Closes $58.7 Million Debt Refinancing
MariMed closed a $58.7 million secured credit facility with a US chartered bank on November 17, 2023. The refinancing will result in a $4.7 million reduction to principal and interest expense in the first 12 months and $3.5 million annually for the next four years. MariMed estimates its new weighted average cost of debt is now about 8%, down from more than 11% previously. The terms of the transaction do not include warrants, equity, or other dilutive instruments. The financing is a 10-year, construction to permanent commercial real estate mortgage (CREM) loan. For the first five years, the interest rate is fixed at 8.43%. The interest rate resets after five years to the FHLB rate plus 3.50%. As of November 26, 2023, the regular five-year FHLB rate is about 4.64%. The payments are interest only for the first 12 months and payments thereafter are based on a 20-year amortization schedule. The loan is secured by a first priority interest in MariMed’s operating assets in Maryland and Massachusetts and first priority on its properties in Maryland and Massachusetts. The company’s other operating assets and key brands, such as Betty’s Eddies™ and Nature’s Heritage™, are now unencumbered with the payoff of the Chicago Atlantic term loan. Proceeds were used to pay off the existing term loans with Chicago Atlantic and Bank of New England and a sellers note from the Ermont acquisition, which in aggregate totaled about $46.8 million. The remaining loan proceeds will be held in escrow to complete the expansion of MariMed’s Hagerstown, Maryland cultivation facility. Any unused proceeds will be released to MariMed after completion of the cultivation facility expansion. Jon Levine, MariMed’s CEO, Interim CFO, and President said, “The principal and interest savings of $4.7 million in the first year and $3.5 million a year for the four years thereafter will significantly improve cash flow from operations going forward and provide funds that can be used for acquisitions if we choose. Including this facility, our lower blended interest rate and new debt facility represent a debt/EBITDA ratio of 2.5X, which is among the lowest in the cannabis industry and speak to our ability to generate significant positive cash flow from operations.” On Tuesday, November 28, 2023 at 1:00 pm ET, we are hosting a Spaces on X with Jon Levine to review the transaction. Those interested can listen live or hear the recording by accessing the link in our full report.
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