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 01/26/2024
Week ended 01/26/2024
Debt Commentary
Week ended 01/26/2024
- Debt accounted for 36% of trailing 8-week capital raises, down ten points from last week. The ratio may stay lower than trend line levels if companies utilize favorable regulatory news to issue equity.
- The Week’s Most Significant Closed Debt Transactions
- On January 24, 2024, SpringBig Holdings (SBIG: OTCPK), a provider of vertical Saas-based marketing solutions, consumer mobile app experiences, and omnichannel loyalty programs, closed two debt transactions for total gross proceeds of $8M
- The largest deal was a $6.4M two-year 8% Secured Convertible Note with a $0.15 conversion price (7.1% premium). Interest is paid-in-kind (PIK). The low conversion premium makes the conversion option quite valuable and results in an effective cost of 17.92%
- SpringBig also raised $1.6M in a two-year 12% senior secured term loan pari passu with the convertible note. Interest is payable semiannually in cash.
- Approximately $2.9M of the proceeds will be used to repurchase the company’s existing Senior Secured Convertible Notes due 2025 at a discount. The issue has an outstanding principal balance of $5.5M (as of the most recent 10Q) with an interest rate of 6% and a maturity date of 6/14/25. The maturity was extended from 2024 to 2025 by an amendment in May 2023 that reduced the conversion price from $12 to $1. The reported $2.9M purchase price of the notes represents approximately 52.7% of the principal and a yield to maturity (neglecting the value of the deeply out-of-the-money conversion option) of over 50%!
- The high effective cost of the convertible notes and the ability of SpringBig to repurchase its outstanding debt at such a significant discount seem warranted when we look at the company’s credit stats relative to its peer group of the twelve software/media companies with market caps over $3M in the Viridian Credit Tracker database. SpringBig ranks as #9/12 (tied with Predictmedix Inc.) Its ranking is influenced by its high liabilities/market cap of 2.06x, weak profitability, and small size. Its proforma cash flow adjusted current ratio of .57x indicates the need for additional financing.
Week ended 01/26/2024
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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 01/26/2024
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 01/26/2024
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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.