Sugarbud Announces $848,000 First Tranche Closing of Marketed Public Offering of Convertible Debenture Units

Published: May 6, 2022

Sugarbud Announces $848,000 First Tranche Closing of Marketed Public Offering of Convertible Debenture Units

Sugarbud Craft Growers Corp. announced the closing of its first tranche of its previously-announced marketed public offering of convertible debenture units for aggregate gross proceeds of $848,000. Net proceeds from the Offering will be used for additional processing and production equipment purchases, facility upgrades and other corporate purposes. Research Capital Corporation was the sole agent and sole bookrunner in connection with the Offering.

Each Debenture Unit issued under the Offering consists of: (i) one 12.0% secured convertible debenture (each, a “Debenture“); and (ii) 1,000 common share purchase warrants of the Company (each, a “Warrant“). Each Warrant will entitle the holder thereof to purchase one Common Share at an exercise price of $1.00 for a period of five (5) years following the closing of the Offering.

The Debentures will bear interest at a rate of 12.0% per annum from the date of issue, payable on a semi-annual basis, such interest being payable: (i) in-kind in Common Shares based on the daily volume weighted average trading price for the 20 trading days preceding the date of interest payment; or (ii) in cash at the Company’s option. The Debentures will mature five (5) years from the closing of the Offering (the “Maturity Date“) and the principal amount of the Debentures will be repaid in cash only. The principal amount of each Debenture will be convertible into Common Shares at the option of the holder at a conversion price equal to $1.00. If the holder elects to convert the Debentures, then the holder will also receive an amount equal to the interest that the holder would have received if the holder had held the Debentures until the Maturity Date (the “Effective Interest“), payable in: (i) units (the “Interest Units“) (or if the holder is a Non-Arm’s Length Party (as such term is defined in the policies of the TSXV), Common Shares) based on the daily volume weighted average trading price for the 20 trading days preceding the date of such election; (ii) cash; or (iii) a combination of cash and Interest Units (or Common Shares, as applicable), at the Company’s option. For more details in respect of the securities issued under the Offering, and the underlying securities thereunder, please see the Company’s press release issued on April 22, 2022.

Each Interest Unit will consist of one Common Share and one common share purchase warrant (each, an “Interest Warrant“). Each Interest Warrant entitles the holder thereof to acquire one Common Share at an exercise price equal to the daily volume weighted average trading price for the 20 trading days preceding the date of the conversion election, at any time up to five (5) years following the date of such election (subject to adjustments in certain customary events).

Each holder of Debentures may, at their option, elect to exchange the aggregate principal amount of such holder’s Debentures for an equivalent aggregate principal amount of 15.0% non-convertible secured notes expiring on the Maturity Date (each, a “Secured Note“) on a one for one basis at any time prior to the Maturity Date. Any accrued interest from the date of exchanging the Debentures into Secured Notes will be carried forward and be payable on the applicable interest payment date, together with the interest accruing from the Secured Notes beginning on the date of exchange.

About Sugarbud
Sugarbud is a leading consumer-driven craft cannabis company focused on the cultivation and production of superior, select-batch, craft cannabis products. The Sugarbud Craft Cannabis Collection offers consumers “Hand-Crafted Cannabis for a New Era”. The Company is proudly Albertan and is proud to share Western Canada’s long tradition of exceptional craft cannabis with the most discerning of enthusiasts. Sugarbud strives to define the intersection of product craftsmanship, quality, and value for consumers in the Canadian craft cannabis space. Our vision and mission are to become a trusted and well-respected consumer brand renowned for providing exceptional high-quality craft cannabis products to legal markets.

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