, CEO of CannTrust, commented, "We recently announced record revenues and patient numbers and are continuing to see strong trends that we believe will take up full demand from Phase 1 of our recently licensed 430,000 Niagara Greenhouse Facility. "

 

Brad Rogers, President at CannTrust, added, "The pending legislation to legalize the adult consumer recreational use of cannabis provides a further major opportunity for the company. With the completion of all phases of our Niagara expansion we plan to have in excess of 1,000,000 square feet of production capacity. This will give us the ability to acquire a substantial share of the increased demand arising from this new market."

 

CannTrust expects the first harvest from its Niagara Facility in early November 2017, with full utilization from Phase 1 expected in December 2017. The planned Phase 2 expansion at this Facility is anticipated to be completed and in cultivation towards the middle of 2018. Phase 1 and 2 should conservatively provide the company with an additional 40,000 kilograms of annual growing capacity.

 

Closing of the aforementioned offering is expected to occur on or about November 30, 2017 and is subject to certain conditions including, but not limited to, the receipt of all necessary regulatory and stock exchange approvals, including the approval of the CSE and the applicable securities regulatory authorities.

 

In addition to the offering detailed above, CannTrust has also arranged for a $15 million CAD mortgage on the Niagara Greenhouse Facility.  The mortgage terms presented to the company remains subject to the lender's credit committee approval. The mortgage financing together with the bought deal offering would fully fund CannTrust through Phase 2 expansion at the Niagara Greenhouse Facility. Further updates will be provided as they become available. 

 

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