Craft 1861 is the latest cannabis company to find a major backer
Special Purpose Acquisition Companies (SPAC) are not new, but their use as an alternative to taking a company public is. In 2020 and in the midst of a stock market rally, this investment vehicle has definitely taken off. It has already been obviated that one of the main goals of these companies is to buy or merge with another company. New Mexico and its cannabis industry have seen this move after British Columbia-based BGP Acquisition agreed to take over Craft 1861 Global.
Through the deal, Craft will receive an equity investment from BGP valued at $100 million, as well as a $100 million undrawn committed line of credit facility, which has recently been put on the table for investors to consider. As initial equity consideration, BGP will issue 430,000 pro rata voting shares to Craft Global shareholders. These will be supplemented by an additional gain of 100,000 proportional voting shares based on a certain milestone trading price.
The companies expect this transaction to be completed before the end of the year. Led by retailers, Craft Global is a US company related to the health and wellness sector. Through it, consumers can obtain cannabidiol (CBD) products derived from hemp. In addition, the firm operates a vertically integrated cannabis company in New Mexico under the banner 1861 Market.
Once the transaction is completed, the company’s pro forma market capitalization will be approximately $580 million. BGP expects this move to serve as a qualifying transaction, a financing requirement that all SPACs must go through.