What made Flora Growth Corp tank 35% on Friday morning?
- Flora Growth Corp priced its public offering at a deep discount.
- The cannabis company will sell 10 million shares at $3.0 each.
- Shares of the Canadian firm tanked 35% on Friday morning.
Shares of Flora Growth Corp (NASDAQ: FLGC) are down 35% in premarket trading on Friday after the cannabis company priced its public offering at a deep discount.
Flora to sell 10 million shares at $3.0 each
Flora said it will sell 10 million shares at $3.0 each to raise $30 million in new capital. In comparison, the stock closed on Thursday at $3.69.
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Each unit, the Nasdaq listed company revealed, will represent one common share and one-half warrant immediately exercisable at $3.75 over five years.
The news comes more than a month after Roth Capital Partners’ Scott Fortune assumed coverage of Flora Growth Corp with a “buy” rating and a price target of $10 per share. Including the sharp decline in the stock price on Friday, that would now represent an over 300% upside from here.
Founded in 2019, Flora is a Canadian company that cultivates and processes natural, medicinal-grade cannabis oil and cannabis-derived medical and wellbeing products.
Underwriters can opt for over-allotment
Flora refrained from revealing how it intends to use the proceeds from the public offering that is expected to close on November 23rd after meeting the customary closing conditions.
Underwriters can also subscribe to over-allotment and buy another 15% of the units within 45 days.
The press release on Friday announced A.G.P/Alliance Global Partners as the sole book-running manager and Roth Capital Partners and BMO Capital Markets as co-managers for the public offering. Flora picked MKM Partners as the financial advisor.
Last month, the Toronto-headquartered company launched Flora Pharma – a new division focused on developing data-backed pharmaceutical cannabis products.