Canadian Imperial Bank of Commerce acted as administrative agent on a $65 million secured non-revolving term loan credit facility for cannabis company Cronos Group. Bank of Montreal was a lender on the facility.
Cronos intends to use the funds to repay its existing loan facility with Romspen Investment and for general corporate purposes, pending the closing of its previously announced equity investment by Altria Group. Cronos subsequently intends to repay the facility with a portion of the proceeds from said investment.
The term loan will mature on July 23, 2019, unless extended to September 7, 2019 with the consent of the lenders.
The facility includes an accordion feature which can increase the facility by up to an additional $15 million, subject to the terms and conditions of the facility agreement. The facility will bear interest at varying margins based on the Canadian prime rate or the bankers’ acceptance rate, at the option of the company.
The facility is guaranteed by Cronos’ wholly-owned Canadian subsidiaries, while the obligations under and in connection with the facility are secured by substantially all present and after-acquired property of the company and its subsidiaries. Advances are subject to customary conditions.
The Altria investment remains on track to close in the first half of 2019, subject to certain customary closing conditions, including the receipt of regulatory approval under the Investment Canada Act and approval by at least a majority of the shareholders of the company, in person or by proxy, at a meeting scheduled for February 21, 2019.
Cronos Group is a globally diversified and vertically integrated cannabis company with a presence across five continents. It operates two wholly-owned Canadian licensed producers: Peace Naturals Project and Original BC.