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Organigram Holdings has dipped into its strategic investment pool to pick up a minority stake in Roxboro, North Carolina-based Open Book Extracts as part of its plan to target emerging cannabis markets in the United States and elsewhere.
Late last year, British American Tobacco injected 124.6 million Canadian dollars ($92.5 million) into Organigram, the majority of which it pledged for its strategic investment pool, named Jupiter.
“We are extremely excited to make our first Jupiter pool investment in Open Book Extracts, a company that we’ve had on our radar for quite some time,” Paolo De Luca, Organigram’s chief strategy officer, said in a statement.
Organigram’s investment for a minority position in Open Book Extracts amounts to $2 million (CA$2.7 million) in the form of a convertible note, according to a news release.
The companies said the investment will help the North Carolina business commercialize hemp-derived products in the U.S. over time.
They said the strategic rationale included:
- Expanding Organigram’s footprint in the U.S., which is a strategic priority per the Jupiter strategy.
- Open Book Extracts is growing quickly and is ready to tap the expanding legal hemp derivatives market.
- Organigram expects to gain insights into the U.S. market and its consumers.
- The two companies said they’re discussing how Open Book Extracts could serve as a research partner for efficacy testing, technology development and formulation sciences.
- Open Book Extracts is nearing completion of its EU-GMP certification.
Separately, Organigram said it has entered into an underwriting agreement with ATB Securities, as lead underwriter, to sell 7,740,000 units at a price of CA$3.23 per unit, for gross proceeds of approximately CA$25 million.
The New Brunswick-based company expects to use the proceeds to fund growth initiatives and for general corporate purposes.
Each unit will consist of one common share and half of one share purchase warrant.
Each warrant will be exercisable to acquire one common share for a period of four years after the closing date at an exercise price of CA$3.65 per warrant share.
The offering is expected to close April 2.
Shares of Organigram trade as OGI on the Nasdaq and Toronto Stock Exchange.
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