Decibel closes $61-million in credit facilities

Executive Summary

• Decibel Cannabis Company Inc. has closed a total credit facility of $61 million with ATB Financial and ATB Cormark Capital Markets, replacing existing debt and extending maturity dates.
• The refinancing reduces 2026 payment obligations by $5 million, extends maturities to February 2030, and provides an upsized revolver to support corporate development and international growth.
• The company reports being free cash flow positive with no material near-term debt maturities, aiming to maintain a debt-to-EBITDA ratio of less than 2.0 times.

Key Details

• Total Facility Size: $61 million.
• First-Lien Term Facility: $40 million; replaces the facility from Servus Credit Union Ltd. (formerly Connect First Credit Union Ltd.) that was due January 2027; features normal course principal repayments and a bullet repayment at maturity.
• Revolving Credit Facility: $10 million first-lien facility; $3 million immediately available upon closing, with the remainder becoming available once certain conditions subsequent are satisfied.
• Second-Lien Term Facility: $11 million; results in no net change to total liabilities but reduces certain 2026 payment obligations; features normal course principal repayments and a bullet repayment at maturity.
• Maturity Extension: Existing term loan maturity extended from January 2027 to February 2030.
• Debt Reduction: 2026 payment obligations reduced by $5 million.
• Interest Rate Structure: ATB’s referenced benchmark rates plus a spread determined by financed debt to trailing 12-month adjusted EBITDA.
• Covenants: Subject to normal course financed debt, fixed charge, and minimum cash covenants.
• Security: First-lien facilities secured by first-priority security interest over all assets of Decibel and material subsidiaries; second-lien facility secured by second-priority security interest over the same assets.
• Financial Position: CEO Ben Sze states the company is now free cash flow positive. CFO Stuart Boucher notes the return on investment on the AgMedica acquisition exceeds 50% annualized.

Notable Quotes

• "With our existing term loan coming due in January, 2027, we were pro-active 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," said Ben Sze, chief executive officer of Decibel.
• "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," said Stuart Boucher, chief financial officer of Decibel.