Canopy Rivers' 49%-owned joint venture PharmHouse has entered into a syndicated credit facility with the Bank of Montreal, as agent and lead lender, and with Canadian Imperial Bank of Commerce and Concentra Bank as lenders. Under the terms of the credit facility, the lenders will provide PharmHouse up to C$80 million of secured debt financing at a rate of interest that is expected to average in the mid-to-high 5% per annum range over its three-year term.
“We are proud to be entering the new year with a significant financial development for PharmHouse, a joint venture we consider well-positioned to pursue the increasingly global cannabis opportunity. Having secured what we believe to be the largest bank debt to a private company in the cannabis industry, one that is supported by a syndicate of three Schedule I banks, PharmHouse has gained substantial momentum,” said Bruce Linton, Chairman and Chief Executive Officer of Canopy Rivers. “We believe the commitment made by these leading Canadian financial institutions demonstrates confidence in PharmHouse and sheds meaningful light on the quality of the infrastructure, the level of expertise of the joint venture partners, and the anticipated significant near-term cash flow of this platform,” continued Linton.
The credit facility will be used to finalize the acquisition of the 1.3 million square foot modern greenhouse facility and further fund necessary project equipment and ongoing construction costs as the production and distribution platform ramps up. The credit facility is being secured by the company and its wholly-owned subsidiary, Canopy Rivers Corporation, and contains customary financial and restrictive covenants.
“Closing this credit facility is a major milestone for both PharmHouse and Canopy Rivers,” said Eddie Lucarelli, Chief Financial Officer of Canopy Rivers. “This strategic and non-dilutive financing is a testament to the dedication of our team in identifying and optimizing the most attractive sources of capital at both the portfolio partner and corporate levels.”
The PharmHouse joint venture operates out of an ultramodern greenhouse facility in Leamington, Ontario, constructed in 2017 using the latest in commercial agriculture technology and featuring state-of-the-art automation systems. PharmHouse has already secured multiple offtake agreements, with purchase orders in place for an aggregate 30% of the production capacity upon licensing.
Canopy Rivers and its PharmHouse joint venture partner, a company formed by the leading principals and operators of a North American agriculture conglomerate, seek to leverage their relationship networks and respective strengths in cannabis, global commercial agriculture, marketing, and distribution to pursue regulated cannabis opportunities together on a global scale. The Leamington facility represents the first stage of a planned global strategic relationship between the joint venture partners.
“With $140 million of fully funded capital, modern infrastructure that is being converted for cannabis cultivation, and operators with tier one agriculture and distribution expertise, we believe this initial platform will produce a significant amount of cannabis for distribution within the Canopy Rivers ecosystem and beyond,” said Olivier Dufourmantelle, Chief Operating Officer at Canopy Rivers and a director of PharmHouse. “The development of the PharmHouse platform has been on time and on budget. As economic activity and regulatory reform continues in North America and in new jurisdictions globally, we look forward to building on this success and leveraging the benefits of our global cannabis exclusivity with our joint venture partners,” continued Dufourmantelle.