Harvest Health secures US $225m loan to ‘expedite expansion efforts’

Arizona-headquartered Harvest Health & Recreation has entered into a term sheet for a secured term loan of up to US $225 million from an investment fund managed by Torian Capital Partners.

The loan will be made available to Harvest in three tranches of US $75 million, each with substantially identical terms.

The financing proceeds, when completed, will, says the company, enable Harvest to “expedite its expansion efforts”.

The loan will be secured by certain current and future assets of Harvest, including cannabis-related licenses.

“Harvest is in a strong financial position in the cannabis industry and this growth capital, which we believe is provided at an attractive financing cost will enable us to deliver on our commitment to enhance shareholder value,” said Steve White, CEO of Harvest.

“This transaction positions us well for the strategic acquisition of assets across the cannabis supply chain. With greater financial flexibility, we are better equipped to execute our strategy to aggressively expand our retail and wholesale footprint across the U.S. into key markets, while seeking to build and acquire brands for broad distribution,” White concluded.

David Kutcher, Chief Investment Officer and co-Managing Partner of Torian Capital, said, “We continue to be impressed with Harvest’s industry leading footprint and world-class management team. Torian’s investment thesis centers on investing in industry leading platforms poised for substantial growth and rapid expansion, and we are pleased to be able to invest in Harvest on that basis.”

“The cannabis industry has lacked access to large credit facilities, and Torian’s ability to provide lower cost, growth capital is core to our ability to work with leading operators such as Harvest. We believe its near-term pipeline is robust and we are confident that this type of investment will support the next stage of their growth,” said Charlie Wilkinson, co-Managing Partner of Torian Capital.

The financing from Torian Capital will be in the form of secured notes issued by one or more subsidiaries of Harvest, totaling up to US $225 million on a private placement basis pursuant to applicable securities laws exemptions.

The proceeds of the notes will be used by Harvest for working capital, strategic acquisitions and general corporate purposes.

The first tranche of the loan is expected to close within 30 days. Each tranche will bear interest at a rate of 8.0% per annum, payable quarterly in arrears and will mature 48 months from the date of issuance of such tranche. Following the 24-month anniversary from the date of issuance of such tranche, Harvest may prepay the outstanding principal of the Notes, upon payment of 105% of the principal in year three and 103% during year four.

Upon completion of each tranche, Harvest will issue Torian Capital warrants in an amount equal to 20% coverage of each tranche. Each warrant will entitle Torian Capital to purchase one Subordinate Voting Share for a period of 36 months from the date of issue.

Jason Vedadi, Executive Chairman and member of the Board of Directors at Harvest, is a passive investor in Torian Capital through a separate entity related to Mr. Vedadi. He has recused himself from any board deliberations pertaining to Torian Capital’s loan to Harvest and will not be involved in any board decisions regarding financing arrangements with Torian Capital going forward.Cannabis Business Worldwide

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