Acreage gets a new lender and pays off the old

Acreage Holdings, Inc. (CSE: ACRG.A.U)(CSE: ACRG.B.U)(OTCQX: ACRHF)(OTCQX: ACRDF) announced it was able to pay off its old debt with a new debt and lender. Acreage got $65 million from a new lender that wasn’t named with an original issue discount of 10%, being $6.5 million. The new lender also gets a board observer right.

The company said that $48 million of that money was used to repay the debt owed to a non-Canopy lender. The net proceeds of the loan to Acreage total approximately $8 million after closing costs and expenses.

“This capital infusion will facilitate the expansion of our retail footprint and strengthen our presence in our core markets,” said Dennis Curran, Chair and Chief Executive Officer of Acreage. “With our enhanced financial position, we are well-positioned to quickly act on high-growth opportunities that are available to us, particularly within Ohio’s newly established non-medical market.”

Acreage told investors that the new agreement has an annual interest rate of 13.5% and matures on September 13, 2027. Interest in favor of the new lender will be paid in cash. Interest in favor of Canopy is payable in cash or in-kind at Acreage’s option and will initially be payable in-kind.

Big debt remains

Acreage said in its most recent financial statement that it had received a notice of default letter from the agents of the Prime rate credit facilities due January 2026. However, by the end of the quarter, the company remedied the notices of default by entering into the amended and restated credit agreement.

Acreage noted in its most recent MD&A that its interest expense for the six months ending June 30, 2024, was $17 million and that it increased by $359,000 due to the company having a larger debt balance than in 2023. At the end of June 2024, the company had outstanding debt with varying maturities for an aggregate principal amount of $261 million.

The company told investors that its cash and cash equivalents of $9 million will be adequate to support the future obligations discussed above and the capital needs of the existing operations and expansion plans over the next twelve months.