Maker of Qwest brand cannabis products Decibel Cannabis Company Inc. (TSXV: DB) (OTCQB: DBCCF) has secured access to a large amount of debt capital, which will allow it to refinance existing debt commitments and provide additional funds.
In a statement Friday, the company said it entered into an amended and restated commitment letter with connectFirst Credit Union Ltd. with respect to $54 million of debt capital over five years.
The total amount is made up of $40.5 million in term debt, a $6-million authorized overdraft secured against government receivables and an accordion line of $7.5 million.
Decibel says it expects proceeds from the financing and cash from operations to provide enough liquidity to repay its convertible debentures on maturity.
As of Sept. 30, 2021, Decibel had $78.5 million in liabilities and other contractual obligations — $56 million of that in debt financing.
Read more: Decibel posts 8% revenue growth in Q3
The resigned deal gives the firm an additional $12 million in term debt, amortized over 12 years.
The $7.5 million in accordion debt will go toward funding future growth, Decibel says.
The facilities will have an annually tested covenant of a debt-to-equity ratio of less than one-to-one.
The company expects to close on the refinanced amount by Jan. 31, subject to compliance with financial covenants based on its 2021 financial results. Decibel says it expects to remain in compliance.
With this refinancing, CFO Stuart Boucher says his firm will have the added financial flexibility to optimize its capital structure and is well-positioned for aggressive growth.
“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.”