Cannabis MSO Acreage borrows up to $50M more from AFC Gamma, Viridescent

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Cannabis industry real estate lenders AFC Gamma and Viridescent Realty Trust amended their late 2021 loan agreement with multistate operator Acreage Holdings, lending up to $50 million more than the original $100 million loan.

The amended loan includes $25 million available to Acreage immediately and another $25 million available “upon achieving certain predetermined milestones” which were not specified in AFC Gamma’s Tuesday news release.

The loan is secured against New York-based Acreage’s real estate “and other commercial security interests.”

It matures in January 2026, but Acreage said in a release that it can extend the maturity date by one year for a fee.

While the original loan carried a 9.75% annual interest rate, the amended loan carries a higher rate: prime (of at least 5.5%) plus 5.75% annually.

Acreage is also paying a $1.25 million amendment fee to its lenders.

The lenders are waiving all of Acreage’s financial debt covenant requirements except a minimum cash requirement until the end of 2023.

AFC Gamma and Viridescent also agreed to new covenants “reflecting (Acreage’s) growth plan, financial position, and current market conditions.”

Acreage said it will use proceeds from the upsized loan “to fund expansion initiatives and provide additional working capital.”

The amended loan was announced the same day as Canopy Growth Corp. announced that its new U.S. holding company – Canopy USA – will acquire Acreage.

Acreage said the new loan “includes approval for Canopy USA to acquire control of Acreage without requiring repayment of all amounts outstanding under the amended credit facility, provided certain conditions are satisfied.”

An Acreage subsidiary, “Canopy Sub,” will have the option to acquire Acreage’s outstanding indebtedness to the lenders, and will make an option premium payment of $28.5 million “to be held in escrow.”

Florida-based AFC Gamma has committed up to $90 million for the amended loan plus up to $15 million from an unspecified “affiliate” and $45 million from Texas-based Viridescent.

Acreage shares trade as ACRG.A.U on the Canadian Securities Exchange and as ACRDF on the U.S. over-the-counter markets.

AFC Gamma shares trade as AFCG on the Nasdaq.