On May 31, Organigram Holdings Inc. (NASDAQ: OGI) (TSXV: OGI), the parent company of Organigram Inc. (collectively, the “Company” or “Organigram”), a leading licensed producer of cannabis, closed a $140-million credit agreement with Bank of Montreal (“BMO”) as lead arranger and agent, as well as a syndicate including three other lenders (the “Credit Agreement”).
The Credit Agreement consists of a $115-million term loan and a $25-million revolving credit facility (together, the “Facilities”), both of which mature in May 2022.
The Credit Agreement included an uncommitted option to in-crease the Facilities by an incremental $35 million to a total of $175 million, subject to agreement by BMO and satisfaction of certain legal and business conditions. The Facilities are secured by assets of Organigram and its material subsidiaries, which consists primarily of the Moncton campus production facility that is projected to be able to produce dried flower or equivalent cannabis of approximately 113,000 kilograms per year by the end of calendar year 2019 and will also house state-of-the-art added-value manufacturing equipment, including the previously announced $15-million infrastructure investment to produce world-class infused chocolate products.
The proceeds of the term loan will be used to fund the Phase 4 and 5 expansions of the Moncton campus and refinance the Company’s existing long-term debt with Farm Credit Canada. The revolving credit facility may be used for general corporate and working capital purposes. Pursuant to the agreed conditions of the Facilities, Organigram has initially drawn $50 million of the term loan on closing and can continue to draw down additional funds as required, up to the $115-million term loan commitment, through Nov. 30, 2019.
Principal repayments on the term loan will commence on Feb. 28, 2020 at a rate of 2.5%, or approximately $2.9 million, per quarter thereafter. The Company may, at its discretion, repay the balance of the Facilities without penalty, at any time.
Legal advisors to Organigram were David Nadler and Evita Ferreira (Banking and Finance) of Goodmans LLP and by Jeffrey Hoyt and Scott Wilson of McInnes Cooper LLP.
Legal advisors to BMO were Tom Hunter, Alexandra North, Brandon Brown of Dentons Canada LLP and Maurice Chiason and Andrew McMackin of Stewart McKelvey.