AGH Successfully Completes $2 Million Capital Raising to Enter US Cannabis Beverage Market
AGH (AGH) Share Update July 2024 Tuesday 16th
AGH Completes $2 Million Capital Raising for US Expansion
Althea Group Holdings Limited (ASX: AGH) has successfully completed a $2 million capital raising to support its expansion into the US cannabis beverage market and launch new products in Canada.
Instant Summary:
- AGH raised $2 million through a placement of shares.
- Strong demand from new and existing institutional and sophisticated investors.
- Funds will support US cannabis beverage market expansion and new product launches in Canada.
- AGH aims to achieve EBITDA of $4.0m to $7.0m for FY25.
Capital Raising Details
On July 16, 2024, Althea Group Holdings Limited (ASX: AGH) announced the successful completion of a $2 million capital raising through a placement of approximately 101.3 million new fully paid ordinary shares at an issue price of $0.020 per share. The placement was well-supported by both new and existing institutional and sophisticated investors, as well as key strategic stakeholders within the US cannabis beverage industry.
The new shares will be issued under the company's available ASX listing rule 7.1 and 7.1A placement capacity and will rank equally with existing shares. Settlement of the placement is expected to occur on or about July 22, 2024. Participants in the placement will also receive one free attaching option for every new share subscribed, exercisable at $0.030 each, with an expiry date two years after the date of issue. These options will be subject to shareholder approval at an Extraordinary General Meeting expected in September 2024.
Use of Funds
The funds raised will be used to support AGH's ongoing growth initiatives, including the expansion into the US cannabis beverage market and the launch of additional product ranges in Canada. Specifically, the funds will be applied to equipment procurement and installation to commence cannabis beverage production in the USA, expansion activities in the USA and Canada, and general working capital.
AGH sees the US cannabis beverage market as a significant near-term growth opportunity and aims to become a leading supplier of THC beverages across the USA. The successful application of these funds will enable AGH to deliver on its recent earnings guidance for FY25, targeting revenue of $50 million to $60 million and EBITDA of $4 million to $7 million.
CEO's Statement
AGH CEO and Managing Director, Joshua Fegan, expressed his excitement about the capital raising, stating, 'We are thrilled by the tremendous support from our shareholders and new investors in this capital raising effort. The funds secured will greatly enhance our financial flexibility, allowing us to pursue our strategic initiatives with renewed confidence. With THC cannabis beverages now legal in the USA and projected to become a $19 billion market by 2028, this is a pivotal moment in AGH's journey. We are poised to drive growth and create long-term value for our stakeholders.'
The successful capital raising is a positive development for AGH, providing the company with the necessary funds to expand into the lucrative US cannabis beverage market. This move is expected to drive significant revenue growth and improve the company's financial performance. The anticipated increase in EBITDA for FY25 reflects the potential for substantial returns on this investment. Overall, the market reaction to this news is likely to be positive, as investors see the potential for AGH to capitalize on the growing demand for cannabis beverages in the USA.
Investor Reaction:
Analysts and investors have responded positively to the news, highlighting the strong demand for the placement and the strategic importance of entering the US cannabis beverage market. The projected growth in the US market and AGH's established presence in the cannabis industry are seen as key factors that will drive the company's future success.
Conclusion:
AGH's successful $2 million capital raising marks a significant milestone in the company's growth strategy. Investors should keep a close eye on the company's progress in the US cannabis beverage market and the impact of new product launches in Canada. With the potential for substantial revenue and EBITDA growth, AGH is well-positioned to deliver long-term value to its shareholders.