IM Cannabis announces $1.6 million private placement to repay loan

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Medical marijuana company IM Cannabis Corp. is planning a non-brokered private placement offering of up to $1.6 million through the sale of about 625,000 units.

The company, which operates in Israel and Germany, said in a news release it plans to use the proceeds from the offering to repay a loan that A.D.I. Car Alarms & Stereo Systems provided to its subsidiary IMC Holdings in 2022.

Each unit will be comprised of one share and one share purchase warrant.

Warrant holders are entitled to acquire one additional share at a price equal to a 50% premium to the offering price any time before 5 p.m. ET on the second anniversary of the closing date.

The offering, expected to close in one or more tranches by Nov. 11, will be led by the company’s management team, including Chair and CEO Oren Shuster and Shmulik Arbel, a director, the release noted.

Since October 2022, IM Cannabis has borrowed more than $8 million from various groups. Shuster has personally guaranteed the loans.

A valuation commissioned by independent members of the board determined the value of Shuster’s guarantees to be about $560,000.

Securities issued through the offering are subject to a hold period of four months and one day from the closing date under Canadian laws as well as restrictions that apply under applicable laws outside Canada, according to the release.

IM Cannabis shares trade as IMCC on the Nasdaq and Canadian Securities Exchange.

In March, the company proposed a reverse merger with Israeli biotechnology firm Kadimastem in which it would spin out – and potentially sell – its existing medical cannabis operations in Israel and Germany.