DionyMed Brands Inc., a multi-state cannabis brand and delivery platform, recently announced it had signed a definitive agreement for a two-year, up to US$40 million senior secured credit facility from a syndicate of investors. The credit facility consists of a US$15 million term loan facility and a US$25 million asset-backed loan facility. DionyMed will draw US$13 million following the completion of certain conditions to the satisfaction of the investors.
Currently, the syndicate of investors have committed to provide US$13 million of the credit facility.
Future commitments from existing or future lenders are expected for the full amount. Amounts drawn under the facility will be guaranteed by DionyMed and its subsidiaries and will be secured by all assets of DionyMed and each subsidiary, including, inventory, trade receivables and real property. This credit facility will be used for acquisitions, capital expenditures, refinancing existing debt, working capital and general corporate purposes.
The credit facility provides DionyMed an efficient capital structure as it continues to expand its US operational footprint and product portfolio, through both inorganic and organic growth opportunities. The facility will bear interest of LIBOR plus 8% rate with a commitment fee, an arrangement fee and an annual fee. The credit facility includes up to an aggregate of 7.1 million warrants with warrants issued to investors based on the amount drawn on the credit facility proportionate to the maximum credit facility size of $40 million.
Each warrant provides the investor the right to purchase one subordinated voting (common) share and the warrants expire after 36 months. If the credit facility is fully drawn, the warrants would have a weighted-average exercise price of C$5.16 per share based on the C$3.25 share price as of the close of business .
Edward Fields, CEO of DionyMed commented, "An efficient capital structure is an essential part of DionyMed’s strategic plan as we continue our growth trajectory and further scale our operations. Building upon our capital raise in November 2018 of C$35 million, this credit facility provides non-dilutive capital to help us further achieve our aggressive growth goals, which focus on advancing our deal pipeline and building upon our existing cannabis to consumer platform. The cannabis industry will continue to consolidate at an increasing rate and DionyMed is strongly positioned to play a leading role in this stage of the industry’s rapid growth."
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