Newstrike not left alone for long

Locks up $80M in funding within hours of CanniMed snub

It’s never easy being left at the altar, but for cannabis company Newstrike Resources Ltd., the pain could be relatively short-lived. Within hours of being publicly dropped by wouldbe suitor CanniMed Therapeutics Inc. early Wednesday morning — for a $9.5 million termination fee — Newstrike CEO Jay Wilgar was fielding calls from investment bankers.

By mid-afternoon, the company had locked up $50 million in financing, and by early evening they’d secured $30 million more.

“We had non-stop phone calls coming in from investment banks, it was crazy,” said Wilgar, who secured the financing from a consortium of underwriters including INFOR Financial Inc., Cormark Securities Inc., Eight Capital Inc. and Haywood Securities Inc. “It got to the point where we literally had several of them argue over what size each got to take.”

The financing wasn’t cheap. By issuing shares at $1.32, the bankers received an 11 per cent discount to Newstrike’s Wednesday closing price of $1.47, on top of six per cent underwriting fees.

But to keep that in perspective, Newstrike’s shares were trading below 60 cents less than a month ago.

The raise gives the company a much-needed cash infusion, after months watching from the sidelines as industry giant Aurora Cannabis Inc. first disrupted their friendly merger talks with CanniMed, then walked off with their would-be partner.

“(Newstrike’s) been incredibly distracted over the last six or eight months, and they weren’t able to raise capital during that period,” said a source close to Wednesday’s financing deal. “You’ve had this massive run up in all the stocks, but they haven’t been able to issue capital while everybody else has. So the moment the news came down…. It was the right time to put capital into them and allow them to pursue their growth strategy.”