Aleafia Health closed a credit facility of up to $19 million with the Garrington Group of Companies.
The credit facility consists of a revolving receivables facility of up to $7 million and a term loan of $12 million. The term loan was fully drawn by Aleafia Health upon closing. The revolving receivables facility is expected to be drawn this month and further thereafter as receivables grow with the company’s revenue.
The facility’s interest rate is in-line with Aleafia Health’s existing credit facility and is payable monthly. The credit facility is secured primarily by way of first lien mortgages on Aleafia Health’s Paris, ON, and Grimsby, ON, production facilities and includes customary financial and restrictive covenants.
Aleafia Health will use the net proceeds from the credit facility to fund working capital, to repay $5 million in principal on its existing senior secured credit facility and for general corporate purposes.
“This financing improves our liquidity and capital structure, as the company’s senior secured debt obligations will now mature in December 2023 rather than in August 2022,” Geoffrey Benic, CEO of Aleafia Health, said. “The transaction allows us to continue the growth of our core adult-use and medical cannabis sales channels, as we again expect to realize sequential growth in both channels over the previous quarter.”
The term of Aleafia Health’s previous senior secured credit facility was extended from August 2022 to December 2023. In connection with that facility, a first lien mortgage will be granted on the company’s Port Perry, ON, outdoor cultivation property.
The Garrington Group of Companies is a Toronto-based private lender providing working capital financing to the small to mid-sized middle market sector across North America, providing credit facilities that generally range from $1 million to more than $30 million.
