Institutions buy into ‘potstock’ buzz
MGC Pharmaceuticals (ASX:MXC) has offered more evidence that the ‘potstock’ buzz is real – closing a $5 million capital raise “multiple times oversubscribed”.
The medical cannabis player told the market this morning that institutional and sophisticated investors had applied for $3.5 million worth of shares raised at 4.4c each – with a free attaching option exercisable at 6.5c available for every three shares subscribed for.
MXC, however, soon found that demand outweighed supply and so made another $1.5 million worth of shares available – bringing the bookbuild closing at $5 million.
The shares were offered at a 19% discount on its previous trading price.
Additional shareholders will be given a chance to buy into the action, however, with MXC also announcing a priority rights offer at the same price – with punters given the opportunity to buy up to $15,000 worth of shares.
The PRO will also come with a free attaching option and MXC is aiming to raise another $2 million from this, although it has set aside another $500,000 worth of shares in case of another oversubscription.
The company said the funds raised from the offers would go towards a number of things, including: the construction of a Slovenian medical cannabis growing facility; a research lab and cannabidiol extraction centre; and to continue the development of its push into Australia.
Early in April it announced a five-pronged plan to enter the Australian market – with the aim of taking advantage of what the University of Sydney has labelled a $150 million opportunity.
The medicinal cannabis player had focused on the European market through the development of cosmetic products derived from cannabidiol – but has recently pivoted to become more of a pharmaceutical player.
It now, however, has its sights set on the Australian market which has opened up following a series of positive legislative changes allowing for cannabis to be grown for medical purposes.
These changes include things such as downgrading cannabis from the prohibited list to a lower class of medical drug which contains things such as morphine.
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