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Little Green Pharma balance books for growth

24 March 2023 13:27
ASX: LGP

Little Green Pharma is set to strengthen its balance sheet and break even having secured firm commitments for a $AUD5 million dollar placement supporting the Company’s pathway to break even and achieve significant growth at scale.

This comes right on the heels of the Company’s psychedelic-focused subsidiary entering a strategic alliance with insurance giant HIF to develop a proof-of-concept mental health treatment facility with the capability to deliver psychedelic-assisted psychotherapy.

The placement was oversubscribed with support from both new and existing investors, with the funds being used to repay a balance of loan note with the Canopy Growth Corporation for the acquisition of its Denmark facility. Outstanding funds will be used for extra working capital and the cost of the offer.

Little Green Pharma acquired the world-class GACP cultivation and GMP licensed facility in June 2021 as part of its extensive EU expansion strategy, with the facility having the capability to produce in excess of 20 tonnes of biomass per annum including 12 tonnes per annum of dried cannabis flower.

The Company was able to secure its registration for its Billinol Little Green Pharma 16% THC cannabis flower medicine in November that year, the first locally produced cannabis medicine granted registration in Denmark. Since then, the Denmark facility has become pivotal to the continued growth of Little Green Pharma’s European strategy.

Since the acquisition, the Company has secured a number of supply deals for its exclusive products across Europe most recently, signing two massive supply deals, worth potentially $AUD4.5 million dollars each, with German alternative medicine giant Cannamedical, cementing itself as the preeminent non-Canadian medicinal cannabis supplier to Germany.

Little Green Pharma said its managing director has also committed an additional $50,000 to the Placement subject to shareholder approval at an Extraordinary General Meeting to be announced in due course.

“The proceeds of the Placement allow us to fully repay the outstanding Loan Note with Canopy Growth Corporation in relation to our 2021 Denmark facility acquisition, which both strengthens our balance sheet and removes associated interest expenses,” Chief Executive Fleta Solomon said.

“In addition, the business will use the balance of the funding to continue delivering on its growth trajectory and focus on achieving cash-flow break-even. We are confident the business’s current momentum will allow it to continue growing sales and leveraging domestic and international medicinal cannabis market opportunities.”

LGP’s Australian Stock Exchange-listed share price has risen 10.52 per cent today, currently selling at 21c (1.12 pm UTC+8 hours).

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