TLDR:
Althea Group Holdings (AGH) has secured $2 million in funding through a Loan Note Placement to support the expansion of its Canadian operations. The funds will be used for supply chain optimization, increased production capacity, and onboarding a new vape cartridge customer. The notes may convert into shares at $0.03, subject to shareholder approval.
AGH Secures $2 Million for Canadian Expansion
Althea Group Holdings Limited (ASX:AGH), a global leader in cannabis-based products, has announced $2 million in funding through a Loan Note Placement. This funding will drive expansion efforts at Peak Processing Solutions, AGH’s Canadian manufacturing facility, and further strengthen its market position.
How Will the Funds Be Used?
AGH plans to channel the funding into key operational improvements at its Ontario-based facility, including:
- Supply Chain Optimisation: Increasing core materials inventory and automating tax stamp applications.
- Production Capacity Expansion: Adding capacity for an additional 3 million beverage units.
- Infrastructure Upgrades: Connecting wastewater to the mains and preparing for new customer onboarding, including a significant vape cartridge client.
These initiatives aim to enhance efficiency and position the company for long-term growth in Canada’s burgeoning cannabis market, especially in cannabis beverages, a high-growth segment where AGH is already a leader.
The Loan Note Placement Explained
- Structure: 2 million Loan Notes issued at $1.00 each, raising $2 million.
- Terms:
- Pure debt instrument with 0% interest.
- Convertible into shares at $0.03 per Loan Note, pending shareholder approval.
- Maturity: 1 year from the issue date (unless repaid earlier).
If approved, the Loan Notes could convert into 66.67 million ordinary shares, providing investors with equity participation at an attractive conversion price.
Who’s Behind the Deal?
The Loan Note Placement was led by Taurus Capital Group Pty Ltd, which received a 6% fee and will be issued 25 million unlisted options (exercisable at $0.04 by February 2027), subject to shareholder approval. The placement was supported by sophisticated investors, including AGH’s major shareholder, Adman Lanes Pty Ltd.
CEO Insights
Joshua Fegan, AGH’s CEO, emphasized the importance of this funding:
“This funding strengthens our ability to deliver key initiatives and reinforces our growth in key markets. Enhancing Peak’s operations positions us to capitalise on Canada’s evolving cannabis landscape, especially in cannabis beverages, where we hold a strong niche.”
What’s Next for Investors?
- Growth Potential: With targeted investments in infrastructure and capacity, AGH is primed to scale operations in a high-demand market.
- Shareholder Approval: The upcoming general meeting will be crucial for approving the Loan Notes’ conversion mechanism and options issuance.
- Focus on Leadership: As AGH continues to lead in cannabis beverages, investors should watch for further developments in this segment.
Bottom Line: AGH’s strategic funding reinforces its commitment to growth in Canada’s evolving cannabis market. With a clear focus on efficiency and capacity expansion, the company is well-positioned for long-term success in this competitive space.
