It appears that Acreage Holdings (CSE: ACRG.u) is tight for money in a major way. The company announced this morning that it has entered a loan for short term funding at an astounding interest rate of 60% per annum, in addition to a massive fee in the event of default.
The loan in question is for total gross proceeds of $15.0 million, with the loan being for a period of four months. Funding comes from an undisclosed institiutional investor, at a mind boggling rate of 60% per annum in interest – a figure worse than some loan shark rates even. If that wasn’t enough, the short term loan is secured by the firms cannabis operations in Illinois, New Jersey, and Florida as well as all of the firms US intellectual property.
In the event of default, a fee of $6.0 million will also be applied to the debt – roughly a 40% fee on the value of the principal. On the bright side, Acreage can prepay the note without penalty or premium after 90 days post closing.
And what is this extremely expensive funding being used for? You guessed it, working capital and general corporate purposes.
Acreage Holdings last traded at US$3.06 on the CSE.
Information for this briefing was found via Sedar and Acreage Holdings. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.