The Very Good Food Company (CSE: VERY) is evidently in need of capital. The company this morning announced that it has executed a non-binding term sheet for a $70 million senior secured credit facility with an unnamed “prominent institutional investor.”
The proposed credit facility will see the company receive a $50.0 million asset backed term loan, valid for a period of two years from the date of issuance with a one year option for renewal. Also included is a $20.0 million revolving line of credit, with all amounts drawn under the facilities to bear interest at 9.95% per annum, with both the revolver and term loan being secured by the firms current and planned production equipment.
The arrangement will also see VERY issue 225,000 common share purchase warrants at a 25% premium to the current share price on the date of the first draw from the facility.
Proceeds from the facility are expected to be used to accelerate the commissioning of the first two production lines at the firms Californian facility, at an estimated cost of $30.0 million. Here the company will look to scale existing products that are already in the market. The funds are also to provide flexibility for sales growth of the company’s ecommerce platform in the US and Europe, while also providing for working capital.
The credit facility is expected to close by April 15, subject to due diligence and the signing of a definitive agreement.
The Very Good Food Company last traded at $5.72 on the CSE.
Information for this briefing was found via Sedar and The Very Good Food Company. The author has no 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.
