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More funds available for the critical production ramp-up towards generating positive operating cash flow
Interest only payments significantly reduce cash outflow
Simpler capital structure
TORONTO, Dec. 13, 2019 /CNW/ - The Green Organic Dutchman Holdings Ltd. (the "Company" or "TGOD") (TSX: TGOD) (US: TGODF), a leading producer of premium certified organic cannabis, is pleased to announce that the Company has entered into a binding term sheet with Maynbridge Capital Inc. (the "Lender"), subject to satisfactory documentation and the fulfilment of all conditions precedent, for a senior secured first lien credit facility of up to $41.7 million (the "Facility"). The Facility will replace the proposed mortgage loan as well as the sale and leaseback of its Ancaster Energy Centre, which are no longer being pursued by the Company at this time.
The Facility consists of a committed $26.7 million senior secured term loan (the "Loan") with an 18-month term and 12 monthly interest only payments followed by 6 monthly payments of principal and interest, with the principal component based on a 15-year amortization, and an additional uncommitted $15.0 million senior secured term loan (the "Accordion Loan"), with terms to be agreed between the Lender and the Company. The interest rate on the Loan will be 13% per annum and the Loan will be secured by a first lien against all assets of the Company and its material subsidiaries. The Company will issue 7,000,000 common share purchase warrants of the Company ("Warrants") to the Lender, subject to standard adjustment provisions, on the date of closing of the Loan. Each Warrant shall be exercisable to acquire one common share of the Company for a period of 36 months from closing of the transaction at an exercise price of C$1.00 per Warrant.
Upon closing of the Loan, TGOD will receive $26.7 million. A further $15 million may be made available by the Lender under the Accordion Loan upon the Lender's credit approval and the achievement of certain operating and financial milestones, to be agreed, which the Company expects to obtain and achieve not earlier than the end of the third quarter of 2020.
The Loan's gross proceeds of $26.7 million to be received on closing (which includes the financed portion of a fee in the amount of $1.7 million) compares to the combined total of $26 million that was expected in the first tranches of the mortgage loan and the sale and leaseback previously considered by the Company. In addition, the interest only payments under the Loan in the first-year amount to only $3.5 million in cash outflow, compared to a total of $7.1 million in cash outflow for interest and lease payments that would have been due under the mortgage loan and the sale and leaseback agreement. As such, this new lending arrangement represents a net positive for committed cash flow. The Company does not consider the difference in amounts from the Accordion Loan expected later in 2020 to impact the viability of the production ramp-up to operating cash flow by the second quarter of 2020.
The Loan is subject to completion of customary closing conditions, including satisfactory documentation, with expected completion of conditions precedent and closing on December 20, 2019 and in any event prior to December 31, 2019. The underwriter of the Company's previously announced bought deal public offering of units has consented to the entering into of the Loan.
About The Green Organic Dutchman Holdings Ltd.
The Green Organic Dutchman Holdings Ltd. (TSX: TGOD) (US‐OTC: TGODF) is a premium certified organic cannabis company focused on the health and wellness market. Its certified‐organic cannabis is grown in living soil, as nature intended. The Company is committed to cultivating a better tomorrow by producing its products responsibly, with less waste and impact on the environment. Its two Canadian facilities are being built to LEED certification standards and its products are sold in recyclable packaging. In Canada, TGOD plans to expand its product portfolio by launching a series of next‐generation cannabis products such as organic teas, infusers and vapes. Through its European subsidiary, HemPoland, the Company also distributes premium hemp CBD oil in Europe. By leveraging science and technology, TGOD harnesses the power of nature from seed to sale.
TGOD's Common Shares and warrants issued under the indenture dated November 1, 2017 trade on the TSX under the symbol "TGOD" and "TGOD.WT", respectively. For more information on The Green Organic Dutchman Holdings Ltd., please visit www.tgod.ca.
This news release includes statements containing certain "forward‐looking information" within the meaning of applicable securities law ("forward‐looking statements"). Forward looking statements in this release includes, but is not limited to, statements about timing or likelihood of closing of the first tranche of the Facility and the ability to receive additional funds under the Facility, the ability of the Company to achieve certain operating cashflow conditions required by the Lender, the statement about the offering of any particular products by the Company in any jurisdiction and statements regarding the future performance of the Company. Forward‐looking statements are frequently characterized by words such as "plan", "continue", "expect", "project", "intend", "should", "believe", "anticipate", "estimate", "may", "will", "potential", "proposed" and other similar words, or statements that certain events or conditions "may" or "will" occur. These statements are only predictions. Various assumptions were used in drawing the conclusions or making the projections contained in the forward‐looking statements throughout this news release. Forward‐looking statements are based on the opinions and estimates of management at the date the statements are made and are subject to a variety of risks and uncertainties (including market conditions) and other factors that could cause actual events or results to differ materially from those projected in the forward‐looking statements, including those risk factors described in the Company's most recently filed Annual Information Form available on SEDAR. The Company is under no obligation, and expressly disclaims any intention or obligation, to update or revise any forward‐looking statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable law.
Neither the TSX nor the TSX's Regulation Services Provider (as that term is defined in the policies of Toronto Stock Exchange) accept responsibility for the adequacy or accuracy of this release.