Alberta-based Aurora Cannabis closed an expansion of a loan deal with three of Canada’s biggest banks, making it among the largest nonconvertible debt facilities in the marijuana industry to date, according to analysts.
Aurora said it closed term loans worth an additional 160 million Canadian dollars ($120 million) with a syndicate of lenders led by the Bank of Montreal, plus an option to upsize the facility by about CA$40 million.
That’s in addition to the original CA$200 million in credit facilities Aurora secured last year.
The total debt deal – now worth as much as CA$400 million – is one of the industry’s biggest debt arrangements as large cannabis firms in Canada turn to traditional lenders.
Aurora rival Canopy Growth closed a CA$500 million convertible debt deal in 2018.
Aurora’s debt facilities consist of:
- CA$160 million in term loans announced in August.
- An option to upsize the facility by about CA$40 million.
- CA$200 million in credit facilities announced in 2018.
The term loans and revolving credit facility mature in August 2021.
Harrison Phillips, vice president of New York-based Viridian, said nondilutive financing is expanding on the margin, but such arrangements are still limited in the cannabis sector.
“Aurora is a company with a significant amount of fixed assets, so that gives a lender comfort given the debt is secured by those assets,” he said.
“This, I believe, is the largest nonconvertible debt facility that we’ve seen so far in this space.”
Barriers remain for smaller cannabis companies to access nondilutive financing, according to Phillips.
“We’ve seen a concentration of capital flows to those larger operators, because they’ve developed their infrastructure and staked a claim on some pretty material market share,” he said.
Canadian cannabis firms raised a record CA$12 billion last year to expand domestically and overseas, including through initial public offerings, private placements, equity, debt and strategic investments.
Matt Lamers can be reached at [email protected]
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