Cannabis producer Decibel Cannabis Company Inc. (TSXV:DB) (OTCQB:DBCCF), has closed its previously announced financing with connectFirst Credit Union Ltd. in respect of $54 million of debt capital over an initial 5-year term.
The committed amount is comprised of $40.5 million of term debt, a $6 million authorized overdraft secured against government receivables, and an accordion line of $7.5 million.
The company expects the proceeds combined with contributions from operations to provide sufficient liquidity to repay Decibel's convertible debentures on maturity.
"With this refinancing, Decibel has added financial flexibility to optimize its capital structure and is well positioned to continue to execute its aggressive growth strategy," Stuart Boucher, chief financial officer of Decibel said "This transaction reflects the strong position Decibel has established in the Canadian cannabis market and the continued confidence from connectFirst and our team in the execution of the Company's strategic plan."
Financing Highlights
Decibel’s existing term debt will be increased by $12 million to $40.5 million, amortized over 12-years. The $12 million term debt will be accessible on request by the company.
The company expects the proceeds combined with contributions from operations to provide sufficient liquidity to repay Decibel's convertible debentures on maturity.
The credit facilities also include a $7.5 million accordion to support future growth initiatives as Decibel continues to scale.
The accordion line's initial availability is subject to Decibel achieving a trailing twelve month funded debt to EBITDA ratio of less than or equal to 4.00:1, as well as its maintained compliance with its other financial covenants.
The credit facilities will have one annually tested financial covenant, a debt to equity ratio of less than 1.00:1.
Additionally, the credit facilities will have one quarterly tested financial covenant, a debt service coverage ratio of not less than 1.40:1, and a monthly current ratio financial covenant of not less than 1.25:1. Decibel's 12-month forecast projects compliance with all financial covenants.
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