OUR 9TH YEAR OF PROVIDING PROPRIETARY CAPITAL MARKETS INTELLIGENCE ON THE CANNABIS / HEMP / PSYCHEDELIC SECTORS
Debt Capital Raises
Debt Transaction Chart
Viridian publishes weekly data and analysis on debt capital raises in the Cannabis/CBD/Psychedelic industries. This data includes information about the company issuing debt (public/private, state/country location), deal size, deal structure, pricing, warrants, and credit data.
Week ended 09/30/2022
Week ended 09/30/2022
Debt Commentary
Week ended 09/30/2022
- Debt accounted for 44% of trailing 4-week capital raises, below its LTM average of 61%. Sporadic financing has reduced the correlation between the trailing 4-week debt to total financing ratio and equity prices.
The Week’s Largest Debt Raise:
- On September 29, 2022, Heritage Cannabis (CANN: TSX)(HERTF: OTCQX), is a grower, seller, and distributor of medical cannabis and CBD products, announced the second amendment and increase in its Senior Secured Loan with BJK Holding through the addition of a third facility for $3.6M.
- The third facility carries a 15% rate and matures on 11/30/2024.
- Additional warrants for 50M shares are exercisable at $.072 per share (184% premium) with a 2.5-year expiration. Although the warrant package technically offers 100% coverage, its extremely high premium and short maturity give it limited value. We estimate an effective cost of the debt at 15.12%, only 12bp higher than the interest rate.
- The table below shows the Viridian Credit Tracker credit rankings of the 16 Canadian Cultivation & Retail companies with market caps between $10M and $100M. Heritage ranks seventh due to its median leverage rating, smaller than peer average size, and reasonable liquidity. In the current environment, 15% looks fair to us.
Week ended 09/30/2022
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Weekly Credit Tracker
Each week, Viridian highlights a specific industry sector and provides a deep dive into credit metrics and comparable company credit rankings for public companies operating in that sector. Credit ratings are not currently available for public cannabis companies leaving companies, lenders, and investors with a gap of information. The Viridian Cannabis Credit Tracker fills this gap. The model uses 11 market and financial statement variables to discern 4 key credit factors: Liquidity, Leverage, Profitability, and Size, to provide credit/liquidity analysis for over 370 public Cannabis/Hemp companies.
- Week ended 09/30/2022
This week’s credit tracker focuses on the 7 Canadian Cultivation & Retail sector companies with market caps between $50M and $500M in the Viridian Value Tracker database in order to make the case that Auxly had a good reason to sell assets, even at prices significantly below its cost: The firm is over levered and needs to sell assets to reduce debt. The Viridian Credit tracker ranking system shows Auxly near the bottom of the peer group in terms of credit quality.
- Week ended 09/30/2022
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Additional content is available to Premium and Enterprise users. Please purchase a higher tier membership to see more.
This Chart is Only Available to Higher Tier Memberships
Please Purchase a Premium or Enterprise membership to see more.
Viridian publishes weekly insights on debt capital raises in the Cannabis/CBD/Psychedelic industries. These insights typically highlight the most interesting/meaningful debt transactions of that week, and commentary on market conditions, debt deal structures, and lenders.