Debt Funding Targeted at Accelerating Growth and Capacity Expansion Initiatives
VANCOUVER, BC / ACCESSWIRE / January 22, 2020 / Experion Holdings Ltd. (the "Company" or "Experion") (TSXV:EXP)(OTCQB:EXPFF)(FRANKFURT:MB31) is pleased to announce that it has signed a non-binding term sheet (the "Term Sheet") to receive up to $8.5 million in the form of a senior secured term loan (the "Term Loan") from Trichome Financial Corp. ("Trichome Financial") (CSE: TFC), a Toronto-based specialty finance company focused on the cannabis sector.
Upon closing of the Term Loan, Experion will immediately receive gross proceeds of $2.0 million and will have access, contingent upon the satisfaction of certain conditions, to up to $6.5 million in order to fund strategic initiatives. All amounts drawn under the Term Loan will pay interest at a rate of 10.5% per annum and mature 30 months from the date of closing. Closing of the Term Loan is subject to, among other things, the completion of due diligence and definitive agreements and is expected to close on February 7, 2020 or such other mutually agreed upon date.
"We believe this significant financial commitment from a leading cannabis focused institutional investor represents a strong vote of confidence in our plan and is reflective of the inherent value of Experion's assets, products, brand and team," commented Jarrett Malnarick, CEO. "We are seeing a strong pick-up in demand for our adult-use products and have already implemented cost-cutting measures to streamline our operations such that this new capital will be utilized in the most fiscally responsible way. Access to the Term Loan positions Experion to take advantage of both organic and acquisition-based growth opportunities which will enable the Company to achieve both economies of scale and generate further revenue."
Experion intends to use the funds drawn under the Term Loan to take advantage of current market conditions facing the cannabis sector. The equity market is currently challenging to the cannabis sector with many companies still requiring significant financing to complete their buildouts and distribution roll-out strategies. The Company expects the market for distressed asset sales from cannabis companies to increase significantly; creating an opportunity for Experion to expand its cultivation capacity through acquisitions on favourable terms. Specifically, the funds drawn under the Term Loan will be used:
- Grow Existing Business - to target M&A opportunities to expand cultivation capacity specifically focusing on licensed producers with completed or near complete facilities already in cultivation; and
- Finance and Operations - to provide, if needed, working capital to sustain and build long-term operations without fundraising concerns.
The Company expects that the foregoing use of funds will have a positive impact on shareholder value.
"Amidst difficult broader market conditions, Experion has put into place the infrastructure to support a long-term viable business in the Canadian cannabis space," said Michael Ruscetta, CEO of Trichome Financial. "For an operator of their scale, Experion's management have done an outstanding job in expanding distribution for their Citizen Stash branded product, which is starting to carve a niche in the premium flower segment. On top of quality cultivation operations and growing in-house brands, Experion's balance sheet and strong liquidity position played a role in Trichome Financial's decision to partner with Experion as it will allow the Company to deploy the proceeds of Trichome Financial's capital into accretive opportunities from both an organic and opportunistic M&A basis."
Consideration for the Term Loan is anticipated to include:
- such number of common shares of Experion (the "Bonus Shares") equal to 12.5% of the committed portion of the Term Loan, being $4,500,000, divided by the lower of: (i) $0.115; and (ii) the closing price of the common shares on the closing date of the Term Loan; and
- such number of common share purchase warrants of Experion (the "Bonus Warrants") equal to 15% of the committed portion of the Term Loan divided by the lower of: (i) $0.115; and (ii) the closing price of the common shares on the closing date of the Term Loan. Each Bonus Warrant will be exercisable for a period of 30 months and will have an exercise price equal to the lower of (i) $0.115; and (ii) the closing price of the common shares on the closing date of the Term Loan, subject to adjustment in accordance the rules of the TSX Venture Exchange (the "TSXV").
Additional consideration of Bonus Shares and Bonus Warrants are anticipated to be payable by the Company to Trichome Financial upon receiving an advance of funds under the non-committed portion of the Term Loan.
The Term Sheet is generally non-binding, other than the Break Fee, and the terms as set out in any definitive agreements entered into between the parties may be different from those set out in the Term Sheet. Further, the terms of any definitive agreements, the issuance of the Bonus Shares and Bonus Warrants are subject to applicable corporate and regulatory approvals, including but not limited to, the approval of the TSXV.
About Experion Holdings Ltd.
Experion Holdings Ltd. is the parent company of Experion Biotechnologies Inc., a Health Canada licensed cultivator and processor of cannabis, based in Mission, BC.
Experion Holdings Ltd. is invested in a portfolio of products to address a wide spectrum of consumer needs‘' including Adult-use, Wellness and Therapeutic, and Medical products.
Experion trades on the TSX Venture Exchange as a Tier 1 issuer under the symbol "EXP"; on the OTCQB Venture under the symbol "EXPFF" and on the Frankfurt Stock Exchange under the symbol "MB31".
About Trichome Financial Corp.
Trichome Financial is a specialty finance company focused on providing flexible and creative credit solutions to the global legal cannabis market. Trichome Financial was created to address the lack of credit availability in the large, growing and increasingly complex cannabis market. Founded by industry leaders Origin House and Stoic Advisory, Trichome Financial's experienced management team has a unique edge to capitalize on proprietary deal flow and industry insight while developing a first mover advantage as a global cannabis focused specialty finance company. Trichome Financial provides customized financing solutions across the industry value chain to support growth, capital expenditures, mergers, acquisitions, working capital and other needs. Leveraging the combined resources and knowledge of its founders, it is able to offer significant value-added financial, product, market and operational support to its partner companies. Trichome Financial's current assets are all based in Canada and it currently has no operations or assets in the United States.
For further information about Trichome Financial please visit us at www.trichomefinancial.com or @trichomefinance on Twitter and refer to the joint information circular of Trichome Financial and 22 Capital dated May 29, 2019 which is available on Trichome Financial's SEDAR profile at www.sedar.com.
About Animus Capital Partners Inc.
Animus Capital Partners ("Animus Capital") acted as exclusive financial advisor to Experion in respect of this financing. Animus Capital is a leading global financial advisory and merchant banking firm based in Calgary, Alberta; focused on investing, advising and partnering with leading companies in select industries. For further information about Animus Capital Partners please visit www.animuspartners.com.
Cautionary Note Regarding Forward-Looking Statements: This news release includes certain statements and information that may constitute forward-looking information within the meaning of applicable Canadian securities laws. All statements in this news release, other than statements of historical facts, including statements regarding the proposed Term Loan and the anticipated terms and conditions of Term Loan set out in the Term Sheet, the Company's assessment of the cannabis market and that the number of distressed asset sales will increase significantly, the Company's ability to obtain favorable terms with respect to potential acquisitions, the Company's assessment of the demand for its adult-use products and the impact of its cost-cutting measures, the proceeds of the Term Loan will be used as described in this news release and the resulting benefits to the Company, and the anticipated issuance of Bonus Shares and Bonus Warrants to Trichome Financial in connection with the Term Loan, are forward-looking statements and contain forward-looking information. Generally, forward-looking statements and information can be identified by the use of forward-looking terminology such as "intends" or "anticipates", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "should", "would" or "occur". Forward-looking statements are based on certain material assumptions and analysis made by the Company and the opinions and estimates of management as of the date of this news release, including that the Term Loan will be provided by Trichome Financial on the terms and conditions set out in the Term Sheet, the Company's assessment of the cannabis market and the number of distressed asset sales is correct, the Company's assessment of the demand for its adult-use products and the impact of its cost-cutting measures are correct, the Company's will obtain favorable terms with respect to potential acquisitions, the proceeds of the Term Loan will be used as described in this news release and will result in benefits to the Company, the Company will be able to satisfy all conditions required for it to receive to up to $6.5 million in funds under the Term Loan, the Company will issue the Bonus Shares and Bonus Warrants to Trichome Capital and the parties will obtain all requisite corporate and regulatory approvals for the Term Loan on the anticipated terms and conditions set out in the Term Sheet or otherwise. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements or forward-looking information. Important factors that may cause actual results to vary, include, without limitation, that the Term Loan will not be provided on the terms and conditions set out in the Term Sheet or at all, if the Term Loan is provided, the Company's assessment of the cannabis market and the number of distressed asset sales will not be correct, the Company's assessment of the demand for its adult-use products and the impact of its cost-cutting measures will not correct, the Company's will not obtain favorable terms with respect to potential acquisitions, the proceeds of the Term Loan will be used other than as described in this news release and not result in benefits of the Company, the Company will not be able to satisfy all conditions required for it to receive to up to $6.5 million in funds under the Term Loan, the Company will not issue Bonus Shares or Bonus Warrants to Trichome Capital in connection with the Term Loan, and that the parties will not obtain all requisite corporate and regulatory approvals for the Term Loan on the anticipated terms and conditions set out in the Term Sheet or otherwise. Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements or forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements and forward-looking information. Readers are cautioned that reliance on such information may not be appropriate for other purposes. The Company does not undertake to update any forward-looking statement, that are incorporated by reference herein, except in accordance with applicable securities laws. See the Company's disclosure documents for a detailed discussion of the risk factors currently faced by it.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE: Experion Holdings Ltd.