Canadian cannabis producer The Valens Company Inc. (TSX: VLNS) (Nasdaq: VLNS) says it’s getting a large loan that will help it continue its aggressive growth strategy which includes expansion in the U.S.
On Thursday, the company said it entered into a secured one-time loan with a private institutional lender called 2361380 Ontario Limited for up to $40 million.
The loan has an annual rate of 10 per cent, payable quarterly, and matures Dec. 15, 2023 with an initial interest payment date Dec. 31.
Valens says proceeds from the loan will strengthen its balance sheet, allowing the firm “to execute on its corporate strategy and fund working capital needs as the business continues its aggressive growth trajectory,” as well as pay off the $7.5 million outstanding under its existing debt facility.
“With this strategic secured financing, Valens is now well positioned to accelerate its aggressive growth strategy, further fund its Canadian operations, and capitalize on new growth opportunities as the company works toward expanding its presence in the United States,” CEO Tyler Robson says in a statement.
“This $40-million term loan reflects the unique value proposition that Valens has created in the market, as well as the continued confidence from our management, board, and shareholders in the continued execution of our business plan.”
Read more: Valens enters US CBD market with purchase of Florida firm
Read more: Valens set to acquire Citizen Stash for $54.3M
Company president Jeff Fallows noted the attractive cost of capital, and that the business doesn’t anticipate needing to raise more capital in the short term.
In its third quarter ending Aug. 31, the company reported sales rising 20 per cent to $24.6 million. Earnings before interest, taxes, depreciation and amortization (EBITDA) fell 24 per cent to a loss of $6.2 million.
Read more: Valens stock to list on Nasdaq Thursday
Read more: Valens posts nearly $25M in Q3 revenue, continues aggressive acquisition strategy
And net loss rose 47 per cent to a loss of $12.8 million.
Valens has made a number of acquisitions this year, including buying extractor Verse for an undisclosed amount and Citizen Stash Cannabis Corp. (TSXV: CSC) (OTCQB: EXPFF) (FRANKFURT: MB31) in an all-stock transaction valued at around $54.3 million.
In April, the firm entered the U.S. market by making a deal to acquire Florida-based CBD maker Green Roads for US$40 million in cash and stock, plus US$20 million if earnings-based targets are met.
Last week, Valens started trading on the Nasdaq. Company stock fell over 12 per cent Thursday to $3.09 on the Toronto Stock Exchange.
nick@mugglehead.com
