The Green Organic Dutchman (TSX: TGOD) announced thi morn ing that the firm has secured up to $103 million in funding through a series of agreements. The funding consists of a definitive agreement for a sale leaseback of the Ancaster Energy Centre, as well as two non-binding term sheets for a construction mortgage term loan and a convertible equity note.
With respect to the sale-leaseback arrangement, it appears that the firm was only able to sell a portion of the Ancaster, Ontario facility. The Deep Dive originally reported last month that the Green Organic Dutchman was attempting to sell the entire facility in a leaseback arrangement, however it appears the firm has only managed to find a buyer for a portion of the facility. The power center at the facility will be sold for $23 million, with a lease signed for a term of 10 years. TGOD will be able to repurchase the power center after such time for $1.00.
The closing of the definitive agreement for the sale leaseback arrangement is contingent on the completion of final due diligence, and an energy services as well as an operating agreement being signed. The purchaser is stated to be an undisclosed infrastructure investor. No time frame was given for the closing of the arrangement.
In addition to the leaseback arrangement, a non-binding term sheet for a $40 million construction mortgage loan has been signed with an investment fun. The mortgage is secured by both the Ancaster, Ontario as well as Valleyfield, Quebec facilities. Of the $40 million, only $15 million is payable upon closing. The remaining $25 million is available upon certain undisclosed operational milestones being met later in 2020. The loan bears interest at a rate of 12% per annum and is for an initial term of 2 years.
The final financing is a non-binding term sheet for a total of US$30 million (approximately $40 million Canadian) in the form of a convertible note. The problem, is its unclear at what rate the note converts. No disclosure on the conversion price was provided. The debt carries a 5% coupon. Only US$10 million will be provided upon closing to TGOD, with the remainder provided as the note is converted to equity.
The Green Organic Dutchman intends to close the two non-binding term sheets by the end of the fourth quarter of 2019. The funds are stated to be used towards construction at both Ancaster and Valleyfield, as well as a bridge for working capital until TGOD is capable of generating positive operational cash flow.
The Green Organic Dutchman last traded at $0.92 on the TSX. The firm is set to release financials tonight after the close of markets.
Information for this briefing was found via Sedar and The Green Organic Dutchman. 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.
