This morning, iAnthus (CSE: IAN) announced that it is negotiating a definitive agreement for a senior secured term loan of up to US $ 50 million with Torian Capital Partners. The term loan is expected to be made available in two tranches of US $ 25 million, each with substantially similar terms.
The press release says the proceeds will be used to support iAnthus’ short-term growth efforts in Florida, Nevada, New Jersey and New York.
Reducing our cost of capital has been one of our main goals for this year. We believe this is a great opportunity to strengthen our balance sheet as we continue to invest in our key expansion initiatives, as well as in people, systems and brandsâ¦ This transaction will position us well as We continue to make strategic investments to take advantage of the unique opportunity offered by the cannabis industry.
Hadley Ford, CEO, iAnthus
Here are the basic terms of the term loan:
- a senior lien on all current and future assets of iAnthus
- the duration will be 36 months
- 9.0% interest, per year, payable quarterly
- iAnthus can prepay the principal outstanding (i) in year 2, with a payment of 109% and (ii) in year 3, with a payment of 104.5%
- Coverage of 20% of warrants of each tranche, with an exercise price of 25% above the market for a period of 3 years
Hadley is a former Goldman Sachs banker and understands cost of capital management as well as anyone in the space. The main difference that shareholders should notice here is the absence of the word ‘convertible’, which means that the debt will be paid off and not converted into shares, which will avoid dilution to today’s depressed level of share prices. . Shareholder risk is the safe word, if iAnthus encounters cash flow problems, Torian Capital will now have the first call on the assets.
Torian Capital is a private investment firm focused on investments in cannabis. They recently signed a $ 225 million loan with Harvest.
Information for this briefing was found via Sedar and iAnthus. The author has no title or affiliation related to this organization. Not a buy or sell recommendation. Always do additional research and consult a professional before purchasing a title. The author does not hold any license.
SmallCapSteve started blogging in the winter of 2009. During that time, it was able to spot many redeeming candidates and choose a variety of stocks that have generated returns in excess of 200%. Today, he consults with micro-capitalized companies to help them with capital markets strategy and focuses on sectors such as cannabis, tech and junior mining.