Canadian Cannabis Producer BZAM Announces Non-Brokered Private Placement to Raise Up to C$5 Million

BZAM Ltd a Canadian cannabis producer, revealed its plans to conduct a non-brokered private placement to raise approximately C$5 million. The company intends to offer up to 22,222,223 units, with each unit priced at C$0.225. The CEO, Matt Milich, expressed gratitude for the continued support of the company’s Chairman and largest shareholder. This investment aligns with the anticipated funding needs outlined during the November merger, as BZAM strives to achieve positive EBITDA and free cash flow by the second half of 2023.

Each unit in the offering will comprise one common share and one share purchase warrant. The warrant will grant the holder the right to acquire one additional share at an exercise price of C$0.40 per share, valid for three years from the closing date. The proceeds from the private placement will be allocated for general corporate purposes and working capital needs.

The completion of the offering, expected to occur on or around May 31, 2023, is subject to customary closing conditions and regulatory approvals, including those from the Canadian Securities Exchange (CSE). However, there is no guarantee that the offering will be finalized on the specified terms or at all, nor that the funds raised will fully meet the company’s intended purposes.

As the Chairman, who is also the largest shareholder and an insider of BZAM, will purchase all the units in the offering, it qualifies as a “related party transaction” under Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (MI 61-101). In compliance with MI 61-101, the company will submit a material change report disclosing the details of the transaction on SEDAR, The material change report was not filed more than 21 days before the anticipated closing date, as the terms of the offering and the Chairman’s participation were not finalized at that time. BZAM is relying on exemptions from formal valuation and minority shareholder approval requirements provided by MI 61-101. Specifically, the company is exempt from the formal valuation requirement under section 5.4 of MI 61-101, as the fair market value of the transaction involving interested parties does not exceed 25% of the company’s market capitalization. Additionally, BZAM is exempt from the minority shareholder approval requirement under section 5.6 of MI 61-101, as the fair market value of the transaction involving interested parties does not exceed 25% of the company’s market capitalization.

Investors and industry observers will closely watch the outcome of BZAM’s private placement, as it represents a strategic move to secure additional capital for the company’s ongoing operations and growth initiatives.