Green Ivy Capital entered a non-binding term sheet agreement on a senior secured, delayed draw term loan with an aggregate principal amount of up to $46 million with science-focused cannabis company Vireo.
The credit facility is non-convertible and has a three-year term. Loans issued under the facility will bear interest at a fixed annual rate of 13.25%. For all advances under the facility, the term sheet specifies that the lenders shall receive warrants at a rate of 30% warrant coverage based on the gross amount of each tranche advanced, with a warrant strike price equal to a 15% premium to the closing price on the trading day immediately preceding each funding date. A first tranche of U.S. $10 million, net of fees and closing costs, is expected to close in December, subject to execution of definitive documents, with additional tranches subject to certain performance metrics or regulatory developments. Vireo intends to use proceeds of the loan to support working capital, organic growth and acquisition opportunities.
“We’re very pleased at the prospect of additional non-dilutive financing to help fund our growth, especially considering our concerns about the potential dilutive impacts of equity offerings at current prices and the considerable upside we continue to foresee in each of our core markets,” Kyle Kingsley, chairman and CEO of Vireo, said. “Most importantly, this facility would allow Vireo to continue pursuing first-mover’s advantages in our five core markets, most of which are anticipated to transition to adult use sometime in 2021. We remain committed to being strong stewards of capital for our shareholders while executing against our growth and profitability initiatives.”
“Vireo has leadership positions in several of the most attractive cannabis markets in the United States, and the company’s improving operations and potential to benefit from … regulatory catalysts attracted us to this opportunity. We are looking forward to partnering with Vireo’s management team and providing them the necessary support to execute their growth strategy,” John Mazarakis, principal of Green Ivy, said.
Green Ivy Capital is a specialty finance firm focused on providing debt capital to cannabis, hemp and related industries.
