OrganiGram strikes $9M stock deal with Dundee Capital

A Moncton-based medicinal marijuana company has received a financial boost with a major stock deal known as a "bought deal."

OrganiGram has entered into an agreement forDundee Securities to purchase 8.5 million shares of thelicensed medical marijuana producer at a cost of just over $9 million.

"It's where I receive a phone call from Dundee Capital and they tell me, `Guess what?If you want to sell $9 million worth of shares at $1.05 we'll buy it,'" said OrganiGram CEO Denis Arsenault.

"Then it's Dundee's responsibility to find the buyers for it," he added.

Arsenault says the deal has proved successful.

"So the bankers,in this case Dundee, was comfortable that if they bought $9 millionof my shares from the company that they would over the next day be able to sell that to institutional investors and retail investors and that's what happened." he said.

Arsenault says brokers have a right to sell up to 15 per cent more, and they did in this case, meaning the company is going to get $10.53 million.

Arsenault says the money will be used to expand the facility to increase production, and provide more jobs.

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Back in March, the provincial government announced it was giving OrganiGram up to $990,000 through payroll rebates.

The funding will be distributed over three years and help create up to 113 jobs, Premier Brian Gallant said in a statement.

OrganiGram is the only company in Atlantic Canada that's licenced to grow and sell medical marijuana and one of only 30 legal pot producers in Canada.

Health Canada has estimated medical marijuana sales will hit $1.3 billion annually by 2024.

Arsenault says he's pleased to be able to invest at home thanks to a well-educated work force, low power rates and a competitive cost of living.