Non-dilutive Financing Provides Company
with Significant Financial Flexibility
MONCTON, NB, MAY 31, 2019 /CNW/ - Organigram Holdings Inc.
(NASDAQ: OGI) (TSXV: OGI), the parent company of Organigram Inc.
(collectively, the "Company" or "Organigram"), a leading licensed
producer of cannabis, is pleased to announce that it has
closed its previously announced credit facility with Bank of
Montreal ("BMO") as lead arranger
and agent as well as a syndicate including three other
lenders. The facility consists of a $115 million term loan and a $25 million revolving credit facility (together,
the "Facilities"), both of which mature in May 2022. Included
in the facility is an uncommitted option to increase the Facilities
by an incremental $35 million to a
total of $175 million, subject to
agreement by BMO and satisfaction of certain legal and business
conditions.
"The closing of this credit facility reflects BMO's and the
syndicate lenders' vote of confidence in our management team,
ability to deliver financial results, and investment in our
world-class Moncton campus," said
Greg Engel, Chief Executive Officer.
"Our current expansion plans are fully funded as we continue to
remain on track for completion of Phases 4 and 5 of our
campus."
"As a Company we are always looking to optimize our capital
structure and reduce our cost of capital," remarked Paolo De Luca, Chief Financial Officer.
"We have chosen not to access the public capital markets since our
last financing in January 2018 in
order to avoid dilution to our shareholders. This credit
facility is only possible because of our focus on running a
profitable and sustainable business with a disciplined spend that
sets us apart amongst our peers."
The Facilities are secured by assets of Organigram and its
subsidiaries, which primarily consists of the Moncton campus production facility that is
projected to be able to produce dried flower or equivalent cannabis
of approximately 113,000 kg per year by the end of calendar year
2019 and will also house state of the art added-value manufacturing
equipment, including the previously announced $15 million infrastructure investment to produce
world class infused chocolate products. The proceeds of the
term loan will be used to fund the Phase 4 and 5 expansions of the
Moncton campus and refinance the
Company's existing long-term debt with Farm Credit Canada.
The revolving credit facility may be used for general corporate and
working capital purposes.
Pursuant to the agreed upon conditions of the Facilities,
Organigram has initially drawn $50
million of the term loan on closing and can continue to draw
down additional funds as required up to the $115 million term loan commitment through to
November 30, 2019. Principal
repayments on the term loan will commence on February 28, 2020 at a rate of 2.5%, or
approximately $2.9 million, per
quarter thereafter. The Company may, at its discretion, repay
the balance of the Facilities without penalty, at any time.
The pricing of the Facilities is a set margin over the BMO's CAD
Prime Rate or a Bankers' Acceptance rate based on the applicable
term, which may increase or decrease based on a pricing grid linked
to the Company's debt to EBITDA coverage at each quarter-end.
Based on the current Bankers' Acceptance benchmark rates and
the highest pricing level and margin in the pricing grid, the
interest payable is expected to be in the high 4% to low 5% per
annum range. The Facilities contain customary financial and
restrictive covenants.
Additional details on the Facilities can be found in the
Company's documents that will be filed on www.sedar.com.
About Organigram Holdings Inc.
Organigram Holdings Inc. is a NASDAQ Global Select and TSX
Venture Exchange listed company whose wholly owned subsidiary,
Organigram Inc., is a licensed producer of cannabis and
cannabis-derived products in Canada.
Organigram is focused on producing the highest-quality,
indoor-grown cannabis for patients and adult recreational consumers
in Canada, as well as developing
international business partnerships to extend the company's global
footprint. Organigram has also developed a portfolio of legal adult
use recreational cannabis brands including The Edison Cannabis
Company, Ankr Organics, Trailer Park Buds and
Trailblazer. Organigram's primary facility is located
in Moncton, New Brunswick and
the Company is regulated by the Cannabis Act and
the Cannabis Regulations (Canada).
Neither 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.
This news release contains forward-looking information. Often,
but not always, forward-looking information can be identified by
the use of words such as "plans", "expects", "estimates",
"intends", "anticipates", "believes" or variations of such words
and phrases or state that certain actions, events, or results
"may", "could", "would", "might" or "will" be taken, occur or be
achieved. Forward-looking information involves known and unknown
risks, uncertainties and other factors that may cause actual
results, events, performance or achievements of Organigram to
differ materially from current expectations or future results,
performance or achievements expressed or implied by the
forward-looking information contained in this news release.
Examples of such statements include statements with respect to the
use of proceeds of the credit facility and interest payable.
Risks, uncertainties and other factors involved with
forward-looking information could cause actual events, results,
performance, prospects and opportunities to differ materially from
those expressed or implied by such forward-looking information,
including risks as disclosed in the Company's most recent annual
information form and other Company's documents filed from time to
time on SEDAR (see www.sedar.com). Readers are cautioned not
to place undue reliance on these forward-looking statements, which
speak only as of the date of this press release. Although the
Company believes that the assumptions and factors used in preparing
the forward-looking information in this news release are
reasonable, undue reliance should not be placed on such information
and no assurance can be given that such events will occur in the
disclosed time frames or at all. The forward-looking information
included in this news release are made as of the date of this news
release and the Company disclaims any intention or obligation,
except to the extent required by law, to update or revise any
forward-looking information, whether as a result of new
information, future events or otherwise. We seek safe harbor.
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SOURCE OrganiGram