March 3, 2021
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Tough crowd this week. Bay Street deal flow shuttered somewhat this week as inflation and long bonds became the new topic de jour and risk appetite soured. So far, only ~22 deals worth ~$323M have come to market this week compared to the 70 deals ($2.5B) seen last week. Rest assured deal junkies, we’re only 3 days in. Still, on a monthly basis it’s difficult to imagine March breaching the $6B in deal activity observed in February.
MediPharm Labs hit the issuance market for the first time in ~1 ½ years with a $29M bought deal of units. Management is giving subscribers full warrants on the issue - an effort to attract demand as equity markets continue to fade. It’s worth noting that since the company’s last offering in May 2019 for $75M, MediPharm’s share price has tanked by -91%. Unsurprisingly, the original underwriters – Scotia, BMO, and GMP – aren’t touching this deal. Fear not, though: Cantor has come to the rescue, leading the deal as its sole bookrunner.
Humour my meatball math for a moment, if you will. Assuming a normalized cash burn of ~$13M/quarter and a pro-forma cash balance of ~$65M, this still leaves the company with only ~5 quarters before completely draining its own taps again. With that in mind, I would now like to call upon Mackie Research and ATB to upgrade their performance ratings on the stock. Go ahead: do your best.
Several weeks back, WeedMD hit the market with a $15M bought deal of units priced at $0.82/unit. As of yesterday morning, the deal was repriced to $0.48/unit, the reason being significant impairment losses undisclosed to the company’s auditors and bankers. The deal is led by Canaccord and Eight Capital - who I am sure are very happy to have included the boiler plate “out” clauses found in underwriting agreements. Luckily for WeedMD, the underwriters did not exercise their outs - the deal pushes on. As for buyers of the stock? I am sure there are far less buyers as the company’s nefarious operations continue. The stock traded down to $0.44, from the February highs of $0.94.
In buy-side land (sorry to intrude @OPM Wars, this is small fry territory), while Som at Purpose and Raj at Evolve continue to fight it out in a battle for Bitcoin ETF dominance (Purpose launched a currency-hedged class for BTCC on Feb 25), 3iQ Corp. was busy trying to raise ~US$150M in new equity capital for its closed-end Ethereum fund. The at-the-market equity offering is being led by Canaccord.
Another worthy update: many initial BTCC/B and EBIT investors are still down on their positions.
CIBC and BMO made headlines in the Globe earlier this week after internal memos revealed that their return-to-office plans will be delayed until at least ~June. Can’t say I’m too shocked, given how disastrous Canada’s vaccination roll out has been. It’s hard to not look forward to grabbing some grub from the PATH.
Recently, I’ve been a big supporter of FLOCK rotisserie + greens as a healthier alternative to my weekly Porchetta fried chicken sandwich. I imagine that ready-to-go breakfast sandwiches, on the other hand, are a commodity in pent-up demand. I am bullish on McDonald’s (Exchange Tower), Porchetta & Co. (Exchange Tower), and Pumpernickel’s (Wellington Tower / TD Centre), while being decidedly short on Marcello’s Market & Deli.
When eating food1 at Marcello’s, you might as well tell your taste buds you no longer need them for the duration of the meal, since they won’t pick up a thing anyways. No matter who you are or which dinky shop you work at, I strongly believe that no one needs that kind of bland mediocrity in their life.
ECM World
Top 5 Notable Transactions
The Ether Fund (3iQ Corp.)
US$150M ATM equity offering of Class A units
CG lead w/ Cantor, Paradigm, Leede Jones
MediPharm Labs
$29M bought deal of units (1sh + 1wt)
Cantor lead w/ BMO, CG, Alliance, Stifel
Field Trip Health
$82M bought deal of commons
BB lead w/ Stifel, CG
OverActive Media Corp.
$20M treasury offering of sub receipts
TD lead
CEMATRIX Corp.
$13M best efforts offering of units (1sh + ½wt)
Gravitas lead w/ Clarus
Synergistically,
G.G.
Food, as defined by the Merriam-Webster dictionary, is “nutriment in solid form”. G.G. can neither confirm or deny that what is served at Marcello’s satisfies any of these criteria.
Great detail and a yummy food review!
Ahhh am so old, I miss the Loch & Key (went under in ‘88)
Thanks Gary,
Alan