The committed interest rate under the credit facility is the Canada Bond rate for five years +3.55% with a minimum floor rate of 4.25% and matures five years following closing. The credit facility replaces Sugarbud’s existing debt facility with Pillar Capital. The proceeds from the credit facility will be used to repay the $2.04 million outstanding under the existing debt facility and for ongoing working capital purposes. Sugarbud has the right to repay amounts outstanding under the credit facility prior to the maturity date without penalty. The credit facility is subject to continued compliance with customary financial covenants. Subject to the satisfaction of certain customary conditions, including the finalization of security documentation, the full amount of the credit facility will be available at closing, which Sugarbud expects to occur on or about June 1.
Upon the anticipated closing of the credit facility and a previously announced marketed public offering of secured convertible debenture units of up to $4.0 million, subordinating in priority and ranking to the credit facility, Sugarbud will have adequate funding for the completion of Phase 1a and to also begin the build-out for Phase 1b at the company’s purpose built facility in Stavely, AB, for the cultivation and production of craft cannabis products.
“We are pleased to be working with Sugarbud and are excited to support them and the community of Stavely as they continue their quest in this dynamic new industry,” Ryan Andries, vice president of commercial banking at First Calgary, said. “Our approach at First Calgary is to work with business teams who have a great vision with a solid business plan. We are proud to welcome Sugarbud as new members of our credit union.”
“We view this new credit facility with First Calgary as a strong vote of confidence in our management team, our business model and most importantly our ability to deliver strong operational and financial results,” John Kondrosky, CEO of Sugarbud. “As a company, we are always looking for ways to balance our overall cost of capital and optimize our capital structure. We believe that this new credit facility with First Calgary more than meets these criteria, further strengthens our balance sheet and provides the company with the additional working capital necessary to continue to successfully execute against our primary growth objectives and priorities.”
Sugarbud is a federally licensed, Alberta-based craft cannabis company.