TGOD Spin Off Provides Cannabis Investors with Ground Floor Opportunity
July 25th, 2018
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The Green Organic Dutchman Ltd. (TSX: TGOD) (OTCQX: TGODF) raised more than C$115 million in an initial public offering at C$3.65 about three months ago. Since then, the stock soared to a high of C$7.87 before settling in the C$6.00 range over the past few weeks, netting investors a return of over 60 percent (assuming a sell price of $6) in less than six months. Investors that missed the original IPO may have another opportunity in the form of a planned spin off during the fourth quarter of this year.
Invest Alongside Management and Insiders in a Seed Round
The same team behind The Green Organic Dutchman’s successful IPO plans to create a new company, TGOD Acquisitions, that will be spun off as a special dividend providing TGOD shareholders the ability to purchase a Unit in TGOD Acquisitions for $0.50. Management believes that the new IPO presents investors with a unique opportunity to tap into TGOD’s significant expertise and participate at a seed level that’s typically reserved for management, employees, close friends and family.
“This is an incredible opportunity for TGOD to transfer expertise and monetize our proprietary knowledge from the Canadian marketplace,” said TGOD CEO Brian Athaide. “We will partner with innovative and disruptive companies that we can assist with capital market knowledge and unique retail-exclusive financing methods. The intention is to raise additional capital and list TGOD Acquisition on the Canadian Securities Exchange.”
The new company will focus on strategic acquisitions and worldwide opportunities that are not core to TGOD’s own business in Canada. With its listing on the Canadian Securities Exchange the new company will be permitted to participate in the United States cannabis industry, which is off-limits for companies that are listed on the Toronto Stock Exchange. It could also participate in other markets around the world, including growing European markets.
A Closer Look at the Transaction
The Green Organic Dutchman will distribute a warrant to acquire a TGOD Acquisitions unit for $0.50 to its shareholders. Each unit will consist of one share plus an additional warrant that will be triggered by a subsequent financing following the initial offering. The distribution will be paid on the basis of one warrant for every 6.67 TGOD shares owned on the record date, which will be fixed by the board of directors over the near-term.
The only way to increase exposure to TGOD Acquisitions is through an increased position in TGOD common shares prior to the record date, that has yet to be set.
TGOD and TGOD Acquisitions will enter into a repayable funding agreement whereby TGOD will provide C$25 million of working capital to TGOD Acquisitions that will be repayable by TGOD Acquisitions prior to the completion of any investment. In consideration, TGOD Acquisitions will issue a restricted warrant to purchase 50 million common shares for a period of 25 years from the date upon TGOD Acquisitions beings trading on the CSE.
Units that aren’t purchased by investors will be backstopped by TGOD management. Following the completion of the spin off, TGOD Acquisitions will operate at arm’s length to TGOD and will have an independent board of directors and management team. The details of the new board and management team will be announced with the filing of materials at a special meeting of TGOD shareholders to approve the transaction.
TGOD VP of Investor Relations, Danny Brody, gives an overview of the company’s current position in the legal cannabis market as a certified organic producer. He also discusses the company’s ambitious international plans, and TGOD’s positioning in the emerging edibles and beverages space. Filmed at the O’Cannabiz Expo in Toronto, June 8, 2018.
The Green Organic Dutchman Ltd.’s (TSX: TGOD) (OTCQX: TGODF) plans to spin off TGOD Acquisitions could generate tremendous value for shareholders. Rather than expanding its own scope, the company is providing its shareholders with an opportunity to invest in an internationally-focused cannabis company that leverages the same intrinsic value. TGOD shareholders can then focus on a pureplay in the Canadian market.
For more information, visit the company’s website at www.tgod.ca.
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