Shares of GABY Inc. (OTCQB:GABLF) are trading down almost 6% on Thursday morning, after the cannabis company announced a merger with Mankind Dispensary, one of the first licensed dispensaries in California.
GABY will pay a total of $36.5 million to acquire Mankind. The transaction will be completed via the issuance of 157,894,737 common shares of GABY at a price of C$0.05 per share, and a $5 million cash consideration.
In addition, Mankind will receive a secured non-convertible promissory note for $25.5 million with a term of 84-months; an annual coupon of 10% with balloon payments every 24-months for a total of $5 million; and a final balloon payment of $10.5 million at the end of the 84th month.
In addition, Mankind CEO and co-founder James Schmachtenberger will become chief strategy officer of GABY. Mankind’s senior management team will also join GABY’s senior management team.
A brokered private placement of up to C$11.0 million ($8.5 million) — lead by Mackie Research Capital Corporation — was also announced.
It was subscribed by a syndicate that includes Haywood Securities.
The placement is expected to close around Dec. 21. According to the company, roughly 50% of the money has already been committed.
Proceeds from the private placement are expected to be used to fund the merger with Mankind, the company’s…