Curaleaf Holdings, Inc. (CSE: CURA) (OTCQX: CURLF) says it’s going to receive the largest debt financing of any publicly traded multi-state cannabis operator to date.
On Monday the U.S.-based company said it’s received commitments for a private placement of 8-per-cent senior secured notes due in 2026, for gross proceeds of US$425 million.
The offering will allow Curaleaf to refinance its existing debt at a lower interest rate, and provide it more financial flexibility to execute growth initiatives, CEO Joseph Bayern says in a statement.
At the end of its third fiscal quarter, the firm reported having US$342 million in outstanding debt net of unamortized discounts.
According to a statement, the notes will be issued at 100 per cent of face value and bear interest at 8 per cent a year, payable semi-annually in equal installments until the maturity date of Dec. 15, 2026, unless redeemed or rebought earlier.
The notes will be governed by a trust indenture, which Curaleaf says allows it to issue additional notes as needed, and up to another US$200 million in senior bank financing.
“While this initial offering provides more than enough liquidity to refinance our existing debt and meet current needs, the new indenture provides us a new degree of flexibility to raise debt financing to ensure we have ample liquidity to meet our needs now and into the future,” Bayern says.
The offering is expected to close on Wednesday.
Seaport Global Securities LLC and Canaccord Genuity Corp. acted as placement agents for the notes in the U.S. and Canada, respectively.
The notes will be subject to a customary four-month hold period under Canadian securities laws.
As it posted its third-quarter results in November, Curaleaf said it was on track to hit a US$1.2-billion sales target despite flat growth. During the three-month period, the company reported a US$59-million loss.
Company stock fell around 3 per cent Monday to $11.71 on the Canadian Securities Exchange.