In the category of recent rips in the cannabis space, you might want to take a look at CannaRoyalty Corp (OTCMKTS:ORHOF). ORHOF just announced that shareholders representing approximately 26% of the common shares of the company, on a fully-diluted basis, have entered into voluntary voting support agreements with the company in support of “its vision, strategic direction, and business plan.”
If you read that closely, you will likely think it sounds completely absurd. Normally, we would agree. However, in this case, the company may have a point. According to the release, “In recent months, Origin House has been approached by several public cannabis companies contemplating stock-based offers to acquire the Company. To date, these approaches have not culminated in transaction terms that recognize the long-term value of Origin House. Accordingly, in the estimation of management, there is a growing risk of hostile takeover activity with respect to the Company’s shares. The Support Agreements were prepared in consultation with the Company’s legal and strategic advisors to protect shareholders from coercive activity.”
CannaRoyalty Corp (OTCMKTS:ORHOF) trumpets itself as a private equity firm specializing in acquisitions. The firm invests in the legal cannabis sector with a focus on research and intellectual property, consumer brands, and industry infrastructure. It seeks to invest in the United States and Canada. CannaRoyalty Corp. is headquartered in Ottawa, Canada.
The company is doing business as Origin House.
Origin House is a growing cannabis products and brands company operating across key markets in the U.S. and Canada, with a strategic focus on becoming a preeminent global house of cannabis brands.
The Company’s foundation is in California, the world’s largest regulated cannabis market, where it delivers over 130 branded cannabis products to the majority of licensed dispensaries.
Origin House’s brand development platform is operated out of five licensed facilities located across California, and provides distribution, manufacturing, cultivation and marketing services for its brand partners. The Company is actively developing infrastructure to support the proliferation of its brands internationally, initially through its acquisition of Canadian retailer 180 Smoke.
Origin House’s Common Shares currently trade on the Canadian Securities Exchange (CSE) under the symbol “CRZ” and will trade under the symbol “OH” effective October 23, 2018. Origin House is the registered business name of CannaRoyalty Corp.
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As noted above, ORHOF just announced that shareholders representing approximately 26% of the common shares of the company, on a fully-diluted basis, have entered into voluntary voting support agreements with the company in support of “its vision, strategic direction, and business plan.”
We’ve witnessed 74% during the past month in terms of shareholder gains in the stock. In addition, the stock has benefitted from a jump in recent trading volume to the tune of 31% over what the stock has registered over the longer term.
Marc Lustig, Chairman and CEO of Origin House commented, “There is a growing trend within the cannabis sector of hostile consolidation transactions with companies using their stock as currency. We are seeking to protect the Company from opportunistic paper bids designed on taking advantage of shareholders by offering short-term gain while depriving them of the more significant potential long-term value that we are building. In my personal capacity as the Company’s largest individual shareholder, I view the Company’s other key shareholders’ unanimous willingness to enter into the Support Agreements as affirmation of their shared belief in the Company’s strategic direction and business plan. To be clear, the Support Agreements are intended to protect shareholders from coercive or opportunistic bids only, and the Company remains committed to considering bona fide opportunities that enhance value for its shareholders.”
At this time, carrying a capital value in the market of $324.4M, ORHOF has a significant war chest ($58.2M) of cash on the books, which stands against about $21M in total current liabilities. One should also note that debt has been growing over recent quarters. ORHOF is pulling in trailing 12-month revenues of $9.1M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 753.4%. You can bet we will update this one again as new information comes into view. Sign-up for continuing coverage on shares of $ORHOF stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!
Disclosure: we hold no position in $ORHOF, either long or short, and we have not been compensated for this article.