Auxly Cannabis repays $5-million inventory loan

Executive Summary

• Auxly Cannabis Group Inc. has fully repaid its $5 million inventory loan to GrassHopper Capital Inc., utilizing existing cash on hand.
• The repayment is projected to generate annualized interest expense savings of approximately $900,000, improving the company's cost structure.
• CEO Hugo Alves cited the move as a strategic capital allocation decision to strengthen the balance sheet and reduce interest expenses, citing growing revenue and stable cost bases.

Key Details

• Loan Amount: $5 million (principal and interest).
• Lender: GrassHopper Capital Inc.
• Funding Source: Cash on hand.
• Financial Impact: Expected annualized interest expense savings of ~$900,000.
• Strategic Rationale: Strengthening the balance sheet and reducing interest expense; prioritizing organic growth investments.
• Company Status: CEO notes the business is growing profitably with operating leverage translating to free cash flow.

Notable Quotes

• "We would like to thank GrassHopper for its financial support and partnership over the past two years. Our business is growing profitably and is now in the position to strategically allocate capital. Our revenue is growing and our stable cost base is providing operating leverage to our profitability, which is translating to free cash flow. We will continue to evaluate capital allocation decisions prioritizing organic growth investments and strengthening our balance sheet. In this case, solidifying our balance sheet and reducing interest expense was an obvious choice for deploying our excess cash," said Hugo Alves, chief executive officer of Auxly.