Cannara Biotech Inc. Closes $50 Million Credit Facility Led by BMO Commercial Banking

Rhea-AI Summary

Cannara Biotech Inc. has successfully closed a $50 million credit facility with BMO Commercial Banking as of May 31, 2022. This facility comprises a $45 million term loan and a $5 million line of credit, featuring a declining interest rate based on performance metrics, and no principal payments required for the first six months. The funds will be used to eliminate existing debt and enhance production capacities at the Valleyfield Facility, enabling the creation of new growing zones and improving post-harvest processing.

Positive

• Secured a non-dilutive $50 million credit facility.
• No principal payments due in the first six months.
• Funds will enhance production capacity and new growing zones.

Negative

• None.

MONTREAL, June 1, 2022 /PRNewswire/ - Cannara Biotech Inc. ("Cannara" or the "Company") (TSXV: LOVE) (OTCQB: LOVFF) (FRA: 8CB), a vertically integrated producer of premium-grade cannabis and derivative products with two mega facilities based in Quebec spanning over 1,650,000 sq. ft., announced today that it has closed on a $50M credit facility led by BMO Commercial Banking.  The credit facility, effective May 31, 2022, includes a three-year term loan for $45 million with an accordion for up to an additional $10 million and a $5 million line of credit. Additional favorable terms attached to the credit facility include a declining interest rate over time as the Company hits certain covenant thresholds and the ability to repay the facility without penalty at any time. Under the terms of this new credit facility, the Company will not make any principal payments for the first six months.

Cannara will use this new credit facility to repay and close all debt associated with its current credit facility and to invest capital into its Valleyfield Facility to redesign and activate new 25,000 square feet growing zones that replicate indoor growing conditions, including growing without utilizing the sun. As of May 31, 2022, the Company has activated and is currently cultivating in 5 of its 24 growing zones.   

The credit facility will also be used to support capital investments for additional post-harvest packaging and processing equipment, which will be used to support the growing production capacity at the Valleyfield Facility and to operationalize the production of in-house solvent-based Cannabis 2.0 derivative products.  

"We're extremely pleased to announce this new non-dilutive credit facility with our new financial partner, BMO Commercial Banking, and are proud that they chose to back Cannara as an emerging leader in the Canadian cannabis industry," stated Nicholas Sosiak, Chief Financial Officer of Cannara. "This partnership and the financing it provides strengthens our working capital position while providing the Company with necessary fire power to execute on our immediate and mid-term growth strategy, both from a production capacity and market expansion standpoint." 

About Cannara Biotech Inc.

Cannara Biotech Inc. (TSXV: LOVE) (OTCQB: LOVFF) (FRA: 8CB) is a vertically integrated producer of premium-grade cannabis and cannabis-derivative products for the Québec and Canadian markets. Cannara owns two mega facilities based in Québec spanning over 1,650,000 sq. ft., providing the Company with 125,000kg of potential annualized cultivation output. Leveraging Québec's low electricity costs, Cannara's facilities produce premium-grade cannabis products at an affordable price. For more information, please visit cannara.ca.

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.

Cautionary Statement Regarding "Forward-Looking" Information

This information release contains certain forward-looking information. Such information involves known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those implied by statements herein, and therefore these statements should not be read as guarantees of future performance or results. All forward-looking statements are based on the Company's current beliefs as well as assumptions made by and information currently available to it as well as other factors. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Due to risks and uncertainties, including the risks and uncertainties identified by the Company in its public securities filings, actual events may differ materially from current expectations. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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SOURCE Cannara Biotech Inc.

FAQ

What is the purpose of Cannara's new credit facility of LOVFF?

The $50 million credit facility will be used to eliminate existing debt and invest in increasing production capacities.

What are the key terms of Cannara's credit facility announced on June 1, 2022?

The facility includes a $45 million term loan, $5 million line of credit, and no principal payments for the first six months, with a declining interest rate based on performance.

How will the credit facility impact Cannara's operations?

The funding will help improve cultivation and processing capabilities at the Valleyfield Facility, supporting market expansion and production growth.