Cannabis Professional’s daily roundup of industry news. View archive here.
Bankers are being kept busy in the early hours of this Thursday morning in marijuana. Green Growth Brands is raising another US$127-million, Auxly is lining up $84-million in new debt financing and Aurora is upsizing its credit facility to $360-million. Acreage Holdings, meanwhile, received a price target cut from Eight Capital and Germany received its first cannabis shipment from Toronto-based TerrAscend.
– Jameson Berkow
Green Growth Brands to raise up to US$127-million
Ohio-based multi-state cannabis operator Green Growth Brands announced plans late Thursday to raise US$77-million worth of convertible debentures and another US$50-million in debt financing.
The debentures are extremely short-term, with a maturity date of only 12 months and interest accruing daily; though the company did not disclose the interest rate it will pay. Holders of the debentures can opt to convert their interest-paying notes into common shares of Green Growth’s stock at $2.45 per share.
That conversion price is the same price Green Growth used to raise $50-million last month in a bought deal led by Canaccord Genuity. Combined with that deal, and assuming discussions with United Capital Partners LLC results in another $50-million of debt financing, the company backed by the billionaire Schottenstein family has announced plans to raise nearly $170-million over the past three weeks.
In early July, Green Growth agreed to buy Moxie Cannabis parent company MXY Holdings in an all-stock deal worth US$300-million in total. That deal gave Green Growth access to THC-based products, as most of its existing portfolio remains focused on non-intoxicating CBD.
The company’s CSE-listed stock has lost two thirds of its value over the course of 2019. From a peak of nearly $6 in early January, Green Growth closed Wednesday at a new 52-week low of $1.97 per share.
– Jameson Berkow
Auxly greenhouse JV partner secures $84 million debt facility
Sunens Farms Inc., a joint venture with Auxly Cannabis Group Inc. and greenhouse builder Peter Quiring, has lined up $84-million worth of debt financing, with the Bank of Montreal as the lead underwriter.
The debt will be secured against Sunens greenhouse, which is under construction in Leamington, Ont., and “partially guaranteed” by Auxly.
“The proceeds of the Credit Facility will be used to fund phase one of the Sunens facility, which is expected to be substantially completed by December 2019. The Leasing Facility will finance processing equipment,” Auxly said on Wednesday.
The announcement comes two days after Chuck Rifici stepped down as Auxly CEO to be replaced by Hugo Alves. Mr. Rifici will stay on as chairman of the board.
It also comes several weeks after the company announced a partnership with U.K. tobacco firm Imperial Brands PLC, which has invested $123-million in Auxly in the form of convertible debt that could give it a 20 per cent ownership stake in Auxly if converted.
– Mark Rendell
TerrAscend makes first cannabis shipment to Germany
TerrAscend Corp. has completed its first international shipment of dry cannabis to Germany, the company said Wednesday. In April, TerrAscend became one of only six Canadian LPs to have a facility certified to EU Good Manufacturing Practices (GMP) standards – a prerequisite to shipping product into the European Union.
TerrAscend’s German partner is a firm called iuvo Therapeutics GmbH.
“As the Company ships additional product to Germany in partnership with iuvo, it will continue to expand its footprint in Europe and other international markets,” TerrAscend said.
In April, the German federal government awarded its first in-country cultivation licences to Aurora, Aphria and Demecan Gmbh, a joint venture with Wayland. The amount of cannabis the three firms are allowed to grow under the licenses, however, is expected to fall short of medical patient demand, suggesting that the market for imported product from Canada will remain strong in the short term.
– Mark Rendell
Aurora Cannabis boosts credit facility to $360-million
Edmonton-based licenced producer Aurora Cannabis announced early Thursday plans to increase its credit facility.
Previously set at $200-million, the existing line of secured credit will be amended to include an additional C$160 million allocated between both term loans and a revolving credit facility, both of which will mature in August 2021. The loans, offered by a syndicate of lenders led by the Bank of Montreal, can be repaid without penalty to Aurora and are non-dilutive.
“In addition to cash being generated from operations, [Aurora] also has access to other unsecured debt alternatives, a number of equity investments, and has access to a C$514 million (US$400 million) At-The-Market equity program (“ATM”)," chief financial officer Glen Ibbott said in a statement.
– Jameson Berkow
Acreage target cut at Eight Capital on slower retail rollout
Graeme Kreindler is less optimistic about the speed of growth from U.S. multi-state cannabis operator Acreage Holdings.
In a Thursday morning note to clients, the Eight Capital analyst said he was cutting his price target by roughly one third, to US$23 per share from US$34 previously, as the company slowed the pace of new store openings. While the lowered target still implies an upside of more than 100 per cent over the next 12 months, Mr. Kreindler said he was responding to revised plans to open no more than 45 new stores in 2019 versus a previous goal of as many as 60.
“At least six store openings (3 in each of MA and OH) have been delayed as a result of regulatory bottlenecks in addition to slower than expected roll-outs in key states such as NJ and FL,” Mr. Kreindler said. “As a result, we are taking a more conservative approach to our expected store openings.”
On a conference call with analysts and investors on Wednesday morning, Acreage CEO Kevin Murphy also said U.S. legislative action required to trigger the company’s US$3.4-billion sale to Canopy Growth was also moving slower than expected.
– Jameson Berkow