Christina Lake arranges $1.5M revolving credit line

Executive Summary

• Christina Lake Cannabis Corp. entered into a secured credit facility and an equipment lease agreement with Mervin Boychuk, a company director, constituting a related party transaction.
• The credit facility provides a revolving line of credit of up to $1.5 million, secured by a second mortgage on company property and a general security agreement.
• The transaction relies on exemptions from formal valuation and minority shareholder approval requirements under Multilateral Instrument 61-101, as the value does not exceed 25% of the company's market capitalization.

Key Details

• Credit Facility Structure:
  • Lender: An entity controlled by Mervin Boychuk (Director).
  • Amount: Revolving line of credit up to $1.5 million.
  • Term: Two years from the date of the agreement.
  • Interest Rate: 15% per annum on outstanding amounts.
  • Repayment: Repayable on demand by the lender with 30 days' notice; the company may repay at any time prior to the end of the term without penalty.
  • Security: Secured by a second mortgage on the company's property at 775 Highway 395, Christina Lake, British Columbia, and a general security agreement.
  • Conversion: The facility is not convertible into any other securities of the company.
• Equipment Lease Agreement:
  • Counterparty: Same lender (Mervin Boychuk entity).
  • Term: 18 months.
  • Cost: Monthly fee of $4,683.39 plus GST.
  • Option: Company has an option to purchase the equipment following the end of the lease term.
• Regulatory Compliance:
  • The transaction is classified as a related party transaction under Multilateral Instrument 61-101.
  • The company relied on exemptions from formal valuation (Section 5.5(a)) and minority shareholder approval (Section 5.7(1)(a)) because the fair market value of the subject matter and consideration does not exceed 25.0% of the company's market capitalization.