Verano Holdings Corp. (OTCQX:VRNOF) (CSE:VRNO) has entered into a credit agreement to refinance its existing $350 million credit facility, extending the maturity date to October 30, 2026. The refinanced indebtedness bears interest at a floating rate based on the prime rate, with a current rate of 12.75% per annum.
The refinanced facility provides the company flexibility to secure additional future indebtedness of up to $270 million, comprised of $120 million in third-party mortgages secured by real estate that is currently unencumbered, a $100 million accordion under the new credit facility to be funded at the option of the existing lenders, and a $50 million third-party revolving credit facility upon the passage of cannabis banking legislation, in each case subject to certain conditions.
The ability to incur an additional $120 million in indebtedness secured by real-estate that is currently unencumbered is expected to enable the company to lower its blended total cost of debt. The company believes the potential $50 million revolving credit facility could be obtained on improved terms if cannabis banking legislation becomes effective. Additionally, under the new credit facility, Verano can elect to prepay up to $100 million of outstanding indebtedness at any time by incurring a prepayment fee of $1 million. George Archos, chairman, CEO and founder of the company, is participating in the credit facility as a lender.
“We’re pleased to continue our partnership with Chicago Atlantic as our credit facility agent and as a lender, extending the maturity and securing terms we believe are favorable during this rising interest rate environment,” stated Archos. “Importantly, we maintained flexibility around prepayments and the ability to incur additional debt which we believe adds significant value to the deal, especially given the legislative environment that has seen positive momentum build in support of cannabis policy and banking reform. Since Verano’s inception, we have taken a conservative approach to our balance sheet, including avoiding sale leasebacks, which has allowed us to leverage our real estate to bring down our blended cost of debt. This refinancing enables us to continue a selective approach to further strategic opportunities as we position our company for the future.”
ATB Capital Markets Inc. and Chicago Atlantic Advisors, LLC acted as lead arrangers for the senior secured credit facility. Chicago Atlantic is also the administrative agent for the credit facility.
Photo: Benzinga; Sources: courtesy of Kindel Media via Pexels
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