- TGOD’s ability to secure significant capital reflects its establishment in industry and strong governance foundation
- The financing plan involved several components, including a sale-leaseback of Ancaster Energy Centre, a $40 million construction mortgage loan with an investment fund, and a $30 million convertible note.
- Company plans for utilization of capital include completing construction of its various facilities and achieving national product distribution
The Green Organic Dutchman Holdings Ltd. (TSX: TGOD) (OTCQX: TGODF), a leading producer of premium certified organic cannabis, recently signed agreements for increased funding amounting to up to $103 million. The company’s ability to secure capital at a time when cannabis companies are weathering the winds of a somewhat tempestuous market indicates investors’ faith in TGOD’s sound business practices, significant assets, and strong governance policies. TGOD is uniquely positioned in the industry as one of the only certified-organic cannabis companies, which when coupled with its recent funding acquisition shows its potential for strong growth in the cannabis sector.
The company’s diverse financing package consists of three pieces (http://nnw.fm/xrGq3), which include “a definitive agreement for a sale-leaseback of the Ancaster Energy Centre, a construction mortgage loan term sheet, and a convertible equity note term sheet.” The agreement for the Ancaster Energy Centre is non-dilutive, denotes proceeds of $23 million, and carries a 10-year term, after which TGOD is able to repurchase the center for $1.
A term sheet with an investment fund for a $40 million construction mortgage loan has also been signed, secured on the facilities at Ancaster and Valleyfield. With this term, $15 million will be payable on closing, with an additional $25 million advance available to TGOD once certain operational milestones are achieved later in 2020. The last segment of its financing involves TGOD’s entrance into a term sheet with an investment fund for a $30 million note with a 5% coupon, which is convertible into common shares of TGOD. These terms indicate that TGOD would receive $10 million upon closing with $20 million immediately placed into escrow to be released as the note is converted into common shares. Closing of the two non-binding term sheets is subject to various conditions, including entering into legally binding documentation, satisfactory due diligence and the receipt of required regulatory approvals. The company expects to close these transactions by the end of Q4, 2019, but there can be no assurance that the transactions close on that time frame or at all.
“Our ability to raise capital, despite recent headwinds affecting the entire sector, is a clear show of confidence from our financial partners,” TGOD CEO Brian Athaide stated in a news release. “It is reflective of the value of our significant assets, the trust investors are putting into TGOD’s strong corporate governance, transparency and accountability, and the opportunity for the company’s unique positioning to quickly capture and grow the organic segment.”
The Green Organic Dutchman, one of the few certified-organic licensed producers in Canada, has garnered industry attention because of its ability to cultivate premium product at competitive costs, due in large part to its industry partnerships, passion for product excellence, and sound governance principles. The company has accrued a significant following among cannabis enthusiasts and was recently described as one of the best licensed Canadian cannabis producers (http://nnw.fm/siI39).
TGOD intends to use its increased capital from the financings to continue executing its plan for “rapid yet disciplined expansion,” focusing concretely on near-term profitability. In this vein, raised capital will be used to accomplish the following:
- Complete construction of the processing facility at Ancaster
- Complete construction of six zones in the Valleyfield hybrid greenhouse and enclose the balance of the facility with the ability to quickly expand production as the market develops.
- Provide adequate cash for working capital needs to bridge until the company anticipates generating positive operational cash flow
- Achieve national distribution of TGOD products in early 2020
The company continues to work toward its mission of nurturing a community focused on a sustainable way of life. With significant funding to power its multifaceted growth strategy, TGOD is well-positioned for continued success in the organic-cannabis sector.
For more information, visit the company’s website at www.TGOD.ca
NOTE TO INVESTORS: The latest news and updates relating to TGODF are available in the company’s newsroom at http://nnw.fm/TGODF
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