Weed companies have used shells to go public,but I don’t see big bucks for ICBT shareholders with a 2+billion share float
Given the need to identify an appropriate entity for an RTO, whether it is a mining company or a CPC, and the risks of inheriting the baggage of another company, why wouldn’t a cannabis producer just perform a conventional IPO? A common misconception has been that the RTO process will be considerably cheaper or faster than an IPO, however, both the costs and timelines are often quite similar. While each licensed producer would have their own motivations, drivers for conducting an RTO as opposed to an IPO can include: the acquisition of a sufficient shareholder base to meet the minimum listing requirements of an exchange, the ability to test the waters with investors by offering a private placement before conducting the RTO as opposed to initiating the IPO process and incurring significant professional fees before determining the market’s sentiment, and, depending on the transaction structure, the ability for holders of the company’s shares (other than insiders), acquired through a private placement in advance of going public to freely trade their shares upon closing, thereby avoiding the four month statutory hold period customarily imposed on such shares.
Dentons Canada LLP partners, Corey MacKinnon and Kris Miks, have advised that “with proper advance planning, RTOs really do offer private companies significantly reduced execution risk. Knowing that the financing is complete, essentially in advance, removes a huge hurdle and a large degree of anxiety for management teams. Management, needs to understand that any going public transaction is enormously distracting to its focus on its core business. Accordingly, any reduction in execution risk makes such distraction much more palatable.”
