GAIL LETHBRIDGE: Griping about ‘youth today’ is a rite of passage
A few questions with Halifax artist Élana Camille Saimovici
Why can’t it be you? The driving force behind success
SUCCESS = career + money ... or does it?
Should I stay or should I go? A look at graduate retention
A conversation with Canadian Armed Forces veteran and health ...
Generational value gaps shifting as individualist thinking warps view ...
Success: Two women. Two lives. One take.
Five questions, 10 answers: let's make prejudice, inequality history
Money. Happiness. Family. How do we define success?
Fresh off advising on a cannabis deal for the first time, Royal Bank of Canada is now set to participate in its first-ever share sale by a pot producer.
The bank’s investment-banking division, RBC Capital Markets, will be one of the lead bookrunners on a US$200-million public stock offering by Vaughan, Ont.-based CannTrust Holdings Inc., which was announced on Monday.
Citigroup Inc., Bank of America Corp.’s BofA Merrill Lynch and Credit Suisse Group AG’s Credit Suisse Securities (USA) LLC will also co-lead the deal.
RBC declined to comment on the transaction but confirmed the bookrunning gig was the first time it has participated in an equity financing in the cannabis sector.
The bank marked another first in March, when it was announced RBC Capital Markets was acting as “exclusive” financial advisor to pot producer Newstrike Brands Ltd., the target of a $263-million acquisition by HEXO Corp.
Major financial institutions have been cautious when it comes to cannabis, which is legal in Canada but still federally illegal in the United States.
In the meantime, the marijuana sector has been largely served by smaller independent investment firms, although Canadian lenders such as Bank of Montreal and Canadian Imperial Bank of Commerce have provided financing for the industry.
RBC signalled it would start making marijuana-related moves late last year, with the head of its capital-markets arm telling Bloomberg News the bank would be “selective in our approach.”
The bank also has a significant U.S. footprint, which CannTrust said factored into its decision-making.
CannTrust’s financing is being done simultaneously in Canada and the United States, a prospectus supplement showed. The company is listed on both the New York Stock Exchange and the Toronto Stock Exchange.
“CannTrust selected BofA Merrill Lynch, Citigroup, Credit Suisse Securites (USA) LLC and RBC Capital Markets to act as lead bookrunning managers for the offering to maximize distribution in the U.S. as the company is a recently listed issuer in that market,” the company said in an email.
Also acting as bookrunning managers on the CannTrust deal are Jefferies LLC and Canaccord Genuity LLC, the release said.
There is no guarantee “as to whether or when” the offering may be completed or its actual size and terms, the release said. There are conditions attached to its completion as well, including any required approvals from stock exchanges.
Approximately 85 per cent of the shares offered would come from CannTrust with 15 per cent being offered by certain shareholders.
“The Company intends to use the net proceeds of the offering for general corporate purposes, including cultivation and facility expansion, expanded outdoor growing, international expansion, enhanced extraction capacity, upgrades for GMP Certification and biosynthesis development,” it added.
CannTrust runs a Niagara-area harvesting facility in Pelham, Ont. and packages products at a Greater Toronto Area manufacturing centre in Vaughan. Its CEO is Peter Aceto, the former head of Tangerine Bank, which is owned by Scotiabank.
Copyright Postmedia Network Inc., 2019