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MTech Acquisition Corp. Blazes up a $7.0M PIPE
by Kristi Marvin on 2019-06-06 at 11:23am

MTech Acquisition Corp. (MTEC), announced today that they have arranged a $7 million PIPE in anticipation of their upcoming shareholder vote to approve their business combination with MJ Freeway LLC.  As part of the transaction, 685,599 shares of Class A common stock will be issued in the private placement at $10.21 per share, however, MTech also stated they may issue up to an additional 799,907 shares of Class A Common Stock in subsequent transactions.  If all 1,485,506 shares are sold (at $10.21), that would amount to $15.2 million in total gross proceeds raised.

Included among the investors in the $7.0 million private placement was Khitan Capital, LLC (“Khitan”), which includes among its members Emery Huang, a current MJ Freeway board member, and Michael Di Hao Zhang, son of the former chairman of Guizhou Xinbang Pharmaceuticals, a China-based company listed on the Shenzhen Exchange.  In addition, The London Fund, a venture capital fund focusing on investments in FinTech opportunities, participated in the private placement as well.  However, we do not know the extent to which each participated.

Nonetheless, the investors in the private placement will ALSO receive an aggregate of 76,178 Class B shares, or “founders shares”.  Specifically, the investors will receive one (1) share of Class B common stock of MTech for each nine (9) Private Placement Shares purchased.  This reduces the investors’ cost basis to approximately $9.19, from $10.21. That’s some choice herb.

MTech’s shareholder vote to approve their business combination is currently scheduled for Monday, June 17th, which is only 11 days away.  If they are going to issue additional shares in another private placement, it will need to happen in the next week.  However, the current $7 million gives this deal enough of a backstop to close the transaction.

Stay tuned for any further updates.




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