Indus Holdings Inc. (OTC:INDXF) stock was moving higher by 24% to lately trade at 21 cents following news that former Acreage Holdings (CSE:ACRG.U)President George Allen has invested in the company.
Indus said it received a $2.3 million loan with lenders that included Geronimo Capital, LLC and Merida Capital Partners. In connection with the loan, Indus has entered into a non-binding term sheet with Geronimo Capital and Merida Capital Partners for the financing of up to $14.5 million (inclusive of the $2.3 million loan). The loan matures on March 13, 2021, and has an interest rate of 10% per annum until April 11, 2020, and 20% per annum thereafter
“We are excited to be working with Indus Holdings, Inc. as they have demonstrated early leadership in both cultivation and manufacturing capabilities in California. We see this as an exceptional opportunity to deploy capital behind a team that is focused and determined to lead California Cannabis,” said George Allen of Geronimo Capital. “While we foresee that the broader capital markets will interrupt many operators across the cannabis landscape, we intend to bring enough capital to Indus such that they are poised to fully capitalize on this tremendous opportunity for the benefit of all investors.”
The proceeds will be used to complete greenhouse 1 while the overall follow-on financing will fund the completion of all remaining greenhouse renovations and working capital needs for the company to become profitable and self-sustaining. The company said in a statement that greenhouse 1 and 2 renovations would continue on schedule. Within the past two weeks, the company has finalized and planted four of the additional 12 grow rooms and expects to bring Greenhouse 1 and 2 online by the summer, with one additional grow room every week for the next eight weeks. Indus said it would add one additional grow room every week for the next 11 weeks.
With the infusion of cash, the new lenders are also bringing in their own new team. Robert Weakley, Indus Holding’s, Inc. co-founder, and CEO said, “We are also looking forward to welcoming Geronimo Capital and Merida Capital Partners. This investment opens up Indus to opportunities that will get us to our goal of profitability.”
Mitch Baruchowitz of Merida Capital said, “Our objective is to finalize our investment into the Company and return the company’s focus to running a lean organization singularly committed to delivering high-quality products to customers.”
Allen formed Geronimo Capital after he parted ways from Acreage Holdings in April 2019. This occurred when Canopy Growth (NYSE: CGC) announced its unusual decision to agree to acquire Acreage once the U.S. federally legalized cannabis. Since that April announcement, Canopy Growth also showed its CEO Bruce Linton the door in July 2019. Linton has gone on to other investment opportunities and two weeks ago announced a $150 million SPAC to acquire cannabis companies.
Refocused On California
It seems one of the plans for the new team is to bring the focus back to California. Indus, like other cannabis companies, saw expansion as the goal for fast growth. However, expansion into numerous states has proven to be more expensive than planned. The company was establishing operations in Nevada and Oregon. The new team also suggested that it was dialing down the number of skus (stock keeping units). This has also been a big issue for many cannabis companies who sought to line up as many skus as possible.
In its last presentation, Indus listed as many as 12 different owned brands. It sells and distributes and mostly manufactures products for well-known brands like Beboe, Dixie Illixirs, Orchid Essentials, and Pantry. In January the company terminated its investment in CBD brand Shredibles as part of its plan to redirect its focus and resources on the company’s core brands.