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 11/11/2022
Week ended 11/11/2022
Debt Commentary
Week ended 11/11/2022
- Debt accounted for 79% of trailing 4-week capital raises. We expect this ratio to be volatile because of the limited capital raise activity but average above 50%. Several large MSOs, including TerrAscend (TER: CSE), Jushi (JUSH: CSE), and AYR (AYR.A: CSE), have significant refinancings to do based on their debt maturity schedules. Several smaller tier 2 and tier 3 companies have upcoming financing needs that we believe will spur an increase in debt financing.
The Week’s Largest Debt Raise:
- On November 7, 2022, Vext Science (VEXT: CSE)(VEXTF: OTC) announced the closing of a $4.6M refinancing of Secured Convertible Debentures that were maturing in December 2022.
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- The new non-convertible debentures have an 11.25% interest rate and will mature in December 2027.
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- The debt is secured by substantially all business assets in Arizona or Ohio subject to a first-priority claim by the company’s senior secured lenders.
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- Warrants for 365,909 shares with a $.38 exercise price (3% warrant coverage and 81% exercise premium) add only 2bp to the effective cost of 11.27%, primarily due to the low coverage.
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- The table below shows that the Viridian Credit Tracker model ranks Vext as the best credit among our database’s 16 U.S. Cultivation and Retail credits, with market caps between $10M and $100M. Despite its high credit quality, the pricing at 11.25% strikes us as aggressive in the current market especially considering recent executions by Verano and TerrAscend.
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Week ended 11/11/2022
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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 11/11/2022
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 11/11/2022
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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.