Cansortium Inc. (CSE:TIUM) (OTCQB:CNTMF) announced on Tuesday that it has secured a new senior secured credit agreement of up to $96.5 million with Chicago Atlantic Admin, LLC, as an administrative agent for certain lenders.
The Tampa, Florida-based vertically integrated cannabis company operating under the FLUENT brand, said the credit agreement includes a 12% cash interest rate and 1% paid-in-kind interest annually. It matures on November 26, 2028, with no material debt maturities until then.
"We are excited to announce the successful completion of our senior secured refinancing," Robert Beasley, CEO of Cansortium, said. "The loan's favorable interest rate and single financial covenant underscore our strong financial standing, while its non-dilutive structure – free of equity or warrants – preserves shareholder value."
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Why It Matters
The company plans to refinance its existing $71 million senior secured term loan, which was set to mature on May 29, 2025. As part of this refinancing, Cansortium has removed a previously required $10 million prepayment obligation that would have been triggered upon completing its planned merger with RIV Capital Inc. (CSE:RIV) (OTC:CNPOF).
Cansortium expects that the merger with RIV Capital -which operates the Etain brand in New York- will be wrapped up in early December 2024.
RIV reported a 111% year-over-year increase in second-quarter net revenue to $3.8 million in August. In a subsequent, October update, the company said third-quarter marked "a turning point for RIV Capital and its shareholders as the team translated strategy and execution into a record-setting year."
Beasley said the financing also provides $25 million in additional credit lines for real estate and acquisitions, positioning Cansortium for growth in Pennsylvania, New York and other emerging markets.
In the meantime, Green Thumb Industries Inc. (CSE:GTII) (OTCQX:GTBIF) – a cannabis consumer packaged goods company and owner of RISE Dispensaries – said Wednesday that it has received principal and cash interest payments related to a prior loan to Cansortium.
"Following Cansortium's recent financing, Green Thumb received approximately $23 million of principal plus 13% accrued interest, adding to its Q3 ending cash balance of $174 million," Green Thumb said in a press release.
Ben Kovler, Green Thumb's chairman and CEO, praised Cansortium's move.
"This investment is a good example of our opportunistic style to allocating capital – we want to have upside optionality combined with downside protection," Kovler said. "The result in this case of getting paid back 100 cents on the dollar feels like a win. We look forward to re-allocating these dollars into unique opportunities within our circle of competence to benefit shareholders."
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