MariMed, Inc. (CSE: MRMD) (OTCQX: MRMD) has closed on a $35 million secured credit facility, with Chicago Atlantic as the lead lender.
“I am delighted to announce the closing of this transformative credit facility,” MariMed president and interim CEO Jon Levine said in a statement. “MariMed is known for its operational and financial discipline, resulting in one of the strongest balance sheets in the cannabis industry, enabling us to secure this funding.
“While we are capable of funding our current growth plans with cash flow from operations, the time is right to raise capital and accelerate these plans, which we believe will result in meaningful returns to our shareholders.”
The credit line has a three-year maturity, which the company can extend to five years under certain conditions. MariMed said it has already borrowed $30 million at close and can draw down up to an additional $5 million over the next six months.
The company said that the funds will be used to:
- Finish the build-out of a new cultivation and processing facility in Illinois and a new processing kitchen in Missouri.
- Expand existing cultivation and processing facilities in Massachusetts and Maryland.
- Repay in full the Kind Therapeutics seller notes from the Maryland acquisition in April 2022.
- Fund other capital expenditures.
The remaining balance will be steered toward acquisition deals. The company has the ability to repay the principal loan balance without penalty after the first 20 months.
The loan bears interest at a floating rate based on bank prime rate plus 5.75% and includes 30% warrant coverage priced at a 20% premium. The company’s Debt/EBITDA ratio — based on the midpoint of the company’s 2022 annual EBITDA guidance — is now 1.5X.
“This credit facility allows us to significantly accelerate the completion of our expansion projects, which we believe will drive meaningful Revenue and EBITDA growth in 2023 and beyond,” said Susan Villare, MariMed’s Chief Financial Officer.
The blended interest rate is calculated as the weighted average rate of all interest-bearing loans, mortgages, and the first draw of the $35 million credit facility, and excludes the Kind Therapeutics seller notes, which will be settled with funds from the initial $30 million draw of the $35 million credit facility.
“Our blended interest rate of 10.5% and Debt/EBITDA ratio of 1.5X remain among the lowest in the cannabis industry and speaks to the strength of our balance sheet and our ability to generate significant positive cash flow from operations,” Villare added.
Chicago Atlantic Advisors led the funding effort with Silver Spike Investment Corp. Chicago Atlantic is also the administrative agent for the loan. Echelon Capital Markets acted as the financial advisor to MariMed.
“We are excited to support the growth of MariMed,” said John Mazarakis, chairman and co-founder of Chicago Atlantic. “The team has consistently demonstrated its ability to profitably expand across an attractive six-state footprint for the benefit of its patients and adult-use customers. We look forward to significantly growing our investment with them in the future.”