Cannasouth wants to raise $4.1 million at a 23% discount to help fund the first NZX-listed medicinal cannabis company's distribution and manufacturing. 

The company will sell shares at 30 cents each in a 1-for-10 pro rata renounceable rights offering, a discount to the 39 cents the stock closed at yesterday. 

Cannasouth said it will spend the money raised on delivery of flower sales in New Zealand and abroad, domestic distribution of cannabis products, expanding its production capacity and developing its laboratory support. 

The company this week reported a loss of $3.7m in the six months ended June 30, widening from $2m a year earlier as its first harvest came on stream.

Cannasouth flagged plans to raise funds at the result, reporting a net cash outflow of $2.9m in the half, leaving it with $2.6m in the bank at the end of the balance date.

This is the third capital raising for Cannasouth since May 2020, with the company raising $6m that year and $4.5m in capital last year.

The shares fell 2.6% to 38 cents in early trading on the NZ stock exchange (NZX). 

The rights are tradeable between Aug 19 and Sept 1.

Cannasouth said eligible shareholders who don’t take up all or some of their rights can sell some or all of their rights on the NZX main board. 

Investors who fully exercise their rights will have an opportunity to apply for additional shares through an oversubscription bookbuild facility to allocate those rights not taken up.  

The final price in the bookbuild process will have a floor of the 30 cents offering price.