It appears that Canopy Growth (TSX: WEED) (NASDAQ: CGC) has seen its funds from Constellation Brands deplete to the point that it now needs to take on debt. The company this morning announced that it has entered into a credit agreement for a US$750 million senior secured term loan, with room to expand the loan by a further US$500 million.
The debt reportedly has no amortization payments, and matures in five years on March 18, 2026 and bears interest at a rate of LIBOR plus 8.50%, with LIBOR having a floor of 1.00%. Proceeds from the debt are to be used for working capital and general corporate purposes, which includes growth investments, acquisitions, capital expenditures, and strategic initiatives.
As per CFO Mike Lee, after having used the majority of the capital provided by Constellation, this debt now “marks a key milestone for us as we work towards achieving a more efficient capital structure.”
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Following the term loan, the company has indicated that its estimated pro-forma cash, cash equivalents, and short-term investments as of December 31, 2020, amount to C$2.5 billion.
Canopy Growth Corp last traded at $43.52 on the TSX.
Information for this briefing was found via Sedar and Canopy Growth. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
