The Week’s Most Interesting Equity Transaction:

• On May 24, 2023, Bright Green Corporation (BGXX: Nasdaq), “one of the few companies selected by the U.S. government to grow, manufacture, and sell, legally under federal and state laws, cannabis and cannabis-related products for research, pharmaceutical applications, and affiliated export,” closed a $3.5M private placement of units.
• BGXX sold 3.68M units at $.95 per share.
• Each unit included one common share and one five-year warrant with a $.95 exercise price (0% premium). The long-dated no-premium warrant is worth approximately $.32 per unit, reducing the net share price to $.63, a 37.3% discount to the pre-announcement price. This discount is significant, considering the issue only increased the share count by about 2%.
• The unit sale implies a market cap of $112M and an enterprise value of $107M, both relatively high for a pre-revenue company that still needs to complete a massive capital raise to put its plans in place.
• The issue does little to address Bright Green’s near-term liquidity. The company’s March 10-Q shows cash of $422,502 against current liabilities of $8.95M.
• Bright Green intends to raise $500M utilizing the EB-5 program, under which it plans to sell approximately 12.5M shares at $39.99 per share. Each investor who purchases a minimum of $800,000 of stock and $80,000 of filing fees will receive a visa and the opportunity to become a U.S. Permanent Resident. Proceeds will fund the construction of the company’s greenhouse facilities in Grants, New Mexico.
• Bright Green’s stock has been highly volatile but has significantly outperformed the general cannabis market as measured by the MSOS ETF and depicted in the chart below.

Public vs. Private Raises: 

• All of this week’s three capital raisers are public companies. One trades in Canada on the TSX, and all three trade in the U.S. on Nasdaq.

Equity vs. Debt Cap Raises: 

• Equity accounted for two of the week’s three capital raises and 4.7% of the funds.