Heritage Cannabis Announces Additional Funds and Improved Terms to $7.0 Million Senior Secured Term Loan Agreement with BJK Holdings Ltd.

Rhea-AI Summary

Heritage Cannabis Holdings Corp. has amended its loan agreement with BJK Holdings Ltd., increasing the original loan from $7.0 million to $7.175 million and extending the maturity date to February 1, 2023. An additional $2.6 million was also advanced to support capital asset acquisitions and operations. A revolving credit line of $5.0 million was established with an 18% interest rate. Overall, the company can access $14.775 million through this agreement. The CEO emphasized the importance of these funds for growth in the Canadian cannabis market.

Positive

• Loan amount increased from $7.0 million to $7.175 million.
• Additional funding of $2.6 million to support operations.
• New revolving line of credit of $5.0 million established.
• Total access to $14.775 million through amended loan agreement.

Negative

• One-time extension fee of $175,000 paid to BJK.
• High interest rate of 18% on the revolving line of credit.

Amended agreement offers an additional $2.7 million, extended maturity date, and a $5.0 million revolving line of credit to further support operations

TORONTO--(BUSINESS WIRE)-- Heritage Cannabis Holdings Corp. (CSE: CANN) (OTCQX: HERTF) (“Heritage” or the “Company”), today announced that it has entered into an amended non-revolving loan agreement (the “Amended Loan Agreement”) with BJK Holdings Ltd. (“BJK”), improving the terms of its existing loan with BJK entered into on March 29, 2021, and further supporting its growing business.

Under the terms of the Amended Loan Agreement, the original loan amount of $7.0 million has been increased to $7.175 million, and its maturity date was extended from September 29, 2022 to February 1, 2023 (the “Increased Initial Loan”). In connection with this Increased Initial Loan, the Company paid a one-time extension fee of $175,000 to BJK on October 12, 2021 (the “Closing Date”).

Additionally, pursuant to the Amended Loan Agreement, BJK advanced $2.6 million to the Company on the Closing Date, at the Royal Bank of Canada prime lending rate plus 1.25%, adjusted automatically with each quoted or published change in rate, until the entire Loan is repaid on February 1, 2023 (the “Additional Loan”). This Additional Loan was advanced to help fund the Company’s capital asset acquisitions and general corporate purposes.

To further support the Company’s operations and growth, a revolving line of credit (the “Line of Credit”) has been established, up to a maximum of $5.0 million, with an interest rate of 18% per annum, calculated daily and payable monthly.

In total, through the Increased Initial Loan, the Additional Loan, and the Line of Credit (collectively, the “Loan”), the Company has access to a total of $14.775 million through its Amended Loan Agreement with BJK. Accordingly, on the Closing Date, the Company granted to BJK a promissory note in the principal amount of $14.775 million together with interest, to represent the amount to be repaid on or before February 1, 2023. If the Company repays the Loan in its entirety on or before October 1, 2022, BJK will repay the Extension Fee to the Company.

Furthermore, in connection with this Amended Loan Agreement, the Company has also granted BJK 10.0 million warrants at an exercise price of $0.25 per share for a period of 24 months.

“We are very pleased to have secured this additional capital at such an exciting time in the growth of the business,” stated David Schwede, CEO of Heritage. “The improved terms and access to additional funds from BJK are a testament to our strategy and offer flexibility and strength to our balance sheet as we solidify our position in the Canadian cannabis market and execute on our international strategy.”

“We have been very impressed with the Heritage team and the execution to this point,” stated David Thiessen of BJK. “We believe Heritage is moving towards becoming one of the leaders in the cannabis sector and we were pleased to work with them to extend additional capital against the same security package. We look forward to watching our capital unlock additional value for all stakeholders.”

About Heritage

Heritage Cannabis is a leading cannabis company offering innovative products to both the medical and recreational legal cannabis markets in Canada and the U.S., operating under two licensed manufacturing facilities in Canada. The company has an extensive portfolio of high-quality cannabis products under the brands Purefarma, Pura Vida, RAD, Premium 5, feelgood., CB4 and ArthroCBD.

ON BEHALF OF THE BOARD OF DIRECTORS OF HERITAGE CANNABIS HOLDINGS CORP.

“David Schwede”
David Schwede
CEO

The Canadian Securities Exchange does not accept responsibility for the adequacy or accuracy of this release.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211013005652/en/

Kelly Castledine

Tel: 647-660-2560

kcastledine@heritagecann.com

Source: Heritage Cannabis Holdings Corp.

FAQ

What is the total funding Heritage Cannabis Holdings can access through the new loan agreement?

Heritage Cannabis can access a total of $14.775 million through the amended loan agreement.

What are the new terms of the loan agreement with BJK Holdings?

The loan amount increased to $7.175 million, with a maturity date extended to February 1, 2023, and an additional $2.6 million advanced.

What is the interest rate on the new line of credit for Heritage Cannabis?

The interest rate on the new revolving line of credit is 18% per annum.

What impact does the amended loan agreement have on Heritage Cannabis Holdings stock (HERTF)?

The amended loan agreement provides more financial flexibility and support for growth, which could positively influence stock performance.