Heritage Cannabis Announces Strategic Re-financing with $7.0 Million Senior Secured Term Loan

Rhea-AI Summary

Heritage Cannabis Holdings Corp. (CSE: CANN) (OTCQX: HERTF) has secured an 18-month non-revolving loan of $7 million from BJK Holdings Ltd. The loan, initiated on April 1, 2021, requires monthly interest payments based on the Royal Bank of Canada prime rate plus 1.25%, with a one-time setup fee of $965,000. Proceeds will be used to settle existing credit obligations totaling approximately $4.7 million to Trichome Financial Corp. CEO Clint Sharples expressed confidence in the company’s growth and international strategy following this financing.

Positive

• Secured $7 million loan, enhancing financial flexibility.
• Loan repayment extends due date to October 2022, improving cash flow management.
• Loan proceeds used to retire $4.7 million Trichome Financial obligation, reducing debt.

Negative

• Monthly interest payments based on variable prime rate may increase financial burdens.

Heritage Cannabis Holdings Corp. (CSE: CANN) (OTCQX: HERTF) (“Heritage” or the “Company”), today announced that it has entered into an 18 month non-revolving loan agreement (the “Loan Agreement”) with BJK Holdings Ltd. (“BJK”) in the amount of $7.0 million (the “Loan”). Pursuant to the Loan Agreement, BLK advanced the Company $7.0 million on April 1, 2021 (the “Closing Date”).

The Loan is payable in full upon maturity of the Loan, 18 months following the Closing Date, with monthly interest only payments made based on the outstanding balance of the Loan, calculated monthly, in arrears. Monthly interest will be calculated at the Royal Bank of Canada prime lending rate plus 1.25%. A one-time setup fee of $965,000 is due to BJK on the Closing Date. The Loan may be prepaid in full at any time without penalty.

A portion of the proceeds from the Loan was used to repay all of the Company’s credit facility obligations to Trichome Financial Corp. (“Trichome Credit Facility”) which was set to mature on January 30, 2022. The total payout to retire the Trichome Credit Facility was approximately $4.7 million and includes accrued interest, voluntary prepayment fees, and closing fees.

“With our positive long-term financial outlook, we are extremely pleased to be in a position to secure capital that increases our flexibility to grow our business internationally as a result of the improved terms over our prior loan arrangement and at the same time extends our re-payment date to October 2022 from January 2022,” commented Clint Sharples, CEO of Heritage. “In combination with our recent equity financing, we have strengthened our financial position and are poised for our product launches in the U.S. market. This new financing furthers our flexibility to execute our international strategy and allows for growth in a controlled but faster pace.”

“We have been following Heritage and their subsidiary Premium 5 for some time now and are excited to become their lending partner given that they are well on their way to establishing the Company as a leader in the cannabis extract and extract derivatives space,” commented David Thiessen of BJK. “We are confident in their ability to execute on their strategy and look forward to being a strong supporter and helping them as they expand their domestic presence internationally.”

Heritage will use the proceeds of the Loan to repay its existing facility and for general corporate purposes.

About Heritage Cannabis Holdings Corp.

Heritage is a cannabinoid company focused on the production and sale of medical and recreational hemp-based and cannabis-based products and services. In Canada, Heritage operates through its subsidiaries Voyage Cannabis Corp. and CannaCure Corporation, both regulated under the Cannabis Act Regulations. Working under these subsidiaries and the Purefarma, Pura Vida, Premium 5, RAD and feelgood. brands, Heritage focuses on extraction and the creation of derivative products for recreational consumers, as well as the formulation of cannabis based medical solutions. In the U.S., Heritage operates under Opticann Inc., a Colorado based oral and topical cannabinoid company with the rights to exclusively sell CBD and CBG products made with the patented VESIsorb® drug delivery system for optimized absorption and stability. As the parent company, Heritage is focused on providing the resources for its subsidiaries to advance their products or services to compete both domestically and internationally.

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

“Clint Sharples”

Clint Sharples
CEO

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

Forward-Looking Statements

This press release contains certain "forward-looking information" within the meaning of applicable Canadian securities legislation and may also contain statements that may constitute "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking information and forward-looking statements are not representative of historical facts or information or current condition, but instead represent only the Company's beliefs regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of the Company's control. Generally, such forward-looking information or forward-looking statements can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or may contain statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "will continue", "will occur" or "will be achieved". The forward-looking information contained herein may include, but is not limited to, assumptions related to cash flow and capital resources, and expectations related to the supply and manufacturing agreements, the intended expansion of the Company, and partnerships and Joint Venture Partnerships.

By identifying such information and statements in this manner, the Company is alerting the reader that such information and statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such information and statements.

An investment in securities of the Company is speculative and subject to several risks including, without limitation, the risks discussed under the heading "Risks and Uncertainties" in the Company's annual management discussion and analysis for the year ended October 31, 2020 and dated February 26, 2021. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in the forward-looking information and forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended.

In connection with the forward-looking information and forward-looking statements contained in this press release, the Company has made certain assumptions. Although the Company believes that the assumptions and factors used in preparing, and the expectations contained in, the forward-looking information and statements are reasonable, undue reliance should not be placed on such information and statements, and no assurance or guarantee can be given that such forward-looking information and statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information and statements. The forward-looking information and forward-looking statements contained in this press release are made as of the date of this press release, and the Company does not undertake to update any forward-looking information and/or forward-looking statements that are contained or referenced herein, except in accordance with applicable securities laws. All subsequent written and oral forward-looking information and statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by this notice.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210401005931/en/

FAQ

What is the significance of the $7 million loan for Heritage Cannabis Holdings (HERTF)?

The $7 million loan enhances Heritage's financial flexibility, allowing it to settle existing debts and support international expansion.

When will Heritage Cannabis Holdings repay the $7 million loan?

The loan matures 18 months after the closing date, scheduled for October 2022.

What will Heritage Cannabis Holdings use the loan proceeds for?

The proceeds will be used to repay existing credit facility obligations and for general corporate purposes.

How much was the setup fee for the loan Heritage Cannabis Holdings secured?

The setup fee for the loan is $965,000, which is due at the closing date.