VFF Stock Climbs on $28 Million USD Bought Deal

VFF Stock

VFF stock is up 5% on Tuesday after Village Farms International (TSX:VFF) (NASDAQ:VFF) announced the completion of a bought deal offering worth over $28 million USD.

VFF Stock Gains Due to Bought Deal Premium

The bought deal was conducted by a syndicate of underwriters co-led by Beacon Securities Limited and GMP Securities LP, which together purchased 3,059,000 VFF shares at a price of $9.40 CAD per share, a 30% premium of its opening price. The company has said it intends to use the net proceeds of the deal to fund working capital projects and general corporate purposes. Village Farms International is one of the longest-running cannabis companies in North America and saw its share value jump as much as 320% earlier this year in the early days of legalization.

VFF stock has actually been trading down for much of the last three months, despite some positive news from the company. Earlier this month, Village Farms' joint venture with Emerald Health Therapeutics (TSXV:EMH) (OTCQX:EMHTF), Pure Sunfarms, began shipping to the British Columbia Liquor Distribution Branch (BCLDB). This means Pure Sunfarms' product should hit shelves throughout BC imminently as the "green rush" hype cranks up again off the back of legalization 2.0 coming into effect.

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Pure Sunfarms Dispute Could Weigh on VFF Shares

One sticking point for investors may come from a dispute emerging from Pure Sunfarms between its two parent companies. Emerald Health is currently withholding $7 million CAD from Village Farms International over an alleged breach of the supply agreement between the two farms. As part of the agreement, Emerald is obliged to purchase 40% of the venture's total output, or pay the difference between the market price and a predetermined price failing to do so. Escalation of the situation may weigh on VFF stock going forward.

With the passage of the Farm Act 2018 legalizing industrial hemp in the US, paving the way for an explosion in demand for hemp-derived CBD products, and legalization 2.0 opening up a whole new market in Canada, VFF stock could be set for a very big year ahead as it looks to capitalize on access to a whole new consumer base.

>> Read More Village Farms News

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