In February, Organigram announced a strategic investment from global tobacco company BATS, which took a 19.9% stake for C$221 million. Only a small portion, C$30 million, was earmarked for joint product development efforts. We found it odd that the deal was done at the market price rather than a premium. On Friday, the company reported that it had used a substantial portion of the investment, C$58.5 million, to pay off its bank debt, perhaps providing an additional motive to make the investment. American cannabis operators have been much more prudent with the use of debt, perhaps because it wasn’t as widely available to them. Unlike their Canadian peers, they weren’t able to issue convertible note-bought deals. More recently, we are seeing a lot of improvement. While rates are still high, they appear to be falling, with better terms as well, including longer maturities and the ability to pay off the debt before maturity. More investors have been willing to provide debt capital over the past several months.

New Cannabis Ventures, 04/04/2021 10:58:00

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