MTL Cannabis closes $27-million credit facility

Executive Summary

• MTL Cannabis Corp. has closed a $27 million credit facility with a leading Canadian Schedule 1 bank to support growth capital expenditures, working capital needs, and the refinancing of pre-existing debts.
• The facility consists of multiple tranches totaling $27 million, including revolving and term credit facilities with varying commitment levels and drawdown structures.
• The transaction serves as the final step in closing the business combination with Canada House Cannabis Corp., specifically refinancing legacy debts including convertible debentures and acquisition payables.

Key Details

• Total Facility Amount: Approximately $27 million.
• Lender: A leading Canadian Schedule 1 bank.
• Facility Structure:
  • Revolving Credit: Uncommitted demand revolving credit facility of up to $4 million, margined against eligible account receivables.
  • Term Facility 1: Committed non-revolving term credit facility of $6.75 million, available via single drawdown, with a 3-year contractual term.
  • Term Facility 2: Committed non-revolving term credit facility of $12.15 million, available via single drawdown, with a 3-year contractual term.
  • Delayed Draw Facility: Uncommitted delayed draw non-revolving term credit facility of $4.12 million, available via one or more drawdowns.
• Interest Rate: Prime or adjusted-term Canadian overnight repo rate average plus an applicable margin.
• Security/Collateral:
  • All present and after-acquired undertakings, property, and assets of the company and its material operating subsidiaries.
  • First-ranking collateral mortgage on the property located at 551 Rue Saint-Marc, Louiseville, Que.
• Use of Proceeds:
  • Growth capital expenditures.
  • Working capital needs.
  • Refinancing pre-existing debts.
• Refinanced Debt Details:
  • Convertible Debenture: $8,316,830.21 payable to Archerwill Investments Inc. (issued Aug. 4, 2020, as amended), including the delivery of 14,466,568 prepayment warrants with an exercise price of 57.49 cents.
  • IsoCanMed Acquisition Payable: $10,041,094.94 related to the acquisition of IsoCanMed Inc. (closed June 12, 2020).
  • Secured Debentures: Approximately $575,000 issued on Dec. 5, 2017.
• Strategic Context: The refinancing of legacy Canada House creditors is described as the "final chapter" in the closing of the business combination between Canada House and MTL Cannabis.

Notable Quotes

• "We are incredibly excited to partner with the team to finance the continued growth of the business and strengthen our balance sheet... We fully appreciate the confidence that the bank has in our management team and the business we have built, and we look forward towards repaying that trust with continued performance as we grow together in the coming years." — Michael Perron, CEO
• "We view the refinancing of the legacy Canada House creditors as the final chapter in the closing of the business combination between Canada House and MTL Cannabis... We are extremely proud of management's financial stewardship of the combined company and the turnaround of our financial position that this milestone symbolizes." — Richard Clement, Chairman and Co-founder