Cann Group’s $34M Option Offer Hinges on December 23 Shareholder Approval

Overview of the Capital Raise

Cann Group Limited (ASX – CAN), a key player in the medicinal cannabis sector, has issued a detailed prospectus dated December 22, 2025, announcing a multi-faceted options offer. This capital raising initiative comprises several tranches – a Share Purchase Plan (SPP) Options Offer, Placement Options Offer, SPP Shortfall Options Offer, Lead Manager Options Offer, Lender Options Offer, and Piggyback Options Offer. Each tranche is designed to provide existing and new investors with the opportunity to acquire attaching options on a nil consideration basis, contingent on shareholder approval.

The extraordinary general meeting (EGM) to approve these offers is set for December 23, 2025. The company emphasizes that the issuance of these options is conditional upon this approval, aligning with ASX Listing Rule 7.1 requirements.

Terms and Potential Capital Impact

The attaching options grant holders the right to acquire shares at exercise prices ranging from 1.15 cents for the SPP and Placement Options to 2.85 cents for the Piggyback Options, with expiry dates spanning from June 2026 to June 2028. Notably, the options are issued for nil consideration, meaning no immediate capital is raised from the offer itself. However, upon exercise, the company anticipates raising approximately $34 million in aggregate, excluding associated expenses.

The prospectus outlines that if all attaching options and piggyback options are exercised, the fully diluted capital structure could swell to over 3.4 billion shares, including existing shares, options, and performance rights. This represents a significant potential dilution for current shareholders, a factor investors should weigh carefully.

Strategic Purpose and Use of Funds

The primary objectives of the capital raise are multifold – to provide Cann Group with incremental working capital upon option exercise, to satisfy obligations to lenders and lead managers connected with recent financing arrangements, and to facilitate the removal of trading restrictions on shares issued upon exercise of the options. The company intends to apply any funds raised towards bolstering its working capital position, supporting ongoing operations and potential growth initiatives.

Financial Position and Risks

Cann Group’s pro forma balance sheet as of June 30, 2025, reflects the impact of recent debt restructuring and capital raises, with net assets improving significantly upon anticipated option exercises. However, the company cautions that the timing and certainty of capital inflows depend on future option exercises, which remain at the discretion of option holders.

The prospectus also provides a comprehensive risk disclosure, highlighting challenges such as the need for additional capital, regulatory compliance, agricultural and production risks inherent in medicinal cannabis cultivation, market competition, and operational risks. Investors are advised that the investment is speculative and subject to dilution risks.

Governance and Next Steps

The announcement coincides with recent board changes, including the appointment of Mike Ryan as Chairman. The company has engaged Bell Potter Securities Limited as Lead Manager and MUFG Corporate Markets as share registry provider. Investors are encouraged to review the full prospectus and consider the implications of the offer carefully.

Shareholders will vote on the proposals at the upcoming EGM, with the outcome pivotal to the company’s capital structure and financial strategy going forward.