This morning iAnthus (CSE: IAN) announced they are negotiating towards a definitive agreement for a senior secured term loan of up to US$50 million with Torian Capital Partners. The Term Loan is expected to be made available in two tranches of US$25 million, each with substantially similar terms.
The news release states that the proceeds will be used to support iAnthus’ near-term growth efforts in Florida, Nevada, New Jersey and New York.
Reducing our cost of capital has been one of our key goals for this year. We believe this is a great opportunity to add strength to our balance sheet as we continue to invest in our key expansion initiatives, along with people, systems and brands…This transaction will position us well as we continue our strategic investments to take advantage of the once-ever opportunity presented by the cannabis industry.”
Hadley Ford, CEO, iAnthus
Here are the basic terms of the term loan:
- a first-priority lien on all current and future assets of iAnthus
- the term will be 36 months
- 9.0% interest, per annum, payable quarterly
- iAnthus may prepay the outstanding principal amount (i) in year 2, with payment of 109% and (ii) in year 3, with payment of 104.5%
- 20% warrant coverage of each tranche, with an exercise price of 25% above market for a 3 year term
Hadley is a former Goldman Sachs banker and understands managing cost of capital as well as anyone in the space. The key difference here for shareholders to take notice of is the lack of the word “convertible,” meaning the debt will be repaid and not converted into shares, which will avoid dilution at today’s depressed share price level. The risk for shareholders is the word secured, if iAnthus runs into cash flow issues Torian capital will now have first call on the assets.
Torian Capital is a private investment firm focused cannabis investments. They most recently signed a $225M loan with Harvest.
Information for this briefing was found via Sedar and iAnthus. 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.
