Grown Rogue Retires Senior Secured Convertible Debentures

Rhea-AI Summary

Grown Rogue International (CSE: GRIN, OTC: GRUSF) has retired CAD$2.36M of senior secured convertible debentures ahead of maturity, saving CAD$100k in interest. The move eliminates a general security agreement over its assets and reduces term debt to CAD$1.04M, with CAD$450k currently outstanding. A cash payment of CAD$1.54M accompanied the retirement and resulted in the issuance of 6.56M common shares at $0.125 each. This strategic debt management is expected to enhance shareholder value and positions the Company to increase production capacity to 1,800lbs per month in 2022.

Positive

• Retirement of CAD$2.36M convertible debentures saves CAD$100k in interest.
• Elimination of general security agreement improves asset flexibility.
• Reduced term debt to CAD$1.04M, with only CAD$450k current.
• Increased production capacity expected to reach 1,800lbs per month in 2022.

Negative

• None.

Grown Rogue International Inc. (“Grown Rogue” or the “Company”) (CSE: GRIN) (OTC: GRUSF), a multi-state cannabis company with operations and assets in Oregon and Michigan, today announced the retirement of the Company’s senior secured convertible debentures of CAD$2.36M that would have matured on November 1, 2021. The early retirement of the debt will save the Company CAD$100k in interest payments over 2021. The debt repayment also results in the removal of the general security agreement over all of the Company’s assets and leaves only $1.04M of term debt, of which $450k is current. Of the current amount of $450k, $100k will complete a payment contributing to an option payment to acquire Golden Harvests, LLC (“Golden Harvests”). This results in a debt to projected 2021 adjusted EBITDA¹ ratio of 0.15.

The debt repayment included a cash payment of CAD$1.54M and the issuance of 6,555,556 common shares of the Company at a price of $0.125 per share in accordance with the terms of the debentures. The repayment of principal results in the elimination of a potential conversion of debt into 12.3M common shares or approximately 8% of the current issued and outstanding common shares of the Company.

“Retiring this senior secured convertible debt is an important step in Grown Rogue’s path to financial health and continues our goal of creating shareholder value with disciplined capital allocation,” said Obie Strickler, Chief Executive Officer of Grown Rogue. “With our industry leading cash margins of 65%+ and the recent capacity increase of over 500lbs per month of high quality indoor production we are excited to continue executing on our plan to become a top producer in the US cannabis markets.”

With the recent acquisition by Grown Rogue’s partner, Canopy Management, LLC, of the controlling interest of Golden Harvests, the Company now beneficially controls 127,000 sq ft of indoor production, which will yield more than 1,000 lbs per month in constructed capacity. With additional expansion already underway in Michigan, Grown Rogue expects to increase production to 1,800lbs per month in 2022.

For more information about Grown Rogue please visit www.grownrogue.com

NOTES:

1.

The Company’s “Adjusted EBITDA” is a non-IFRS measure used by management that does not have any prescribed meaning by IFRS and that may not be comparable to similar measures presented by other companies. The Company defines Adjusted EBITDA as the Company’s net income (loss) for a period, as reported, before interest, taxes, depreciation and amortization, and is further adjusted to remove transaction costs, stock-based compensation expense, accretion expense, gain (loss) on derecognition of derivative liabilities and the effects of fair-value accounting for biological assets and inventory. The Company believes that this is a useful metric to evaluate its operating performance. The following is a reconciliation of the Company’s net income (loss) to Adjusted EBITDA.

About Grown Rogue

Grown Rogue International (CSE: GRIN | OTC: GRUSF) is a multi-state Cannabis family of brands on a mission to inspire consumers to “enhance experiences” through cannabis. We have combined an expert management team, award winning grow team, state of the art indoor and outdoor manufacturing facilities, and consumer insight-based product categorization, to create innovative products thoughtfully curated from “seed to experience.” The Grown Rogue family of products include sungrown and indoor premium flower, along with patented nitro sealed indoor and sungrown pre-rolls and jars.

FORWARD LOOKING STATEMENTS

This press release contains statements which constitute “forward‐looking information” within the meaning of applicable securities laws, including statements regarding the plans, intentions, beliefs and current expectations of the Company with respect to future business activities. Forward‐ looking information is often identified by the words “may,” “would,” “could,” “should,” “will,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “expect” or similar expressions and include information regarding: (i) statements regarding the future direction of the Company (ii) the ability of the Company to successfully achieve its business and financial objectives, (iii) plans for expansion of the Company into Michigan and securing applicable regulatory approvals, and (iv) expectations for other economic, business, and/or competitive factors. Investors are cautioned that forward‐looking information is not based on historical facts but instead reflect the Company’s management’s expectations, estimates or projections concerning the business of the Company’s future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Although the Company believes that the expectations reflected in such forward‐looking information are reasonable, such information involves risks and uncertainties, and undue reliance should not be placed on such information, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of the combined company. Among the key factors that could cause actual results to differ materially from those projected in the forward‐looking information are the following: changes in general economic, business and political conditions, including changes in the financial markets; and in particular in the ability of the Company to raise debt and equity capital in the amounts and at the costs that it expects; adverse changes in the public perception of cannabis; decreases in the prevailing prices for cannabis and cannabis products in the markets that the Company operates in; adverse changes in applicable laws; or adverse changes in the application or enforcement of current laws; compliance with extensive government regulation and related costs, and other risks described in the Company’s public disclosure documents filed on www.sedar.com.

Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward‐looking information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although the Company has attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended. The Company does not intend, and does not assume any obligation, to update this forward‐looking information except as otherwise required by applicable law.

SAFE HARBOR STATEMENT

This press release may contain forward-looking information within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including all statements that are not statements of historical fact regarding the intent, belief or current expectations of the Company, its directors or its officers with respect to, among other things: (i) the Company’s financing plans; (ii) trends affecting the Company’s financial condition or results of operations; (iii) the Company’s growth strategy and operating strategy; and (iv) the declaration and payment of dividends. The words “may,” “would,” “will,” “expect,” “estimate,” “anticipate,” “believe,” “intend” and similar expressions and variations thereof are intended to identify forward-looking statements. Also, forward-looking statements represent our management’s beliefs and assumptions only as of the date hereof. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, many of which are beyond the Company’s ability to control, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors including the risk disclosed in the Company’s Form 20-F and 6-K filings with the Securities and Exchange Commission.

The Company is indirectly involved in the manufacture, possession, use, sale and distribution of cannabis in the recreational cannabis marketplace in the United States through its indirect operating subsidiaries. Local state laws where its subsidiaries operate permit such activities however, these activities are currently illegal under United States federal law. Additional information regarding this and other risks and uncertainties relating to the Company's business are disclosed in the Company’s Listing Statement filed on its issuer profile on SEDAR at www.sedar.com. Should one or more of these risks, uncertainties or other factors materialize, or should assumptions underlying the forward-looking information or forward-looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected.

No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein.

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FAQ

What financial impact did Grown Rogue's retirement of debentures have?

The retirement of CAD$2.36M in debentures will save Grown Rogue CAD$100k in interest payments.

How much debt does Grown Rogue have after the repayment?

After repayment, Grown Rogue has CAD$1.04M in term debt.

What is the expected production capacity for Grown Rogue in 2022?

Grown Rogue expects to increase production capacity to 1,800lbs per month in 2022.

What is the significance of the general security agreement removal for Grown Rogue?

The removal of the general security agreement allows Grown Rogue greater flexibility with its assets.