The Week’s Largest Equity Transaction:

• On June 23, 2023, TerrAscend Corp. (TER: CSE)(TRSSF: OTCQX), The sixth-largest U.S. MSO by market cap, closed a $6.1M private placement of equity units.
• 07M units were sold at $1.50 per unit.
• Each unit consists of one common share and ½ of a warrant with a two-year life and an exercise price of $1.95.
• The warrants are worth approximately $.08 per unit producing a net share price of $1.424, a 24.65% discount from the pre-announcement price.
• Interestingly, the total size of the initial tranches of the combined equity and concurrent debt issues was increased by approximately $1M since the deal was announced (with an additional $4M to close on June 28). The initial equity portion was reduced by $.76M, while the debt was increased by $2.41M. Insiders purchased 0.6% of the equity and 20.2% of the debt.
• The transaction implies an EV/2023 revenue multiple of 2.49x and an EV/2023 EBITDA multiple of 11.78X, considerable premiums to the 1.27x and 5.93x medians and 1.5x and 7.74x third quartile measures of the 19 analyst-covered MSOs with market caps over $20M in the Viridian Capital Value Tracker.
• We believe a considerable amount of this premium relates to the company’s plan to up-list to the TSX, which should increase the trading liquidity of its stock. Historically, part of TER’s premium may have also come from its association and implied support by Canopy/Constellation. The value of this support has declined as Canopy has become less financially healthy. TER’s recent purchase of a Maryland dispensary and its positioning in New Jersey both support some premium, but it seems like most of this is already baked into the stock.

Public vs. Private Raises: 

• TerrAscend (TER: CSE)(TRSSF: OTCQX) was the only public company that raised capital this week.

Equity vs. Debt Cap Raises: 

• Equity accounted for two capital raises this week and 74.7% of the funds raised.