Decibel Cannabis, a company in premium cannabis and extract manufactured products, closed credit facilities totaling $61 million with ATB Financial and ATB Cormark Capital Markets.
“With our existing term loan coming due in January 2027, we were proactive in securing refinancing that extends our maturities to February 2030, reduces our 2026 payment obligations by $5 million, and provides an upsized revolver that allows us to pursue corporate development initiatives,” Ben Sze, CEO of Decibel, said. “We are now free cash flow positive and without any material near-term debt maturities. The company remains well positioned to continue its leadership in the Canadian ready-to-consume categories and to drive significant international growth and financial performance through our international business with the AgMedica facility. I also want to thank the ATB team for their support of our business and delivering a market leading four-year term on this financing.”
Financing Highlights
- $40 million first lien term facility with normal course principal repayments throughout the term, and a bullet repayment at maturity which replaces the facility from Servus Credit Union (formerly, Connect First Credit Union Ltd.) that was due January 2027.
- $10 million revolving first lien credit facility which allows flexibility and immediate access to capital to pursue corporate development with immediately available funds. On close, $3 million of such facility will be available, and the remainder will become available once certain conditions subsequent have been satisfied.
- $11 million second lien term facility which results in no net change to total liabilities, while reducing certain other 2026 payment obligations, enhancing Decibel’s free cash flow generation with normal course principal repayments throughout the term, and a bullet repayment at maturity.
“We are incredibly excited to partner with ATB to position Decibel for continued growth of the business domestically and abroad while strengthening our balance sheet,” Stuart Boucher, chief financial officer of Decibel, said. “Our strengthened balance sheet will position the company to pursue corporate development initiatives. Our return on investment on the AgMedica acquisition exceeds 50% annualized and we believe that the available capital will allow us to pursue further opportunities to develop our business and gain scale to become a leading global cannabis company. Capital remains tight in the industry and with this new financing we will be able to pursue opportunities that drive value for the business while still maintaining a debt to EBITDA ratio of less than 2.0x.”
The loan facilities bear interest at ATB’s referenced benchmark rates plus a spread determined by funded debt to trailing twelve month adjusted EBITDA. The loan facilities are subject to normal course funded debt, fixed charge and minimum cash covenants.
The first lien facilities are secured by a first-priority security interest over all the assets of Decibel, as borrower, and certain of its material subsidiaries, as guarantors. The second lien term facility is secured by a second-priority security interest over all the assets of Decibel, as borrower, and certain of its material subsidiaries, as guarantors. Each of loan facilities includes customary positive and negative covenants and events of default for loans of similar type, including financial covenants.
