Sugarbud Announces Non-Dilutive Secured $5.0 Million Credit Facility with Connect First Credit Union Ltd.
CALGARY, Alberta, May 22, 2020 (GLOBE NEWSWIRE) — Sugarbud Craft Growers Corp. (TSXV: SUGR, SUGR.WT) (“Sugarbud” or the “Company“) is pleased to announce that it has entered into a commitment letter with Connect First Credit Union Ltd. (“First Calgary“) in respect of a $5.0 million senior secured credit facility (the “Credit Facility“).
The committed interest rate under the Credit Facility is the Canada Bond rate for five years + 3.55% with a minimum floor rate of 4.25% and matures five years following closing. The Credit Facility replaces the Company’s existing debt facility with Pillar Capital Corp. The proceeds from the Credit Facility will be used to repay the $2.04 million outstanding under the existing debt facility and for ongoing working capital purposes. The Company has the right to repay amounts outstanding under the Credit Facility prior to the maturity date without penalty. The Credit Facility is subject to continued compliance with customary financial covenants. Subject to the satisfaction of certain customary conditions, including the finalization of security documentation, the full amount of the Credit Facility will be available at closing; which the Company expects to occur on or about June 1st, 2020.Upon the anticipated closing of the Credit Facility and the previously announced marketed public offering (the “Offering“) of secured convertible debenture units (the “Debenture Units“) of up to $4.0 million, subordinating in priority and ranking to the Credit Facility, the Company will be strategically positioned to have adequate funding for the completion of Phase 1a and to also begin the build-out for Phase 1b at the Company’s purpose built 29,800 sq. ft. facility in Stavely, Alberta for the cultivation and production of high quality, ultra-premium craft cannabis products. Sugarbud expects to complete the construction and build-out of Phase 1a in 2020 for an approximate maximum annual production design capacity of between 3,308 and 3,891 kilograms. Phase 1b will expand the production capacity by approximately an additional 3,308 and 3,891 kilograms, and together with Phase 1a for an aggregate funded, annual production design capacity of 6,616 and 7,782 kilograms. Sugarbud is positioned to unlock significant shareholder value with its anticipated increase in production capacity upon the completion of Phase 1, inclusive of Phase 1b and 1c.“We are pleased to be working with Sugarbud and are excited to support them and the community of Stavely as they continue their quest in this dynamic new industry. Our approach at First Calgary is to work with business teams who have a great vision with a solid business plan. We are proud to welcome Sugarbud as new members of our Credit Union,” stated Ryan Andries, Vice President – Commercial Banking at First Calgary.
“We view this new credit facility with First Calgary as a strong vote of confidence in our management team, our business model and most importantly our ability to deliver strong operational and financial results,” stated Sugarbud’s Chief Executive Officer, John Kondrosky.
“As a Company, we are always looking for ways to balance our overall cost of capital and optimize our capital structure,” continued Mr. Kondrosky. “We believe that this new credit facility with First Calgary more than meets these criteria, further strengthens our balance sheet and provides the Company with the additional working capital necessary to continue to successfully execute against our primary growth objectives and priorities,” concluded Mr. Kondrosky.The Offering of Debenture Units at a price of $1,000 per Debenture Unit will consist of: (i) one 12.0% secured convertible debenture; and (ii) 20,000 common share purchase warrants of the Company (the “Warrants“). Each Warrant will entitle the holder to purchase one common share in the capital of the Company at an exercise price of $0.05, at any time up to 36 months following the date of issuance. Further details on the terms of the Offering may be obtained from the preliminary short form prospectus and term sheet on www.sedar.com. Mackie Research Capital Corporation is acting as sole book-runner and agent in respect of the Offering.
Sugarbud is a federally licensed, Alberta-based craft cannabis company; focused on the cultivation and production of superior, select-batch, craft cannabis products. Our vision and mission is to become a trusted and well-respected brand – renowned for providing exceptional high-quality craft cannabis products to legal markets by delighting the most discerning of cannabis consumers.http://www.sugarbud.ca/John Kondrosky
Chief Executive Officer
Sugarbud Craft Growers Corp.
Phone: (604) 499-7847
E-mail: [email protected]