Experion Closes $2.5 million Loan Agreement

Rhea-AI Summary

Experion Holdings Ltd. announced the closing of a $2,500,000 loan with a Canadian mortgage lender to enhance working capital and inventory purchases. The initial tranche of $1,565,000 was received, supporting the acquisition of premium flower feedstock and processing equipment. The loan has a 19-month term, ending on August 5, 2022, and bears an interest rate of 11% for the first 18 months. Additionally, Experion issued 1,000,000 warrants and 156,250 RSUs to its directors. This funding approach is intended to minimize shareholder dilution.

Positive

• Access to $2,500,000 loan supports working capital and inventory growth.
• First tranche of $1,565,000 received for premium flower feedstock purchases.
• Loan minimizes shareholder dilution compared to equity financing.

Negative

• Loan bears a high interest rate of 11% for the first 18 months.
• Potential risks associated with repayment and interest payment obligations.

VANCOUVER, BC / ACCESSWIRE / February 9, 2021 / Experion Holdings Ltd. (the "Company" or "Experion") (TSXV:EXP)(OTCQB:EXPFF)(FRA:MB31) has finalized and closed the previously announced commitment letter (the "Commitment Letter") for a loan of up to $2,500,000 (the "Loan") with a Canadian based mortgage lender (the "Lender").

"We are pleased to close this transaction with the cash proceeds to be deployed to support our working capital requirements and to accelerate and increase inventory purchases from our strategic grow partners", said Jarrett Malnarich, CEO of Experion. "This is a significant development as access to capital underpins our key ‘aggregation and distribution' model allowing us to more rapidly acquire feedstock, process, sell and then re-invest, accelerating our overall return on investment. Our inventory and feedstock purchases will be processed by the Company and sold to our provincial cannabis exchange customers across Canada to meet their increasing demand for our highly sought-after Citizen Stash branded products. Additionally, we believe this debt financing is an attractive alternative to an equity raise as it facilitates the acceleration of our growth trajectory while minimizing dilution of our capital structure and consequently provides a superior benefit to our shareholders."

Use of Proceeds

The Company executed and closed the Loan on February 5, 2020 (the "Closing Date"), with gross proceeds received on the first tranche of $1,565,000 (net of fees, the Company received $1,482,482). The cash from this first installment of the Loan will support the Company purchasing its premium flower feedstock from cultivation partners and other Canadian licensed producers. The Company will also use the proceeds to purchase minor processing equipment to increase operating capabilities and drive cost efficiencies within the business.

Transaction Overview

The first tranche of the Loan was advanced on the Closing Date with cash received, net of fees and other expenses of $1,482,482. The Company will have an option to draw a second advance of $935,000 anytime within 9-months of the Closing Date, up to the total maximum of $2,500,000. The Loan has an initial term of 19-months, ending August 5, 2022 (the "Initial Term"), subject to the Company's option to extend the Loan for an additional 6 months with the Lender's approval. The Loan is secured with a conventional first mortgage on the land and building of the Company's Mission, B.C. based operating facility. The Loan bears interest at a rate of 11% per annum for the first 18 months and 14% per annum for the 19^th month and beyond if the Loan is extended, pursuant to the 6-month extension option. The interest will be paid monthly, with principal due at the end of the Initial Term, subject to the extension option. The Loan can be repaid at any time but is subject to a minimum payment of 9-month's interest on the amount outstanding at the time of repayment.

Grant of Warrants and RSU's

Pursuant to the Commitment Letter, Experion issued 1,000,000 warrants to the Lender at a strike price of $0.18 for a 24-month period starting from the Closing Date (the "Warrants"). The Warrants are subject to a 4-month hold period, which will expire on June 6, 2021.

Experion also granted 156,250 restricted stock units ("RSUs") to its directors as payment for their contribution during the fourth quarter of fiscal 2020, which RSUs will vest 12 months after the date on which such director resigns.

About Experion Holdings Ltd.

Experion Holdings Ltd. is the parent company of Experion Biotechnologies Inc., a Health Canada licensed cultivator and processor of Cannabis, based in Mission, BC.

Experion Holdings Ltd. is invested in a portfolio of premium cannabis brands and products and is best known for its' rapidly growing Adult-Use premium brand Citizen Stash. The company's growth strategy incorporates a highly scalable aggregation and distribution business model to drive revenues across its national sales network.

Experion trades on the TSX Venture Exchange as a Tier 1 issuer under the symbol "EXP" on the OTCQB Venture under the symbol "EXPFF" and on the Frankfurt Stock Exchange under the symbol "MB31".

For further information, please visit the Company's website www.experionwellness.com or contact Investor Relations, Email: IR@experionwellness.com.

Disclosure

This news release contains "forward-looking statements" and "forward-looking information" (collectively referred to herein as "forward-looking statements") within the meaning of applicable securities legislation. Such forward-looking statements include, without limitation, forecasts, estimates, expectations and objectives for future operations that are subject to a number of material factors, assumptions, risks and uncertainties, many of which are beyond the control of the Company.

Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects", "plans", "anticipates", "believes", "intends", "estimates", "continues", "future", "forecasts", "potential", "outlook" and similar expressions, or are events or conditions that "will", "would", "may", "likely", "could", "should", "can", "typically", "traditionally" or "tends to" occur or be achieved. This news release contains forward-looking statements, pertaining to, among other things, the following: The Company's capital spending forecast and expectations of how it will be funded, including the benefits thereof; the use of proceeds of the Loan; the timing of repayment of the Loan, including interest thereon; near-term impacts from the COVID-19 pandemic; the Company's capital management strategy and financial position; the impact of governmental and Company measures implemented in response to the COVID-19 pandemic; the Company's outlook, activity levels, supply chains and sales channels; loss of markets; further legislative and regulatory developments involving cannabis or otherwise affecting the Company's business or its consumers generally, including delays in the issuance of licenses; competition; currency and interest rate fluctuations; and marketing costs.

Although the Company believes that the material factors, expectations and assumptions expressed in such forward-looking statements are reasonable based on information available to it on the date such statements are made, undue reliance should not be placed on the forward-looking statements because the Company can give no assurances that such statements and information will prove to be correct and such statements are not guarantees of future performance. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties.

Actual performance and results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to: known and unknown risks, including those set forth in the Filing Statement dated September 25, 2017 and/or the most recent annual and interim Management's Discussion and Analysis (the "MD&A") (copies of which can be found under Experion's profile on SEDAR at www.sedar.com); a significant expansion of COVID-19 pandemic and the impacts thereof; the Company's ability to raise the necessary capital or to be fully able to implement its business strategy; integration of acquisitions, competition, and uncertainties resulting from potential delays or changes in plans with respect to acquisitions, development projects or capital expenditures and changes in legislation; stock market volatility and the inability to access sufficient capital from external and internal sources; general economic, market or business conditions including those in the event of an epidemic, natural disaster or other event; global economic events; changes to the Company's financial position and cash flow; the availability of qualified personnel, management or other key inputs; currency exchange fluctuations; changes in political and security stability; potential industry developments; and other unforeseen conditions which could impact the Company. Accordingly, readers should not place undue importance or reliance on the forward-looking statements. Readers are cautioned that the foregoing list of factors is not exhaustive and should refer to "Risk Factors" set out in the MD&A.

Statements, including forward-looking statements, contained in this news release are made as of the date they are given and the Company disclaims any intention or obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE: Experion Holdings Ltd.

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https://www.accesswire.com/628571/Experion-Closes-25-million-Loan-Agreement

FAQ

What is the purpose of the loan closed by Experion (EXPFF) on February 9, 2021?

The loan is intended to support working capital and accelerate inventory purchases from strategic grow partners.

How much was the first tranche of the loan received by Experion (EXPFF)?

Experion received $1,565,000 as the first tranche of the loan.

What are the terms of the loan acquired by Experion (EXPFF)?

The loan has a 19-month term with an interest rate of 11% for the first 18 months.

What impact does the loan have on shareholder dilution for Experion (EXPFF)?

The debt financing is considered an attractive alternative to equity raising, thereby minimizing shareholder dilution.