Jushi Holdings Inc. (CSE: JUSH) (OTCQX: JUSHF) made some financial moves as the year winds down. Jushi announced the second closing of its previously announced private offering of 12% second lien notes and detached warrants to purchase the company’s subordinate voting shares at an exercise price of $2.086. Jushi also entered into a sale-leaseback situation on equipment.
To date, Jushi has closed on an additional $3 million for a total of $72 million in gross cash proceeds and issued $72 million aggregate principal amount of Notes and approximately 17 million of warrants to investors in the Notes. As of September 30, 2022, the company had approximately $209 million in principal amount of total debt, excluding leases and property, plant, and equipment financing obligations.
The company stated that the Notes will mature on December 7, 2026, and will bear interest of 12.0% per annum, payable in cash quarterly, and will be guaranteed by certain of the company’s direct and indirect domestic subsidiaries and secured by second priority liens on certain assets. In connection with the Offering, the purchasers of the Notes also received four-year Warrants at 50% coverage with an expiry date of December 7, 2026, at an exercise price per share equal to $2.086.
Entities affiliated with Jim Cacioppo, Jushi’s Chief Executive Officer, Chairman, and Founder, subscribed for $3.0 million of the Notes, and Denis Arsenault, a significant stockholder of the company, subscribed for $14.4 million of the Notes. Based in Switzerland, Arsenault acquired 3,452,595 warrants of Jushi. Each Warrant entitles him to buy one subordinate voting share of the Issuer at a price of $2.086 until December 7, 2026.
Sunstream Gets Warrants
Last week, Jushi changed its existing $100 million Senior Secured Credit Facility with SunStream Bancorp. Under the terms of the Amended Acquisition Facility, Jushi’s loan will be a first lien term loan capped at $65 million, bear an interest rate of 11% per annum, payable quarterly, will no longer carry a standby fee, and will mature on December 31, 2024. The financial covenants in the Amended Acquisition Facility have been changed to remove the total leverage ratio covenant and replace it with a minimum quarterly revenue covenant. Additionally, in connection with the Amended Acquisition Facility, the company has made a one-time issuance to SunStream of 2.0 million subordinate voting share purchase warrants issued at $2.086.
Jushi entered into an equipment lease financing facility with XS Financial (OTCQB:XSHLF) (CSE:XSF), together with a related equipment funding commitment of up to $10 million valid through August 2, 2023, subject to the terms and conditions of such facility agreement. Within that commitment and pursuant to such facility agreement, the Company expects to conduct approximately $2.0 million in sale-leasebacks of certain company-owned equipment, subject to customary closing conditions. Further, the company also plans to draw down an additional $1.9 million on an Arlington, Virginia real estate mortgage facility in the first quarter of 2023.