The investment is a non-brokered private placement of debenture with a four-year maturity date. It can be converted into common shares of Choom Holdings the U.S. dollar equivalent of 95 cents per share. Aurora has obtained the right to acquire up to 40 percent of Choom the U.S. dollar equivalent of $2.09 per share.
Aurora's Expanding Retail Footprint
The investment in Choom Holdings gives Aurora Cannabis more exposure to the Canadian marijuana retail segment.
Choom aims to become one of the largest adult-use cannabis retail networks in the country. The company has obtained rights for 45 locations across Western Canada, which includes 27 development permits and 18 building permits in various cities.
The Terms Of The Deal
Under the terms of the agreement, Aurora's debenture can be converted into common shares any time before the maturity date at $1.25 per share, with a minimum conversion amount of $5 million. After the expiration of the hold period, Choom can convert the debenture into stock if the volume weighted average trading price, or VWAP, on the Canadian Securities Exchange is above $3 for more than 10 consecutive trading days. The debenture is nontransferable and carries an annual interest of 6.5 percent calculated semi-annually. Aurora Cannabis can opt to receive interest in stock instead of cash at a price per share equal to the VWAP for 20 days before the payment is due.
Aurora received around 95.76 million shares under warrants to buy stock at $2.75 each for no consideration. If Aurora exercises the warrants, it can amass 40 percent of Choom Holdings. The warrants can be exercised until Nov. 2, 2020.
Liquor Retailer Enters Cannabis Space
In August, Aurora Cannabis entered into an exclusive partnership with Alcanna Inc (OTC: LQSIF), the biggest private sector liquor retailer in Canada, that allows the latter to open retail cannabis locations in the country under the brand name Aurora.
The company plans to open 37 stores in Alberta, and received five interim licenses prior to the full legalization of weed in Canada Oct. 17.
The partnership follows Aurora's investment in Alcanna of 9.2 million shares, representing roughly 25 percent of the company.
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