What if the price of Organigram share prices continue to trade sideways or even go down? Good question. If this does occur the upside of conversion may be lost, however, you still have a decent return of the 6% interest you collected along the way plus the initial principle you invested would be returned by maturity. Visually it would look something like this:
Organigram Holdings Inc. DB
(TSXV: OGI.DB)
Risks:
Like any investment, there will be some form of risk involved and these debentures are no different. Here are the potential risks you may face:
- The company goes belly up. That is to say that Organigram declares bankruptcy of finds itself in a situation where it unable to meet its financial obligations.
- Currency - The debentures are only available on the TSXV, so all interest payments will be issued in Canadian dollars. I am not going to speculate the to what the exchange rate will be going forward. In fact, this could potentially boost your yield. However, I just wanted to ensure you are aware that the debentures are paid in Canadian dollars and not US dollars or Yuan or bitcoin...etc...
- Opportunity cost - Like any other investment there is always a potential that your money could be put to better use in another investment. For example. If you were super bullish on Organigram currently then you would purchase the shares which are currently trading below the debentures conversion price instead. You would receive more upside this way. Note that the advantage as we discussed of the debentures is to act as a safeguard in the even the share prices trade sideways or go down.
Advantages:
- Advantages are displayed and explained as per above. In a nutshell, the Organigram debentures are what I would consider a more conservative means of investing in the space with little to no downside (see risks below for details) while leaving the upside open. This could be a route to go for those of you that have sleepless nights watching some of the marijuana shares price volatility.
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