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Captor Capital Corp – Capturing Marketshare
Equity Grades POSTED ON JANUARY 25, 2018
Captor Capital Corp (CSE: CPTR) is a company that has has been drawing more attention to itself as it is increasing its investments and financing.
They have been quietly acquiring assets in the US in the Cannabis space and now the E-games market.
In Early January, they announced that they would be purchasing I-5 Holdings (Private Company). You may of heard of this company earlier in our article on Quinsam Capital as they invested in I-5 back in May 2017.
Recent Transations
Back in November, Captor Capital initially made a $5M investment in I-5 Holdings by acquiring 12.5 Million common shares at a price of at $0.40. This investment would equate to 21% of the shares of I-5 Holdings.
To fund this investment they announced a PP for $5.9 Million at a price of $0.05 per unit with a $0.10 warrant (24 month) attached. They oversubscribed their $5.9M PP and raised $7.6M in capital for future investments.
The initial deal with I-5 Holdings also had a caveat that Captor had the option to acquire an additional 29% (17,500,000 shares at the time) in equity of I-5 Holding for $0.60 per share, this would make Captor Capital a 50% owner of the company.
In early January, Captor announced that they had signed a term sheet with I-5 Holding to acquire the remaining 79% of I-5 Holdings (73,500,000 shares at a value of $0.60 per share). Each I-5 Holding shareholder will receive 3 shares of Captor (deemed valued at the time was $0.20 per share).
Captor will issue an additional 220,500,000 shares to be given to I-5 shareholders who will own roughly 34.5% of the 640,000,000 Captor shares at the time.
There are also about 9 Million I-5 Holdings warrants and 5 Million stock options which will be converted to Captor at the same rate of 1 for 3. In essence there will be an additional 27M Warrants and 15M options outstanding for Captor Capital.
Captor also announced that they would be doing a PP raise of $20M raise @ $0.20 with a 1/2 warrant @ $0.30 (24 month). With $10M of the capital raised to go towards a loan for I-5 Holdings to finance its operations.
Captor later announced an upsizing of the Private Placement to $50M and also announced that signed a non-binding LOI with MM Enterprises USA LLC to subscribe for Class B membership interests of MedMen, for Class B membership interests (3%) of the issued and outstanding membership interests of MedMen for $30M US. Giving Medmen a valuation of roughly $1B US.
They also announced a small investment of $500,000 into Millennial Esports Corp (TSX: GAME)
About I-5 Holdings
I-5 Holdings is a Canadian company with US Cannabis holdings in Washington and California.
Their 3 main verticals are:
Cannabis production
Processing
Retail dispensary network
We posted their August 2017 Presentation deck in our Quinsam article but wanted to highlight their assets from that point in time as if gives a good overview of the company
How this affects Quinsam Capital
Captor Capital has seen a dramatic uptick in its share price recently since announcing their transaction with I-5 Holdings and this will also have a positive effect on Quinsam Capital also as they were invested in I-5 Holding back in May 2017
According to I-5 Holdings’ Form 45-106F1 Report of Exempt Distribution we are assuming that they got in this $0.40 round with a full warrant at $0.65 (24 month).
For every I-5 Holdings unit Quinsam Capital Purchased, They received 3 shares of Captor Capital (at the time it was worth $0.20) and their warrants carry forward to Captor at the same ratio.
For simplicity lets assume that QCA invested $100,000 in I-5.
They would receive 250,000 I-5 shares ($100,000 / $0.40) and 250,000 warrants at $0.65
Converting those shares over to shares of Captor equal 750,000 shares of Captor and 750,000 warrants exercisable at $0.35 (Warrant was for $0.65 above $0.40 as per the PP a 62.5% premium, Converting that over to Captor with assumed value share price at translation of $0.20 equates to $0.35)
With the current price of Captor of $0.82 this equates to a current value of:
$615,000 (Shares 750,000 x $0.82)
$352,500 (Warrants 750,000 x ($0.82-$0.35)
$967,500 value from a $100,000 investment (Roughly 10X their initial Investment)
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