CanadaBis Capitalizes on Investor Demand with $4.5M Convertible Debenture Upsize

In the ever-evolving landscape of the cannabis industry, CanadaBis Capital Inc. (TSXV: CANB) has made a strategic move that could significantly bolster its financial flexibility and growth prospects. On March 27, 2025, the company announced an upsize of its brokered private placement, increasing the offering to up to 4,500 unsecured convertible debentures at a price of $1,000 per debenture, for gross proceeds of up to $4.5 million. This financing, led by Research Capital Corporation as the sole agent and bookrunner, is a testament to the strong investor demand and the company's ambitious plans for expansion.



The convertible debentures will bear interest at an annual rate of 11.0%, payable quarterly in arrears, and can be converted into common shares at a conversion price of $0.10 per share. This structure provides CanadaBis with the flexibility to manage its debt levels and avoid potential liquidity issues. The debentures will mature 48 months from the closing of the financing, with the option for CanadaBis to redeem them in cash at 105% of the outstanding principal amount, plus accrued interest, after five months from issuance.

The upsize of the financing is not only a vote of confidence from investors but also a strategic move that aligns with CanadaBis' broader growth plans. The company is in the process of completing a plan of arrangement with Simply Solventless Concentrates Ltd. (SSC), which, if approved by shareholders on April 28, 2025, will further integrate SSC's operations into CanadaBis' portfolio. The indenture governing the debentures includes provisions for the issuance of common shares of SSC upon conversion of debentures following the closing of the arrangement, with an adjustment to the conversion price based on the exchange ratio provided in the arrangement.

For income-seeking investors, the upsize of the convertible debenture financing presents an attractive opportunity. The 11.0% annual interest rate offers a compelling yield, especially in a market where high-yield investments are often accompanied by higher risk. However, it is crucial to consider the potential tax implications and the company's long-term financial health. The interest payments on the debentures are tax-deductible for CanadaBis, which can reduce its taxable income. However, the conversion of the debentures into common shares can dilute the ownership of existing shareholders, potentially affecting the company's earnings per share and stock value.

Investors should also be aware of the potential tax implications of holding convertible debentures. The interest income from the debentures is taxable, and investors will need to report this income on their tax returns. However, if the debentures are converted into common shares, investors may be able to defer the recognition of the interest income until the shares are sold, providing a tax advantage.

In conclusion, the upsize of CanadaBis' convertible debenture financing to $4.5 million is a strategic move that enhances the company's financial flexibility and supports its growth plans in the cannabis industry. For income-seeking investors, the 11.0% annual interest rate offers an attractive yield, but it is essential to consider the potential tax implications and the company's long-term financial health. As CanadaBis continues to navigate the dynamic cannabis market, this financing positions the company for further growth and integration with SSC's operations.