VFF - Village Farms Raises $25 Million In Tight Capital Markets
Village Farms International, Inc. (NASDAQ: VFF) announced it has completed its previously announced registered direct offering with certain institutional investors for the purchase and sale of an aggregate of 18,350,000 common shares at $1.35 per share, together with accompanying warrants to purchase up to 18,350,000 common shares, which have an exercise price of $1.65 per share. The stock closed on Monday at $1.01 per share but was selling higher by one cent on Tuesday in early trading.
Village Farms said that it has raised approximately $25 million , before deducting placement agent fees and other offering expenses payable by Village Farms. The net proceeds from this offering will be used for general working capital purposes.
It’s been a tough market for cannabis companies to raise money. Viridian Capital Advisors wrote this week that cannabis capital raises are off to a multi-year low. Viridian says that only $5.9 million had closed through the first three weeks of the year compared to $157.2 million last year . Of that amount, public companies have raised 56.7% of total capital year-to-date.
CEO Dilution
As a result of the offering, the company noted that founder and CEO Michael DeGiglio’s ownership of Village Farms was diluted below 10% of Village Farms’ issued and outstanding common shares. Prior to the offering he owned roughly 11.4% of the issued and outstanding common shares of Village Farm. DeGiglio continues to beneficially own 9,259,529 common shares of Village Farms and vested stock options exercisable for 1,180,722 common shares of Village Farms, collectively representing approximately 9.4% of the issued and outstanding common shares of Village Farms.
The company also noted that because Mr. DeGiglio now owns or exercises control or direction over less than 10% of the issued and outstanding common shares of Village Farms, he is no longer subject to ongoing early warning reporting requirements under applicable Canadian securities laws in respect of his ownership of Village Farms.
The warrants will be exercisable beginning on July 30, 2023 and will expire on July 30, 2028 . Proceeds from the exercise of all the warrants would be approximately $30 million over this period.
In November, Village Farms reported its financial results for the third quarter ending September 30, 2022, as consolidated sales dropped by 2% to $71.1 million from $72.4 million in the 2021 third quarter. The c onsolidated net loss was ( $8.7 million ), or ($0.10) per share compared with a net income of $0.8 million ), or $0.01 per share. This also missed the estimates for an earnings loss of ($0.09). Last month the company announced that its subsidiary, Pure Sunfarms, began shipping cannabis products for the Israeli medical market under an exclusive three-year supply agreement with Israel -based Dr. Samuelov Importing and Marketing Ltd., doing business as Better Pharma .