Althea Group secures A$4m to expand THC beverage production across North America

Althea Group Holdings Limited (ASX:AGH), a global leader in medicinal and recreational cannabis production, has successfully raised A$4 million through a combination of a Share Placement and a Loan Notes Placement. This strategic funding will enable the company to expand its THC beverage production under its Peak USA brand, strengthen its operational infrastructure in North America, and enhance working capital across both the U.S. and Canadian markets.

The cannabis industry has witnessed significant growth, particularly in the THC-infused beverage sector, where demand continues to rise among consumers seeking alternative cannabis consumption methods. With a well-established presence in Canada and a growing footprint in the United States, Althea Group Holdings is positioning itself at the forefront of this rapidly evolving market.

What does the $4 million funding mean for Althea Group Holdings’ growth strategy?

The newly secured capital will play a pivotal role in the company’s expansion efforts, allowing it to accelerate Peak USA’s market entry while reinforcing its operations in Canada. The funds will be strategically allocated to increase THC beverage production, secure critical raw materials, invest in automation, and integrate essential infrastructure improvements to support large-scale manufacturing.

Althea Group Holdings’ Managing Director, Joshua Fegan, stated that the funding strengthens the company’s ability to scale its North American THC beverage business, particularly as it builds on its first successful commercial production run in the U.S. He emphasised that with Canada serving as its operational foundation, the company is leveraging its expertise to expand rapidly in the United States. By capitalising on its contract development and manufacturing model (CDMO) and trusted manufacturing partnerships, Althea Group Holdings aims to meet the growing consumer demand for premium THC beverages across North America.

How will the capital raise impact THC beverage production and distribution?

Althea Group Holdings plans to significantly scale up production capacity for its Peak USA brand, a move that is expected to increase the availability of THC beverages in both retail and wholesale channels. As part of this expansion, the company will invest in enhancing its manufacturing capabilities in Canada while reinforcing its supply chain infrastructure in the U.S.

A substantial portion of the funds will be allocated to automating tax stamp application processes, integrating wastewater infrastructure, and securing core production materials essential for large-scale manufacturing. Additionally, the capital will help boost Peak USA’s working capital to ensure operational stability as it expands its market presence.

The funding will also support the production of an additional three million THC beverage cans, allowing Althea Group Holdings to meet the growing demand for its products in key North American markets. As regulatory frameworks for cannabis products continue to evolve, the company is strategically positioning itself to capitalise on these shifts by increasing accessibility to high-quality THC-infused beverages.

What are the details of the Share Placement and Loan Notes Placement?

The $4 million funding was secured through two financial mechanisms: a Share Placement and a Loan Notes Placement. The Share Placement involved the issuance of 125 million ordinary shares at $0.02 per share, generating $2.5 million. The Loan Notes Placement comprised the issuance of 1.5 million unsecured Loan Notes at $1.00 each, raising an additional $1.5 million.

The Loan Notes were issued as a pure debt instrument with a 0% interest rate, offering investors an opportunity to convert them into ordinary shares at a price of $0.02 per share, subject to shareholder approval. If shareholders do not approve the conversion, Althea Group Holdings will be required to repay the Loan Notes in full within one year of issuance.

Additionally, the company referenced existing Loan Notes previously issued in December 2024, which were initially structured with a conversion price of $0.03 per share. In light of the current capital raise, the conversion price has now been adjusted to $0.02 per share to align with the new funding round. These revisions remain subject to shareholder approval, with any new shares to be issued within three months following the upcoming general meeting.

Who were the key investors and lead managers in the capital raise?

The capital raise attracted strong participation from new and existing Australian sophisticated and professional investors, reflecting market confidence in Althea Group Holdings’ expansion strategy. Directors Vaughan Webber and Joshua Fegan have personally subscribed for up to $120,000 in tranche 2 of the Share Placement, a move that underscores their commitment to the company’s long-term vision.

Taurus Capital Group Pty Ltd acted as the lead manager for the capital raise, receiving a fee equivalent to 6% of the total amount raised. Additionally, Taurus Capital Group was granted 25 million unlisted options with an exercise price of $0.03 per option, expiring in April 2027. These options will be allocated to the lead manager and selected sophisticated investors, pending shareholder approval.

What does this mean for the future of Althea Group Holdings in the North American cannabis industry?

As the cannabis beverage market gains momentum, Althea Group Holdings is strategically positioning itself to capture a larger share of this high-growth segment. The company’s ability to rapidly scale production, enhance supply chain efficiency, and strengthen working capital puts it in a strong position to expand its THC beverage distribution network across North America.

By leveraging its expertise in both medicinal and recreational cannabis production, Althea Group Holdings is well-equipped to navigate the complexities of evolving cannabis regulations while catering to an expanding consumer base. The successful execution of its North American growth strategy could further solidify its reputation as a leading player in the THC beverage industry.

With the capital raise providing the necessary resources to support large-scale production and market expansion, the company is poised for sustained growth as it capitalises on increasing demand for THC-infused beverages. As it moves forward with its expansion plans, Althea Group Holdings will continue to refine its operations to ensure long-term profitability in a rapidly evolving market.