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 06/16/2023
Week ended 06/16/2023
Debt Commentary
Week ended 06/16/2023
- Debt accounted for 74% of trailing 8-week capital raises. We expect this ratio to be volatile because of the limited capital raise activity. With cannabis stocks trading at or near their 52-week lows, we expect debt to continue to account for more than 50% of capital raises. Several large MSOs have now come close to maxing out their debt capacity and may be forced to issue equity, even at the cost of dilution. See our Insights section for more explanation.
The Week’s Only Closed Debt Issue:
- On June 13, 2023, Humble & Fume (HMBL: CSE)(HUMBF: OTCQX), a Canadian distributor of cannabis and cannabis-related products whose operations include distribution of cannabis accessories, contract manufacturing, packaging, and distribution of concentrate products, announced the closing of a US$1.1M private placement of convertible debenture units.
- The debentures have a 10% coupon, mature in three years, and are convertible at US$.045 (a 50.4% premium)
- The units include 50% warrant coverage with three-year maturities and an exercise price of US$.06 (a 100.54% premium)
- The conversion option and warrants are valued at approximately 8.46 points of bond value and produce an effective cost of 13.48%. This is a reasonable cost for a company with roughly $8M enterprise value, proforma debt/ market cap of 1.5x, and adequate proforma liquidity with a free cash flow adjusted current ratio of 2.5x. The fact that insiders purchased 1,150 of the 1,540 debenture units (74.7%) probably helped keep the effective cost down.
Week ended 06/16/2023
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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 06/16/2023
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 06/16/2023
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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.