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 12/29/2023
Week ended 12/29/2023
Debt Commentary
Week ended 12/29/2023
- Debt accounted for 69% of trailing 8-week capital raises, up from last week. The ratio may stay lower than trend line levels if companies utilize favorable regulatory news to issue equity.
- The Week’s Largest Closed Debt Transaction
- On December 27, 2023, Trulieve Cannabis Corp. (TRUL: CSE)(TCNNF: OTCQX), the fourth largest U.S. MSO by market cap, closed a $25M commercial loan secured by a cultivation site in Florida.
- The interest rate on the five-year term loan is fixed at 8.31%. This is consistent with the aggressive rates offered recently by commercial banks. As a reference point, the company’s public 8% notes due 10/6/26 are offered to yield approximately 14.7%, a 640bp higher yield for shorter 1st lien secured paper. The spread shows the illiquidity of the cannabis debt market and the mispriced opportunities that savvy investors can find there.
- The lenders were comprised of two banks led by First Federal Bank.
- Trulieve has been an improving credit story for the last few months. The Virdian Credit Tracker model ranks Trulieve as the 2nd best credit in the cannabis space after GTI. However, the company had been ranked as poorly as #8 as recently as September 30.
- Since then, Trulieve has improved its liquidity ranking from #6 to #4, mainly due to better than expected 3rd quarter free cash flow.
- The company has made similar improvements in leverage, moving from #10 in September to #8. The primary driver of this improvement is a swing in Annualized Funds from Operation/ Total Liabilities, which went from -.04 (#23) to .05 (#10), reflecting significantly improved profitability, which improved from #14 to #7.
- Another positive credit factor is the redemption of the $130M of 9.75% Secured 1st Lien notes due 6/18/24, solving the company’s maturity problems for 2024.
Week ended 12/29/2023
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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 12/29/2023
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 12/29/2023
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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.