Entourage Health, a Canadian producer and distributor of cannabis products and brands, amended its existing credit facility with an affiliate of the LiUNA Pension Fund of Central and Eastern Canada (LPF) to add an additional $20 million in non-dilutive funding.
Entourage Health will use the expanded credit facility for general working capital purposes as the company continues to focus on sustainable growth, part of which will be driven by upgrading and standardizing its cultivation practices with a recently acquired tissue culture business and by introducing new genetics for products expected to drive commercial growth in 2022.
“With the recent integration of our renowned tissue culture business and addition of new genetics, our cultivation team is enhancing our Strathroy facility using the latest science-based plant performance data and executing on our promise to meet evolving consumer and patient preferences with premium products,” George Scorsis, interim CEO and executive chairman of Entourage Health, said. “With our enhanced propagation techniques and upgraded suite of products, we are setting a clear path to reaching our profitability goals in late 2022. This added support from our trusted partner and strategic investor, LiUNA Pension Fund, provides us with significant non-dilutive financing, which will enhance our liquidity position and provide additional working capital to drive sales and pursue targeted growth initiatives.”
The credit facility continues to bear an interest rate of 15% with the option, at Entourage Health’s discretion, to capitalize interest in lieu of cash payments of interest. The credit facility, which is set to mature in August 2022, is secured by the assets of Entourage Health and its subsidiaries, including the company’s production facilities, and contains customary financial and other covenants, as well as typical conditions precedent for a transaction of this nature. LPF’s security under the credit facility is in second position to Entourage Health’s senior creditor.
In addition to the new funding provided under the credit facility, Entourage Health and LPF agreed to defer certain of the facility’s financial covenants to the end of 2021, under an amended credit agreement announced on Nov. 1, which is now further extended until March 28.
Entourage Health also signed an additional amendment to its senior secured credit facility entered into in 2019 with Bank of Montreal. The latest amendments to the senior credit facility modify the terms under which Entourage Health secured up to $39 million of debt financing over a three-year term ending in 2022.
Under the terms of the amendment, Entourage Health secured a temporary bulge facility of $500,000, which is available for a limited period of time and only to be used for working capital purposes. Additionally, Entourage Health secured deferral of certain of its financial covenants to March 28, 2022.
