The Green Organic Dutchman (TSX: TGOD) has lost two proposed sources of funding. The firm announced this morning that it has secured $41.7 million senior secured debt credit facility, which will have a first lien on its property. The financing is currently agreed upon on a binding term sheet basis with Maynbridge Capital Inc. The financing however will see TGOD walk away from approximately $63 million in previously proposed financings.
However, the title of the news release itself is misleading. While the company “announced” a $41.7 million senior secured credit facility, the details of the news release state otherwise. Rather, The Green Organic Dutchman has secured $26.7 million in the form of a senior secured term loan, with a maturity of 18 months. Under the terms of the agreement, the first twelve months will see interest-only payments, while the final six months of the loan will see principal and interest payments.
The loan itself bares interest at a rate of 13% per annum and will be secured by a first lien against all of TGOD’s and its subsidiaries assets. Seven million warrants with an exercise price of $1.00 will be issued upon closing of the loan, with an expiry of 36 months.
There remains an uncommitted $15 million senior secured term loan that has terms yet to be agreed upon by the lender and the company. These additional funds may be made available to the company upon the lenders credit approval, and the achievement of certain undisclosed operating and financial milestones, which are yet to be agreed upon. As a result of the milestones, The Green Organic Dutchman does not expect to receive this portion of the accordian loan until the end of the third quarter of 2020.
As a result of receiving this loan, The Green Organic Dutchman has indicated that it has walked away from the previously announced $23 million sale leaseback agreement of the Ancaster Energy Centre, as well as the non-binding term sheet for a $40 million construction mortgage. However, TGOD revealed in this mornings news release that only $26 million would have been made available in the first tranches of those loans, which was not revealed in the prior news release.
The firm indicated that the current loan will only consume $3.5 million in cash outflow for the first year, versus $7.1 million in the previous arrangement. What’s notably missing however is the year two figures for cash outflows, which are significantly worse under the newly entered loan agreements.
The Green Organic Dutchman closed yesterdays session at $0.82 on the TSX.
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.
