Delta 9 Cannabis Inc. closed a $32 million debt financing partnership with connectFirst Credit Union Ltd. on Tuesday, Feb. 1, with money coming from First Calgary Financial.
“With this debt financing, Delta 9 has added financial flexibility to optimize its capital structure and is well positioned to continue executing its growth strategy,” said John Arbuthnot, CEO of Delta 9, in the joint announcement.
“This transaction reflects the strong financial and operational results that Delta 9 and its team have been able to deliver following the legalization of cannabis in Canada, and the confidence of our new lead lender, connectFirst,” he said. “To our knowledge, this interest rate is among the most competitive rates set by a public cannabis company to date.”
The agreement includes a $23 million commercial mortgage credit facility, a $5 million acquisition facility and an authorized overdraft of $4 million. The commercial mortgage portion matures after five years and is amortized over 12 years.
It includes $11.2 million for the repayment of existing long-term debt and $11.8 million for the repayment of Delta 9’s 8.5% unsecured convertible debentures due July 17. The plan includes interest rates at a fixed rate of 4.55% per annum over 5 years for the commercial mortgage portion of the loan and connectFirst prime + 1.50% per annum for the authorized overdraft.
The plan gives Delta 9 about $1.2 million in additional operating capital and an additional $470,000 in annualized principal repayment reductions. This money will be used to grow the business and for general working capital needs. Delta 9 would also have access to capital of up to $5 million for future acquisitions.
“We are delighted with the new partnership between Delta 9 and connectFirst. Delta 9 is one of Canada’s most established and recognizable cannabis brands, and our senior debt offering will provide capital to continue its growth trajectory,” said Craig Zaychkowsky, Assistant Vice President of Services. business and commercial banking at connectFirst, in the joint announcement.
“This debt offering allows connectFirst to continue to prove that we support our members by providing the financial tools, passion and expertise for a better future,” he said.
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