WeedMD Inc (CVE:WMD) (OTCQX:WDDMF) revealed on Thursday that it has entered into a binding term sheet for a $30 million credit facility with an affiliate of the LiUNA Pension Fund of Central and Eastern Canada (LPF).
In a statement, the Toronto-based licensed producer and distributor of cannabis, said the $30 million credit facility will mature in August 2022. The funds will boost the company’s working capital and provide WeedMD with “significant financial” muscle to drive commercial initiatives during its next stage of growth.
The credit facility is expected to close and fund before the end of the current fiscal quarter, which ends September 30, said the company.
“Over the past few months, we have successfully streamlined our operations, enhanced our cultivation platform with production upgrades, executed our product strategy and expanded our distribution networks – all with the ongoing support from our partner and strategic investor LiUNA Pension Fund,” said WeedMD CEO Angelo Tsebelis.
“This $30 million of non-dilutive financing will enhance our liquidity position and provide additional working capital at this inflection point to drive our adult-use brands, add distribution points and expand our sales and marketing team.”
Tsebelis noted that the proposed investment by the company’s “cornerstone shareholder reiterates their support” for WeedMD’s strategic plan and “provides significant growth capital to execute on key commercial initiatives to drive sales and generate sustainable profitability.”
The interest rate for the credit facility is set at 15% with the option, at the company’s discretion, to capitalize interest in lieu of cash payments of interest. The credit is secured by WeedMD and its subsidiaries’ assets, including the company’s production facilities, and contains standard financial and other covenants.
“As we progress into the next stage of growth, WeedMD is implementing consumer-centric decisions by diversifying our product pipeline with new offerings," said WeedMD Chief Commercial Officer Stephen Ng.
"We are also investing in the expansion of a commercial team that will broaden distribution and work to increase sales on a national level. We look forward to executing on our plan with this financing.”
WeedMD has outlined its commercial plans for the adult-use market and is also bringing online medical product channels under "one unified Starseed marketplace." It is on track to complete its full patient migration to its Starseed Medicinal online marketplace by early October.
Separately, WeedMD said its financials will now be filed on September 30, with a management hosted earnings call on October 1, at 10 am ET.
WeedMD owns and operates a 158 acre state-of-the-art greenhouse, outdoor and processing facility in Ontario as well as a fully-licensed 26,000 sq ft processing facility, specializing in cannabis extraction in the Canadian province.
With the addition of Starseed, a medical-centric operator based in Bowmanville, Ontario, WeedMD has expanded its multi-channeled distribution strategy.
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-- Adds comments, details on filing company financials, earnings call --