TerrAscend Corp. (“TerrAscend” or the “Company”) (TSX: TSND, OTCQX:
TSNDF), a leading North American cannabis company, today announced
that the Company, together with certain entities that are
consolidated by the Company (the “Consolidated Entities”), have
closed on a senior secured term loan (the “Loan”) for gross
proceeds of US$140 million (the “Transaction”) from funds managed
by FocusGrowth Asset Management, LP (“FocusGrowth”), a leading
capital provider to the cannabis sector, along with other members
of a loan syndicate. The Loan includes an initial draw of US$114
million in gross proceeds by certain of the Company’s Consolidated
Entities in Pennsylvania, Maryland and California, with a second
draw of US$26 million in gross proceeds expected in September 2024
by the Company’s Consolidated Entities in Michigan. The Loan
carries an interest rate of 12.75%, matures in August 2028,
contains no prepayment penalties, and is guaranteed by the Company
and TerrAscend USA, Inc. No warrants were issued as part of the
Loan. The proceeds from the initial draw were used to retire the
Company’s existing indebtedness in Pennsylvania with the remainder
available for potential M&A transactions focused on geographic
expansion. The proceeds from the second draw will be used to retire
the Company’s existing indebtedness in Michigan.
“Completing this non-dilutive financing
strengthens our balance sheet and provides us the financial
flexibility to continue to execute on our growth strategy. With
this financing closed, we have no other material debt maturing
until late 2027.” said Jason Wild, Executive Chairman of
TerrAscend. “This transaction also reflects our lender’s confidence
in our vision and strategy. The FocusGrowth team has been a
pleasure to work with and we look forward to a long and successful
partnership together.”
“We have closely watched TerrAscend’s progress
and are excited to partner with them to support their continued
growth,” said Peter Bio, Partner of FocusGrowth. “TerrAscend has
established itself as a market leader in multiple states with ample
greenfield opportunities for growth in both new and existing
markets. We have enjoyed working with the team on this transaction
and are already working with management to evaluate additional
opportunities.”
The Transaction constitutes a “related party
transaction” within the meaning of Multilateral Instrument 61–101
Protection of Minority Security Holders in Special Transactions
(“MI 61–101”) because Jason Wild, an insider of the Company,
directly or indirectly invested approximately US$7.5 million of the
Loan as a member of the loan syndicate in connection with the
Transaction (the “Insider Participation”). The Company has relied
on exemptions from the formal valuation and minority shareholder
approval requirements of MI 61–101 contained in sections 5.5(a) and
5.7(1)(a) of MI 61–101 in respect of the Insider Participation as
the fair market value (as determined in accordance with MI 61-101)
of the Insider Participation in the Transaction is below 25% of the
Company’s market capitalization (as determined in accordance with
MI 61-101).
Ventum Capital Markets acted as the exclusive financial advisor
to the Company for the Transaction.
About TerrAscendTerrAscend is a
leading TSX-listed cannabis company with interests across the North
American cannabis sector, including vertically integrated
operations in Pennsylvania, New Jersey, Maryland, Michigan and
California through TerrAscend Growth Corp. and retail operations in
Canada through TerrAscend Canada Inc.. TerrAscend operates The
Apothecarium, Gage and other dispensary retail locations as well as
scaled cultivation, processing, and manufacturing facilities in its
core markets. TerrAscend’s cultivation and manufacturing practices
yield consistent, high-quality cannabis, providing industry-leading
product selection to both the medical and legal adult-use markets.
The Company owns or licenses several synergistic businesses and
brands including Gage Cannabis, The Apothecarium, Cookies,
Lemonnade, Ilera Healthcare, Kind Tree, Legend, State Flower, Wana,
and Valhalla Confections. For more information visit
www.terrascend.com.
Caution Regarding Cannabis Operations in
the United StatesInvestors should note that there are
significant legal restrictions and regulations that govern the
cannabis industry in the United States. Cannabis remains a
Schedule I drug under the US Controlled Substances Act, making it
illegal under federal law in the United States to, among
other things, cultivate, distribute, or possess cannabis
in the United States. Financial transactions involving
proceeds generated by, or intended to promote, cannabis-related
business activities in the United States may form the
basis for prosecution under applicable US federal money laundering
legislation.
While the approach to enforcement of such laws
by the federal government in the United States has
trended toward non-enforcement against individuals and businesses
that comply with medical or adult-use cannabis programs in states
where such programs are legal, strict compliance with state laws
with respect to cannabis will neither absolve TerrAscend of
liability under U.S. federal law, nor will it provide a defense to
any federal proceeding which may be brought against TerrAscend. The
enforcement of federal laws in the United States is a
significant risk to the business of TerrAscend and any proceedings
brought against TerrAscend thereunder may adversely affect
TerrAscend's operations and financial performance.
Forward Looking InformationThis
news release contains “forward-looking information” within the
meaning of applicable securities laws. Forward-looking information
contained in this press release may be identified by the use of
words such as, “may”, “would”, “could”, “will”, “likely”, “expect”,
“anticipate”, “believe, “intend”, “plan”, “forecast”, “project”,
“estimate”, “outlook” and other similar expressions.
Forward-looking statements include, but are not limited to,
statements herein with respect to the Company’s expectations
regarding the financial and other benefits of the Loan to the
Company’s operations and growth strategy. Forward-looking
information is not a guarantee of future performance and is based
upon a number of estimates and assumptions of management in light
of management’s experience and perception of trends, current
conditions and expected developments, as well as other factors
relevant in the circumstances, including assumptions in respect of
current and future market conditions, the current and future
regulatory environment, and the availability of licenses, approvals
and permits.
Although the Company believes that the
expectations and assumptions on which such forward-looking
information is based are reasonable, undue reliance should not be
placed on the forward-looking information because the Company can
give no assurance that they will prove to be correct. Actual
results and developments may differ materially from those
contemplated by these statements. Forward-looking information is
subject to a variety of risks and uncertainties that could cause
actual events or results to differ materially from those projected
in the forward-looking information. Such risks and uncertainties
include, but are not limited to, current and future market
conditions; risks related to federal, state, provincial,
territorial, local and foreign government laws, rules and
regulations, including federal and state laws in the United States
relating to cannabis operations in the United States; and the risk
factors set out in the Company’s most recently filed MD&A,
filed with the Canadian securities regulators and available under
the Company’s profile on SEDAR+ at www.sedarplus.ca and in the
section titled “Risk Factors” in the Company’s Annual Report for
the year ended December 31, 2023 filed with the Securities and
Exchange Commission (the “SEC”) on March 14, 2024, as may be
updated by the Company’s Quarterly Reports on Form 10-Q and other
filings it files with the SEC from time to time..
The statements in this press release are made as
of the date of this release. The Company disclaims any intent or
obligation to update any forward-looking information, whether, as a
result of new information, future events, or results or otherwise,
other than as required by applicable securities laws.
For more information regarding TerrAscend: Keith
StaufferChief Financial Officerir@terrascend.com
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