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- MGC Pharmaceuticals (MXC) has entered into a $15 million convertible securities financing agreement with Mercer Street Global
- The first tranche of $2.25 million will be drawn down through the issue of 2,475,000 convertible notes with a face value of one dollar each
- Any additional funding will see Mercer issued convertible notes worth 110 per cent of the value of the money loaned
- MGC plans to use the money to accelerate its global research and marketing strategies
- MGC Pharmaceuticals closed Thursday’s session steady at 2.4 cents per share
MGC Pharmaceuticals (MXC) has entered into a $15 million convertible securities financing agreement with Mercer Street Global.
The first tranche of $2.25 million will be drawn down through the issue of 2,475,000 convertible notes with a face value of one dollar each.
The plan
MGC plans to use the money to accelerate its global research and marketing strategies.
Ongoing clinical trials, including the completion of a phase II trial of a COVID-19-targeted formulation of ArtemiC, acceleration of the CannEpil phase IIb clinical trial and the continuation of Glioblastoma brain cancer research, will be funded.
The money will also be used to support production and sales as the company rolls out ArtemiC and other phytocannabinoid products into new markets including Brazil and the U.K.
MGC Co-founder and Managing Director Roby Zomer says the funding will enable the company to take some important steps in executing its strategy.
“This funding agreement in total is significantly larger than what we envisage being required. However, in the near term, it allows us to fast track commercial activities and multiple preclinical and clinical trials until their completion,” Roby said.
“We are also now able to complete the acquisition of Medicinal Cannabis Clinic which provides us access to large new markets and patients in Australia, currently our largest market and revenue generator,” he added.
The company says the funding will underpin its strategy to become cashflow break-even or positive during the first half of 2021 via the ramp-up of its global commercialisation initiatives.
The deal
The initial issue of 2.475 million convertible notes will also come with 9.375 million shares, worth around $225,000.
The additional funding of up to $12.75 million would have to be drawn down within 18 months of the signing of the agreement.
Any additional funding will see Mercer issued convertible notes worth 110 per cent of the value of the money loaned. If MGC takes the whole $12.75 million, 14,025,000 convertible notes would be issued.
Any conversion of the notes will have a floor price of 1.8 cents per share.
The first tranche notes will have a conversion price of 2.4 cents per share within the first two months. Thereafter, shares will be priced at the lower of either 2 cents or 92 per cent of the lowest daily volume-weighted average price over the ten days prior to the conversion.
Any subsequent issue of notes may be converted at the lower of either 3.5 cents or 92 per cent of the lowest daily volume-weighted average price over the ten days prior to the conversion.
Should Mercer choose not to convert the notes within 12 months of the date of issue, MGC will have to repay the face value of the notes.
MGC can opt to draw down between $500,000 and the full $12.75 million remaining under the funding facility.
With the new funding arrangement in place, MGC can continue its research and marketing strategy into 2021 and beyond.
MGC Pharmaceuticals closed Thursday’s session steady at 2.4 cents per share.
