Making Sense Of Acreage Holdings Shares - Grow Life 420

Making Sense Of Acreage Holdings Shares

October 07, 2020

#KahliBuds #MMJ #CBD #THC

Acreage Holdings, Inc.  (OTCQX: ACRHF, ACRDF) announced that both its new Class D “floating” shares (OTCQX: ACRDF) and Class E “fixed” shares (OTCQX: ACRHF) will commence trading on the OTCQX Best Market on October 7, 2020, and graduating from Pink Sheet status. For shareholders, it’s the latest step in the tangled relationship between Canopy Growth (NYSE: CGC) and Acreage.

Acreage Holdings has never followed a simple path for its shareholders. The company’s initial stock ACRG.U was confusing in that it was traded on the Canadian exchanges but using American currency – hence the .U in the symbol. Most cannabis companies just had dual listings with Canadian stock using the Canadian currency and an American listing using U.S. currency. Then the company agreed to a most unusual deal with Canopy Growth, where Canopy would buy Acreage when the U.S. federally legalized cannabis – called the “triggering event.” That deal was recently amended and resulted in the creation of two new share classes.

OTC Share History

In the original deal, Canopy would buy all of Acreage. In the new deal, Canopy decided it didn’t want to be locked into a fixed deal. Canopy will buy only 70% of Acreage at a fixed price, but the remaining 30% will float with the market. The idea behind the floating shares was that the Canopy shareholders should be able to participate in any upside in the stock, should that happen. Canopy is not committed to buying the 30% of the company. It has the option to buy these shares if the triggering event happens or they decide to waive that condition.

The original symbol for Acreage on the OTC Markets Group was ACGRF. There are now two new symbols ACRHF, which are the fixed shares and ACRDF, which are the floating shares.

ACRGF  Old symbol. Delisted. No longer trading

ACRHF  Fixed shares. 70% of Acreage that Canopy is obligated to buy at .30xx

ACRDF  Floating shares. 30% of Acreage that Canopy has the option to buy at 30-day VWAP (volume-weighted average price) or $6.41, which is higher.

Which Is Better?

Shareholders understandably can’t figure out which one is better. For now, it looks like retail investors prefer the fixed share class. They know that Canopy will buy these shares. The floaters are only an option to buy. Canopy could change its mind and not buy the other 30% rendering these shares worthless.

Analysts, though, have been using the floating shares for their basis of valuation. So, when an investor reads an analyst report, it is based on the floaters, not the fixed shares. This is a rare disconnect for investors. The company is the same so that analysis is intact, however, any figures related to the market price will be referencing the floating shares – not the fixed shares.

New Loan

In the midst of all these changes, Acreage also managed to close a financing transaction with an institutional lender for $33 million and used a portion of the proceeds to retire its short-term $11 million secured convertible note. The loan is unsecured, matures in three years, and bears a 7.5% annual interest rate.

“Access to low-cost capital, even in a very challenging capital market environment for cannabis, has always been a core part of our strategy,” said Bill Van Faasen, Interim CEO of Acreage. “The retirement of the potentially dilutive, short-term convertible debt, and the additional cash infusion bolsters our balance sheet enabling us to continue to deliver on our shareholder commitments to accelerate our path to profitability.”


The post Making Sense Of Acreage Holdings Shares appeared first on Green Market Report.



Debra Borchardt, KahliBuds, 420GrowLife

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