Ascend Wellness Holdings, Inc. (CSE: AAWH.U) (OTCQX: AAWH) announced that it has closed on a $210 million Senior Secured Term Loan with Seaport Global Securities LLC as lead manager. AWH said that it plans to use the proceeds to (i) repay substantially all of its debt excluding approximately $12 million of outstanding acquisition payments with near zero interest rates, (ii) finance the company’s pending investment in MedMen NY, Inc., and (iii) support its future growth and acquisition initiatives.
In March Ascend said it would make an investment of approximately $73 million in MedMen NY Inc. or MMNY. Following the investment, Ascend will hold a controlling interest in MMNY of approximately 86.7% and will have an option to buy MedMen’s remaining interest in MMNY in the future. Also in the agreement, Ascend must also make an additional investment of $10 million in exchange for additional equity in MMNY. This investment will also be used to repay MMNY’s senior secured lender if adult-use cannabis sales commence in MMNY’s dispensaries.
The loan will bear an interest of 9.5% per year, payable quarterly in arrears, with a maturity date of August 27, 2025. The Term Loan is secured by a first lien on all company assets. Subject to certain conditions of the agreement, the company has the ability to increase the facility by up to $65 million if desired. Prior to closing the Term Loan, at the end of Q2 2021, ending June 30, 2021, Ascend had $104.2 million in cash and equivalents.
“I am thrilled to secure this non-dilutive financing which both reduces our overall cost of capital and will fuel the growth of our business as we invest in scaling our strategic footprint. We saw tremendous interest and had healthy participation in the Term Loan. Our marketing process, lead-managed by Seaport Global Securities, introduced us to a very high-quality mix of institutional investors, family offices and hedge funds. We are excited to include this new class of stakeholders into our capital structure via the senior debt financing and look forward to the opportunity to expand our relationship with many of these investors over time in future debt and equity financings.” said Abner Kurtin, Founder and CEO of AWH. “We are actively building one of the most robust networks of retail stores and cultivation facilities in the highest quality markets. With our strong balance sheet and successful track record, we are well positioned to implement our growth strategies to take advantage of the significant market opportunity ahead and drive strong value for our shareholders.”