Alberta-primarily based Aurora Cannabis closed an expansion of a loan deal with 3 of Canada’s most significant banks, generating it amongst the biggest nonconvertible debt facilities in the marijuana sector to date, according to analysts.
Aurora stated it closed term loans worth an further 160 million Canadian dollars ($120 million) with a syndicate of lenders led by the Bank of Montreal, plus an choice to upsize the facility by about CA$40 million.
That is in addition to the original CA$200 million in credit facilities Aurora secured final year.
The total debt deal – now worth as considerably as CA$400 million – is 1 of the industry’s most significant debt arrangements as significant cannabis firms in Canada turn to standard lenders.
Aurora rival Canopy Development closed a CA$500 million convertible debt deal in 2018.
Aurora’s debt facilities consist of:
- CA$160 million in term loans announced in August.
- An choice to upsize the facility by about CA$40 million.
- CA$200 million in credit facilities announced in 2018.
The term loans and revolving credit facility mature in August 2021.
Harrison Phillips, vice president of New York-primarily based Viridian, stated nondilutive financing is expanding on the margin, but arrangement is nevertheless rather restricted in the cannabis sector.
“Aurora is a enterprise with a substantial quantity of fixed assets, so that offers a lender comfort offered the debt is secured by these assets,” he stated.
“This, I think, is the biggest nonconvertible debt facility that we’ve observed so far in this space.”
Barriers stay for smaller sized cannabis businesses to access nondilutive financing, according to Phillips.
“We’ve observed a concentration of capital flows to these bigger operators, for the reason that they’re created their infrastructure and staked a claim on some quite material market place share,” he stated.
Canadian cannabis firms raised a record CA$12 billion final year to expand in Canada and overseas, which includes initial public offerings, private placements, equity, debt and strategic investments.
Aurora’s shares trade as ACB on the New York Stock Exchange and the Toronto Stock
Matt Lamers can be reached at [email protected]
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