Decibel Announces Closing of its $54 Million Debt Refinancing with connectFirst, Increasing its Access to Debt by $20 Million
Decibel Cannabis Company (TSXV:DB, OTCQB:DBCCF) secured $54 million in debt financing from connectFirst Credit Union. This financing includes $40.5 million in term debt, a $6.0 million authorized overdraft, and a $7.5 million accordion line to support future growth. The funds will enhance Decibel's liquidity and support the repayment of convertible debentures. The company aims to optimize its capital structure and execute its growth strategy while maintaining compliance with financial covenants. The interest rates for the financing range from 4.75% to Prime + 2.00%.
- Secured $54 million in debt financing to improve liquidity.
- Access to $12 million additional term debt.
- Includes a $7.5 million accordion line for future growth.
- Attractive interest rates (4.75% fixed for term debt).
- Expected compliance with financial covenants for the next 12 months.
- None.
CALGARY, AB, Feb. 1, 2022 /PRNewswire/ - Decibel Cannabis Company Inc. (the "Company" or "Decibel") (TSXV:DB) (OTCQB:DBCCF), a premium cannabis producer, is pleased to announce that it has closed its previously announced financing with connectFirst Credit Union Ltd. ("connectFirst") in respect of
The Company expects the proceeds combined with contributions from operations to provide sufficient liquidity to repay Decibel's convertible debentures on maturity.
"With this refinancing, Decibel has added financial flexibility to optimize its capital structure and is well positioned to continue to execute its aggressive growth strategy" said Stuart Boucher, Chief Financial Officer of Decibel. "This transaction reflects the strong position Decibel has established in the Canadian cannabis market and the continued confidence from connectFirst and our team in the execution of the Company's strategic plan".
Financing Highlights
- Access to
$12 Million of Additional Term Debt: The Company's existing term debt will be increased by$12 million to$40.5 million , amortized over 12-years. The$12 million term debt will be accessible on request by Decibel. The Company expects the proceeds combined with contributions from operations to provide sufficient liquidity to repay Decibel's convertible debentures on maturity. - Accordion for Future Growth: The Credit Facilities include a
$7.5 million accordion to support future growth initiatives as Decibel continues to scale. The Accordion Line's initial availability is subject to Decibel achieving a trailing twelve month funded debt to EBITDA ratio of less than or equal to 4.00:1, as well as its maintained compliance with its other financial covenants (as further described below). - Attractive Interest Rate: Decibel continues to receive industry leading interest rates that reflect the strength of its business:
Term Debt | ||
Authorized Overdraft | Prime + | |
Accordion | Prime + |
- Financial Covenants: The Credit Facilities will have one annually tested financial covenant, a debt to equity ratio of less than 1.00:1. Additionally, the Credit Facilities will have one quarterly tested financial covenant, a debt service coverage ratio of not less than 1.40:1, and a monthly current ratio financial covenant of not less than 1.25:1. Decibel's 12-month forecast projects compliance with all financial covenants.
Link to Decibel's Investor Presentation
About connectFirst Credit Union
connectFirst Credit Union, one of the largest and most successful credit unions in Canada, is a full-service financial institution with over
About Decibel
Decibel is uncompromising in the process and craftsmanship needed to deliver the highest quality cannabis products and retail experiences. Decibel has three operating production houses along with its wholly owned retail business, Prairie Records. The Qwest Estate in Creston, BC is a licensed and operating 26,000 square foot cultivation space which produces the widely championed, rare cultivar-focused brands Qwest and Qwest Reserve, which are sold in six provinces across Canada. Thunderchild Cultivation, is a licensed and operating 80,000 square foot indoor cultivation facility in Battleford, SK. The Plant, Decibel's extraction facility, in Calgary, AB has 15,000 square feet of Health Canada licensed extraction and product development space. This production house will fuel the growth of our brands Qwest, Qwest Reserve, Blendcraft, and General Admission, into new and innovative product formats like concentrates, vapes, edibles and beyond.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Cautionary Statements
Forward Looking Information and Future Oriented Financial Information
This news release contains "forward-looking information" and "forward-looking statements" (collectively, "forward-looking statements") within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as "expects", or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "budget", "scheduled", "forecasts", "estimates", "believes" or "intends" or variations of such words and phrases or stating that certain actions, events or results "may" or "could", "would", "might" or "will" be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements.
In this news release, forward-looking statements relate to, among other things, the Company's business plans and strategies, including: the Company's anticipated use of the funds obtained pursuant to the Credit Facilities; the anticipated availability under the Credit Facilities; the Company's expectations that it will be able to comply with all of its financial covenants for the next twelve months; the Company's expectations that it will be able to execute its strategic plan; and the Company's ability to grow Qwest, Qwest Reserve and Blendcraft brands into new and innovative product formats, variations and its other business plans and expectations. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: delays, regulatory changes and impacts, capital requirements, construction impacts, displacement requirements and unforeseen requirements resulting from the COVID-19 pandemic, the ability to obtain and maintain licences to retail cannabis products; review of the Company's production facilities by Health Canada and maintenance of licences (including any amendments thereto) from Health Canada in respect thereof; future legislative and regulatory developments involving cannabis; inability to access sufficient capital from internal and external sources, and/or inability to access sufficient capital on favourable terms; the labour market generally and the ability to access, hire and retain employees; general business, economic, competitive, political and social uncertainties; timing and completion of construction and expansion of the Company's production facilities and retail locations; and the delay or failure to receive board, regulatory or other approvals, including any approvals of the TSX Venture Exchange, as applicable. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this news release.
This press release also contains future-oriented financial information and financial outlook information (collectively, "FOFI") about the Company's prospective results of operations including, without limitation, its anticipated liquidity and ability to repay its convertible debentures on maturity. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on FOFI. The Company's actual results, performance or achievement could differ materially from those expressed in, or implied by, the FOFI. The Company has included the FOFI in order to provide readers with a more complete perspective on the Company's future operations and such information may not be appropriate for other purposes.
These forward-looking statements and FOFI are made as of the date of this press release and, except as required by law, the Company assumes no obligation to update the forward-looking statements or beliefs, opinions, projections, or other factors, should they change.
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SOURCE Decibel Cannabis Company Inc.
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