Althea Group Holdings has raised $4 million through a share and loan note placement to boost its THC beverage production and infrastructure across North America, targeting rapid growth in the U.S. and Canada.
- Raised $4 million via share placement and unsecured loan notes
- Funds to expand THC beverage production capacity by 3 million cans
- Investment focused on North American infrastructure and working capital
- Directors subscribed for $120,000 subject to shareholder approval
- Loan notes convertible into shares pending shareholder vote in March
Strategic Capital Raise to Fuel Growth
Althea Group Holdings Limited (ASX:AGH), a global leader in medicinal and recreational cannabis products, has announced a $4 million capital raise aimed at scaling its THC beverage operations in North America. The funding was secured through a combination of a share placement and a loan notes placement, attracting commitments from both new and existing sophisticated investors in Australia.
The capital raise comprises the issue of 125 million ordinary shares at $0.02 each, alongside 1.5 million unsecured loan notes issued at $1.00 each with zero interest. The loan notes include a conversion feature, allowing them to be converted into shares subject to shareholder approval at a general meeting scheduled for late March 2025.
Focused Investment in North American Operations
The funds will be strategically allocated to enhance Althea’s infrastructure in Canada and the U.S., with a particular focus on Peak Processing Solutions, the company's recreational cannabis subsidiary. Key initiatives include expanding production capacity by an additional 3 million THC beverage cans, securing critical production materials, automating tax stamp applications, and establishing wastewater infrastructure in Canada.
In the U.S., the capital will support the acceleration of Peak USA’s commercial production and distribution capabilities, following the successful completion of its first commercial production run last month. Strengthening working capital is also a priority to maintain operational stability amid rapid expansion.
Leadership Confidence and Shareholder Engagement
Directors Vaughan Webber and Managing Director Joshua Fegan have demonstrated confidence in the capital raise by subscribing for up to $120,000 in the share placement, pending shareholder approval. This alignment with shareholders underscores management’s commitment to the company’s growth strategy.
Joshua Fegan highlighted the strategic importance of the funding, stating that it solidifies Peak North America’s leadership in the THC beverage market and positions the company to meet growing consumer demand across Canada and the U.S. The company’s contract development and manufacturing organisation (CDMO) model and trusted partnerships are expected to facilitate rapid scaling.
Convertible Loan Notes and Shareholder Vote
The loan notes issued as part of the capital raise carry no interest but offer a conversion mechanism into ordinary shares at $0.02 per share, contingent on shareholder approval. If approved, 75 million new shares will be issued within three months of the general meeting. Should shareholders reject the conversion, the company will be obligated to repay the loan notes in cash within one year.
This convertible structure provides flexibility for Althea to manage its capital structure while offering investors potential equity upside. The upcoming shareholder vote will be a critical milestone in determining the company’s capital and growth trajectory.
Outlook for Althea’s THC Beverage Ambitions
Althea’s successful capital raise comes at a pivotal time as the North American cannabis market continues to evolve rapidly, with THC beverages gaining significant traction among consumers. By leveraging its established Canadian operations as a foundation, Althea is well-positioned to capitalize on expanding U.S. market opportunities.
Investors will be watching closely to see how the company executes on its production scale-up and distribution expansion, as well as the outcome of the shareholder meeting that will unlock the conversion of loan notes into equity. These developments will be key indicators of Althea’s ability to sustain growth and enhance shareholder value in a competitive sector.
Bottom Line?
Althea’s $4 million capital raise sets the stage for accelerated THC beverage growth, but shareholder approval will be the next critical hurdle.
Questions in the middle?
- Will shareholders approve the loan note conversion at the upcoming meeting?
- How quickly can Althea scale its U.S. THC beverage production to meet demand?
- What impact will increased production capacity have on Althea’s revenue and margins?