CALGARY, AB, Jan. 14, 2022 /CNW/ - Decibel Cannabis
Company Inc. (the "Company" or "Decibel") (TSXV: DB)
(OTCQB: DBCCF), a premium cannabis producer, is pleased to announce
that it has entered into an amended and restated commitment letter
with connectFirst Credit Union Ltd. ("connectFirst") in
respect of $54 million of debt
capital (the "Committed Amount") over an initial 5-year
term. The Committed Amount is comprised of $40.5 million of term debt (the "Term
Debt"), a $6.0 million authorized
overdraft secured against government receivables (the
"Authorized Overdraft"), and an accordion line of
$7.5 million (the "Accordion
Line" and collectively, the "Credit Facilities").
The Company expects the proceeds combined with contributions
from operations to provide sufficient liquidity to repay Decibel's
convertible debentures on maturity.
"With this refinancing, Decibel has added financial flexibility
to optimize its capital structure and is well positioned to
continue to execute its aggressive growth strategy" said
Stuart Boucher, Chief Financial
Officer of Decibel. "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".
Financing Highlights
- Access to $12 Million of
Additional Term Debt: The Company's existing term debt will be
increased by $12 million to
$40.5 million, amortized over
12-years. The $12 million term debt
will be accessible on request by Decibel. The Company expects the
proceeds combined with contributions from operations to provide
sufficient liquidity to repay Decibel's convertible debentures on
maturity.
- Accordion for Future Growth: The Credit Facilities
include a $7.5 million accordion to
support future growth initiatives as Decibel continues to scale.
The Accordion Line's initial availability is subject to Decibel
achieving a trailing twelve month funded debt to EBITDA ratio of
less than or equal to 4.00:1, as well as its maintained compliance
with its other financial covenants (as further described
below).
- Attractive Interest Rate: Decibel continues to receive
industry leading interest rates that reflect the strength of its
business:
Term Debt
|
$40.5
million
|
4.75% (5yr
Fixed)
|
Authorized
Overdraft
|
$6.0
million
|
Prime +
1.00%
|
Accordion
|
$7.5
million
|
Prime +
2.00%
|
- Financial Covenants: The Credit Facilities will have one
annually tested financial covenant, a debt to equity ratio of less
than 1.00:1. Additionally, the Credit Facilities will have one
quarterly tested covenant, a debt service coverage ratio of not
less than 1.40:1, and a monthly current ratio covenant of not less
than 1.25:1. Decibel's 12-month forecast projects compliance with
all financial covenants.
The Company expects to close on the Committed Amount on or
before January 31, 2022,
subject to compliance with financial covenants based on its 2021
draft annual financial results and satisfaction of other customary
conditions precedent. Decibel expects to remain in compliance for
the remainder of its twelve-month forecast period, as well as the
2021 annual covenants.
Link to Decibel's Investor Presentation
About connectFirst Credit Union
connectFirst Credit Union, one of the largest and most
successful credit unions in Canada, is a full-service financial
institution with over $6 billion in
assets under administration. connectFirst employs 750 Albertans who
provide a range of financial products and advice in more than 40
communities across central and southern Alberta. It serves over 125,000 members
through a community-focused approach to banking.
About Decibel
Decibel is uncompromising in the process and craftsmanship
needed to deliver the highest quality cannabis products and retail
experiences. Decibel has three operating production houses along
with its wholly owned retail business, Prairie Records. The Qwest
Estate in Creston, BC is a
licensed and operating 26,000 square foot cultivation space which
produces the widely championed, rare cultivar-focused brands Qwest
and Qwest Reserve, which are sold in six provinces across
Canada. Thunderchild Cultivation,
is a licensed and operating 80,000 square foot indoor cultivation
facility in Battleford, SK. The
Plant, Decibel's extraction facility, in Calgary, AB has 15,000 square feet of Health
Canada licensed extraction and product development space. This
production house will fuel the growth of our brands Qwest, Qwest
Reserve, Blendcraft, and General Admission, into new and innovative
product formats like concentrates, vapes, edibles and beyond.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Cautionary Statements
Forward Looking Information and Future Oriented Financial
Information
This news release contains "forward-looking information" and
"forward-looking statements" (collectively, "forward-looking
statements") within the meaning of the applicable Canadian
securities legislation. All statements, other than statements of
historical fact, are forward-looking statements and are based on
expectations, estimates and projections as at the date of this news
release. Any statement that involves discussions with respect to
predictions, expectations, beliefs, plans, projections, objectives,
assumptions, future events or performance (often but not always
using phrases such as "expects", or "does not expect", "is
expected", "anticipates" or "does not anticipate", "plans",
"budget", "scheduled", "forecasts", "estimates", "believes" or
"intends" or variations of such words and phrases or stating that
certain actions, events or results "may" or "could", "would",
"might" or "will" be taken to occur or be achieved) are not
statements of historical fact and may be forward-looking
statements.
In this news release, forward-looking statements relate to,
among other things, the Company's business plans and strategies,
including: the Company's anticipated use of the funds obtained
pursuant to the Credit Facilities; the anticipated closing date;
the Company's expectations that it will be able to comply with all
of its financial covenants for the next twelve months; and the
Company's ability to grow Qwest, Qwest Reserve and Blendcraft
brands into new and innovative product formats, variations and its
other business plans and expectations. Forward-looking statements
are necessarily based upon a number of estimates and assumptions
that, while considered reasonable, are subject to known and unknown
risks, uncertainties, and other factors which may cause the actual
results and future events to differ materially from those expressed
or implied by such forward-looking statements. Such factors
include, but are not limited to: risks relating to the satisfaction
of the conditions precedent to obtaining the additional Term Debt;
delays, regulatory changes and impacts, capital requirements,
construction impacts, displacement requirements and unforeseen
requirements resulting from the COVID-19 pandemic, the ability to
obtain and maintain licences to retail cannabis products; review of
the Company's production facilities by Health Canada and
maintenance of licences (including any amendments thereto) from
Health Canada in respect thereof; future legislative and regulatory
developments involving cannabis; inability to access sufficient
capital from internal and external sources, and/or inability to
access sufficient capital on favourable terms; the labour market
generally and the ability to access, hire and retain employees;
general business, economic, competitive, political and social
uncertainties; timing and completion of construction and expansion
of the Company's production facilities and retail locations; and
the delay or failure to receive board, regulatory or other
approvals, including any approvals of the TSX Venture Exchange, as
applicable. There can be no assurance that such statements will
prove to be accurate, as actual results and future events could
differ materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on the
forward-looking statements and information contained in this news
release.
This press release also contains future-oriented financial
information and financial outlook information (collectively,
"FOFI") about the Company's prospective results of
operations including, without limitation, its anticipated liquidity
and ability to repay its convertible debentures on maturity.
Readers are cautioned that the assumptions used in the preparation
of such information, although considered reasonable at the time of
preparation, may prove to be imprecise and, as such, undue reliance
should not be placed on FOFI. The Company's actual results,
performance or achievement could differ materially from those
expressed in, or implied by, the FOFI. The Company has included the
FOFI in order to provide readers with a more complete perspective
on the Company's future operations and such information may not be
appropriate for other purposes.
These forward-looking statements and FOFI are made as of the
date of this press release and, except as required by law, the
Company assumes no obligation to update the forward-looking
statements or beliefs, opinions, projections, or other factors,
should they change.
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SOURCE Decibel Cannabis Company Inc.