Charlotte’s Web raises $66M in stock offering

LOUISVILLE — Charlotte’s Web Holdings Inc. (TSX: CWEB, OTCQX: CWBHF), a CBD product manufacturer, announced Monday it will raise $66.25 million in a public stock offering that will help fund ongoing capital expenses. 

The firm has entered into an agreement with Canadian investment underwriting services firm Canaccord Genuity Corp. to sell 5,000,000 shares at CA$13.25. Charlotte’s Web has granted the underwriters an option to purchase an additional 750,000 shares under the same terms.

The deal is expected to close in December.

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Charlotte’s Web’s fundraising comes as the company moves into a large new headquarters and production facility in Louisville. The stock sale is “primarily related to that cap ex expansion,” Charlotte’s Web investor relations director Cory Pala said. 

In August, the company signed a lease for a nearly 137,000-square-foot flex office space in Louisville’s Colorado Technology Center business park.

The new facility “will come online in stages in 2020 and will be fully functional within about a year,” Pala said.

The $66.25 million cash injection will help the firm equip and staff the Louisville facility. 

“We’re being opportunistic,” Pala said of the firm’s decision to raise capital during a relatively “difficult and volatile” period for hemp and cannabis firms. 

Stock prices for companies in the space have slumped in recent months due in large part to overinflated earnings projections. Charlotte’s Web has not been spared. 

The firm recorded a net loss of $1.3 million in the third quarter after posting a $1.8 million profit during that quarter in 2018. For the first three quarters of the fiscal year, the firm has recorded net income of $3.2 million.

Still, Charlotte’s Web’s quarterly revenues were up 42 percent from the same period in 2018 and company leaders are optimistic.

“We’re not burning capital like some of the companies in the cannabis or hemp space,” Pala said, The firm has no plans to engage in any additional fundraising beyond the deal with Canaccord Genuity Corp., he said.