The Week’s Only Closed Equity Transaction:

• On May 10, 2023, PharmaCyte Biotech, Inc. (PMCB: OTCQB) announced closing a $35M Convertible Preferred Unit offering.
• The company sold 35,000 shares of the preferred at $1,000 per share.
• The stock is convertible into common shares at $4.00 per share, a 43.9% premium over the stock price at closing.
• Investors will receive 8.75 million 5-year warrants with a $4.00 exercise price.
• The preferred carries a 4% dividend rate and has amortization provisions requiring the company to redeem equal amounts monthly, beginning in November 2023. Dividends and amortization payments can be paid in additional common shares at the company’s option.
• The preferred contains affirmative and negative covenants regarding the incurrence of debt, liens, and restricted payments.
• Although technically, an equity security, essentially designed as a delayed equity issuance vehicle, we believe this instrument has significant debt characteristics.
• Considering the dividend rate, the conversion option, and the warrants, we calculate an effective cost of approximately 16.5% for this preferred. We have not included the amortization value, which would increase the effective cost by several points.
• PharmaCyte also announced a tender offer for up to 7.75M shares at $3.25 per share, an approximate 17% premium over the pre-announcement price.

Public vs. Private Raises: 

• Three of this week’s four capital raisers are public companies. One trades in Canada on the CSE. Two trade in the U.S. (one on OTC and one on Nasdaq.

Equity vs. Debt Cap Raises: 

• Equity accounted for two of the week’s four capital raises and 50.9% of the funds.