The $2.9m capital raising has solidified Epsilon’s balance sheet position as it targets positive EBITDA by 2022.

Medicinal cannabis company Epsilon Healthcare (ASX:EPN) has successfully completed an oversubscribed capital raising of $2.9m, after receiving strong support from investors.

The placement, led by CPS Capital, was oversubscribed by $900k over the initial minimum target of $2m.

Epsilon will now issue around 32 million new shares at 9c each, which is a 14.6% discount to its 10-day Volume Weighted Average stock price.

As a bonus,  investors including CPS Capital will also receive  one new option for every two shares subscribed, subject to existing shareholder approval.

These options can be exercised to EPN stock at 15c in three years time.

The company will also seek to have the options listed on the ASX so option holders can trade them in the secondary market.

This proposal is subject to shareholder approval, and will be put forward at the 2022 AGM or an extraordinary general meeting.

Meanwhile, Epsilon has confirmed that it will use the funds  towards further growth initiatives.

This includes expanding its production capabilities at the Southport Facility as well as the Tetra Health clinics network.


Earnings positive by 2022

Epsilon has the largest GMP cannabis manufacturing facility in the southern hemisphere at Southport, which is attracting the interest from the medicinal cannabis community worldwide.

The company has recently signed a two-year deal with global cannabis powerhouse Cannim to be its Australian GMP manufacturing partner.

This and other partnership deals with the Valens Company and Cannvalate have now provided a pathway for Epsilon to be EBITDA positive in 2022.

On top of today’s $2.9m capital raising, Epsilon has also solidified its balance sheet position by extending a $3.6m debt facility with Mitchell Asset Management until October 2022.

The company is riding the wave of a rapidly growing global medicinal cannabis market, which at the moment still remains mostly tightly regulated.

In Australia, the Therapeutic Goods Administration (TGA) has permitted consumers to obtain low-dose cannabinoid (CBD) oils and pills from pharmacists.

This article was developed in collaboration with Epsilon Healthcare, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.