Speakeasy Signs $3.0 Million Term Sheet With 55% Interest

SpeakEasy Cannabis Club (CSE: EASY) announced this morning that it has secured $3.27 million in funding for its operation, which will go towards capital projects and general corporate purposes. The kicker, is that much of that is at an annual interest rate of 55%.

The total funding amount for $3.27 million is broken into two separate loan agreements. The first, for $268,500, comes from the firms founder Marc Green, and bears 0% interest and is due on demand. An additional $250,000 is expected to be made available by Green in the near term as well, which isn’t included in the total announced this morning. The demand associated with such loans is not eligible until the funds from the second funding arrive at the company.

The second loan agreement entered into by that of Speakeasy is for a total $3.0 million. The facility is currently classified as being a term sheet, and is set to be a senior secured agreement bearing interest at a rate of 55% per annum for a period of two years. The outstanding principal is convertible at the option of the lender into common shares of Speakeasy at a price of $1.00 per share.

In connection with the term sheet, upon signing definitive documents, $2,715,000, inclusive of interest, would be payable of the first anniversary of the financing. The remaining $2,999,250 is due upon the second anniversary of the agreement, for a total payback of $5,714,250. The loan is secured via a first mortgage over the property owned by Speakeasy in Rock Creek, BC, as well as first ranking general security over the present and after-acquired personal property of the company and its subsidiaries.

An initial payment of $250,000 in relation to the loan is expected to be made by March 31, 2020, with the remainder of the funds issued by April 15. The company has also agreed to pay a finders fee of $285,000 in connection with the agreement, which is to be paid on the first anniversary date.

Speakeasy Cannabis last traded at $0.31 on the CSE.

Information for this briefing was found via Sedar and Speakeasy Cannabis Club. 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.