Bank of Montreal (BMO) agreed to provide a new $200 million debt facility, with a potential upsize to $250 million, to Aurora Cannabis. The facility will consist of a $150 million term loan and a $50 million revolving credit facility, both of which will mature in 2021.
A short period after the implementation of Bill C-45 in October 2018, Aurora may request an increase of up to a further $45 million to the term loan, subject to certain conditions. BMO will also provide up to $5 million in other credit instruments. Closing of the debt facility is subject to completion of final due diligence, negotiation of definitive documentation and satisfaction of conditions precedent customary to a financing of this nature.
The debt facility will be primarily secured by Aurora’s production facilities.
“Having successfully met all of BMO’s stringent risk assessment and other due diligence criteria to establish this facility reflects well on the maturity, progress and prospects of Aurora, as well as the quality and economic value of our production facilities,” said Terry Booth, Aurora CEO. “This is by far the largest traditional debt facility in the cannabis industry to date.”
The loans can be repaid without penalty at Aurora’s discretion. The pricing of the loans is a set margin over the BMO CAD prime rate or a bankers’ acceptance of appropriate term. Based on the current BMO CAD prime rate, the interest payable is expected to be in the mid to high 4% per annum range over the term of the loans.
Headquartered in Edmonton, AB, with funded capacity in excess of 430,000 kg per year and operations across Canada and Europe, Aurora is one of the world’s largest cannabis companies.