The Northern Lights Acquisition Corp. (NASDAQ: NLIT), a special purpose acquisition corporation, has rescheduled its special meeting of stockholders once again to Tuesday, June 28, 2022 at 4:00 pm ET. The vote was originally planned for June 24 in order to approve Safe Harbor Financial as the qualifying transaction for the SPAC. In addition to moving the vote again, Northern Lights also said that it has deposited an aggregate of $1,150,000 (representing $0.10 per public unit sold in the company’s initial public offering) into the company’s trust account to extend the period of time it has to consummate the Business Combination by three months from June 28, 2022 to September 28, 2022, although the company currently anticipates that the Business Combination will close by June 30, 2022 subject to satisfaction or waiver of the closing conditions. 5AK, LLC, the Company’s sponsor, funded the deposit in exchange for a non-interest bearing, unsecured promissory note.
According to Northern Lights, the deal is valued at $185 million or 9.1x 2023 EV/EBITDA vs. 9.7x peer group average according to Northern Lights. The enterprise value of the IPO is 2.0x versus the cannabis SPAC average of 3.0x. These figures were determined by GreenWave Advisors. Once complete, the company will begin trading on the Nasdaq stock exchange under the ticker “SHFS”.
Protecting the SPAC
Last week, Northern Lights said that it had entered into a redemption backstop arrangement in the form of an OTC Equity Prepaid Forward Transaction agreement for up to $50 million with Midtown East Management NL LLC. Midtown East has agreed not to sell any public shares it purchases in connection with the planned business combination. Northern Lights anticipates that the shares purchased in connection with the agreement will help ensure the maximum redemption threshold condition in the business combination agreement will be met. The redemption backstop arrangement is in addition to the $60 million PIPE commitment from certain accredited investors previously announced on February 14, 2022.
According to Crunchbase, Safe Harbor was founded in 2015 and provides banking services to companies in the cannabis industry. It offers financing solutions that complies and follows regulations of the industry. Since legislation protecting cannabis companies’ access to standard banking actions hasn’t been enacted, companies like Safe Harbor continue to fill a need in the industry. Safe Harbor says on its website that it presently processes funds from 20 different states nationally.
Recently Safe Harbor Financial closed on a $5 million senior secured loan to Solar Cannabis Co., an established vertically-integrated cannabis operator headquartered in Somerset, Massachusetts. Solar Cannabis said it would use the funds to further accelerate its growth. The transaction marked the evolution of Safe Harbor’s senior secured lending program, which was established to provide loans to cannabis operators in states in which cannabis is legal. Solar Cannabis’ loan is the first extended by Safe Harbor outside of its home state of Colorado.
Safe Harbor, through its predecessor entity, began offering loan services in 2020 with the buildout of its commercial lending program in late 2021 to help cannabis operators overcome their historic reliance on expensive, non-traditional forms of capital. Since initiating the program, the company has developed an actionable pipeline of approximately $500 million across nine states from both new as well as existing clients.