WeedMD Inc., a federally-licensed producer and distributor of medical-grade cannabis, announced that it has entered into a credit facility with Bank of Montreal (BMO).
Under the terms of the credit facility, BMO will provide WeedMD up to $39 million of secured debt financing at a rate of interest that is expected to average in the low-to-high 5% per annum range over a three-year term.
The facility consists of a $33.1 million term loan, a $3.0 million equipment term loan and a $3.0 million revolving credit facility, all of which mature in 2022. WeedMD may, at its discretion, repay the balance of the Loans without penalty at any time during the term.
Concurrently, WeedMD has exercised its option to purchase the Health Canada-licensed, 98-acre Strathroy property from Perfect Pick Farms. The Strathroy purchase includes the licensed 610,000 sq. ft. state-of-the-art hybrid-greenhouse, more than 100,000 sq. ft. of ancillary structures and all other infrastructure and equipment as well the 50 acres of land upon which the Company intends to cultivate outdoor cannabis.
"Securing BMO's support at this exciting juncture in WeedMD's growth provides market validation in our ability to continue to execute our strategic plan with non-dilutive financing," said Keith Merker, CEO of WeedMD. "In 2018, it took us just six months to retrofit, license and bring the first phase of our state-of-the-art greenhouse online. Less than three months later, we took down our first harvests with very compelling yields and quality. We've since continued to expand our licensed footprint and operations across the greenhouse and have recently announced our plans for outdoor cannabis cultivation onsite, which we expect to double our production potential with a low-cost scalable expansion."
The interest rate for the Loans is a set margin over the Canadian dollar prime rate or a bankers' acceptance of appropriate term. Based on the current Canadian dollar prime rate, the interest payable is expected to be in the low to high 5% per annum range over the term of the Loans. The credit facility is secured by the Company and its subsidiaries, including WeedMD's production facilities in Strathroy, Ontario and Aylmer, Ontario, and contains customary financial and restrictive covenants.