CALGARY, May 22, 2020 /CNW/ - Sugarbud Craft Growers
Corp. (TSXV: SUGR, SUGR.WT) ("Sugarbud" or the
"Company") is pleased to announce that it has entered into a
commitment letter with Connect First Credit Union
Ltd. ("First Calgary")
in respect of a $5.0 million senior
secured credit facility (the "Credit Facility").
The committed interest rate under the Credit Facility is the
Canada Bond rate for five years + 3.55% with a minimum floor rate
of 4.25% and matures five years following closing. The Credit
Facility replaces the Company's existing debt facility with Pillar
Capital Corp. The proceeds from the Credit Facility will be
used to repay the $2.04 million
outstanding under the existing debt facility and for ongoing
working capital purposes. The Company has the right to repay
amounts outstanding under the Credit Facility prior to the maturity
date without penalty. The Credit Facility is subject to
continued compliance with customary financial covenants.
Subject to the satisfaction of certain customary conditions,
including the finalization of security documentation, the full
amount of the Credit Facility will be available at closing; which
the Company expects to occur on or about June 1st, 2020.
Upon the anticipated closing of the Credit Facility and the
previously announced marketed public offering (the
"Offering") of secured convertible debenture units (the
"Debenture Units") of up to $4.0
million, subordinating in priority and ranking to the Credit
Facility, the Company will be strategically positioned to have
adequate funding for the completion of Phase 1a and to also begin
the build-out for Phase 1b at the
Company's purpose built 29,800 sq. ft. facility in Stavely, Alberta for the cultivation and
production of high quality, ultra-premium craft cannabis products.
Sugarbud expects to complete the construction and build-out of
Phase 1a in 2020 for an approximate maximum annual production
design capacity of between 3,308 and 3,891 kilograms. Phase
1b will expand the production
capacity by approximately an additional 3,308 and 3,891 kilograms,
and together with Phase 1a for an aggregate funded, annual
production design capacity of 6,616 and 7,782 kilograms. Sugarbud
is positioned to unlock significant shareholder value with its
anticipated increase in production capacity upon the completion of
Phase 1, inclusive of Phase 1b and
1c.
"We are pleased to be working with Sugarbud and are excited to
support them and the community of Stavely as they continue their quest in this
dynamic new industry. Our approach at First Calgary is to
work with business teams who have a great vision with a solid
business plan. We are proud to welcome Sugarbud as new
members of our Credit Union," stated Ryan
Andries, Vice President – Commercial Banking at First
Calgary.
"We view this new credit facility with First Calgary as a strong
vote of confidence in our management team, our business model and
most importantly our ability to deliver strong operational and
financial results," stated Sugarbud's Chief Executive Officer,
John Kondrosky.
"As a Company, we are always looking for ways to balance our
overall cost of capital and optimize our capital structure,"
continued Mr. Kondrosky. "We believe that this new
credit facility with First Calgary more than meets these criteria,
further strengthens our balance sheet and provides the Company with
the additional working capital necessary to continue to
successfully execute against our primary growth objectives and
priorities," concluded Mr. Kondrosky.
Sugarbud also announces the filing of its year ended
December 31, 2019 audited
consolidated annual financial statement ("Financial Statements"),
related management's discussion and analysis ("MD&A") and
annual information form ("AIF"), which are available on SEDAR
at www.sedar.com and on Sugarbud's website
at www.sugarbud.ca.
The Offering of Debenture Units at a price of $1,000 per Debenture Unit will consist of: (i)
one 12.0% secured convertible debenture; and (ii) 20,000 common
share purchase warrants of the Company (the "Warrants").
Each Warrant will entitle the holder to purchase one common share
in the capital of the Company at an exercise price of $0.05, at any time up to 36 months following the
date of issuance. Further details on the terms of the Offering may
be obtained from the preliminary short form prospectus and term
sheet on www.sedar.com. Mackie Research Capital Corporation is
acting as sole book-runner and agent in respect of the
Offering.
About Sugarbud
Sugarbud is a federally licensed, Alberta-based craft cannabis company; focused
on the cultivation and production of superior, select-batch, craft
cannabis products. Our vision and mission is to become a trusted
and well-respected brand - renowned for providing
exceptional high-quality craft cannabis products to legal
markets by delighting the most discerning of cannabis
consumers.
http://www.sugarbud.ca/
Forward Looking and Cautionary Statements
This news release contains forward-looking statements. More
particularly, and without limitation, this news release contains
statements concerning: Sugarbud's assessment of future plans,
operations and cannabis cultivation; and the closing of the Credit
Facility and the use of the proceeds thereof. When used in this
document, the words "will," "anticipate," "believe," "estimate,"
"expect," "intent," "may," "project," "should," and similar
expressions are intended to be among the statements that identify
forward-looking statements.
The forward-looking statements are founded on the basis of
expectations and assumptions made by Sugarbud. Forward-looking
statements are subject to a wide range of risks and uncertainties,
and although Sugarbud believes that the expectations represented by
such forward-looking statements are reasonable, there can be no
assurance that such expectations will be realized. Any number of
important factors could cause actual results to differ materially
from those in the forward-looking statements including, but not
limited to: the terms and conditions of the Credit Facility;
currently contemplated expansion and development plans may cease or
otherwise change; production of cannabis may be lower than
expected, Sugarbud may not obtain the required approvals from
Health Canada, the size of the medical marijuana market and the
recreational marijuana market; government regulations, including
future legislative and regulatory developments involving medical
and recreational marijuana; construction delays; risks inherent in
the agricultural business, such as insects, plant diseases and
similar agricultural risks which can have a significant impact on
the size and quality of the harvest of cannabis crops; competition
from other industry participants; and other factors more fully
described from time to time in the reports and filings made by
Sugarbud with securities regulatory authorities. In addition, the
Company cautions that current global uncertainty with respect to
the spread of the COVID-19 virus and its effect on the broader
global economy may have a significant negative effect on the
Company. While the precise impact of the COVID-19 virus on the
Company remain unknown, rapid spread of the COVID-19 virus may have
a material adverse effect on global economic activity, and can
result in volatility and disruption to global supply chains,
operations, mobility of people and the financial markets, which
could affect interest rates, credit ratings, credit risk,
inflation, business, financial conditions, results of operations
and other factors relevant to the Company. Please refer to the AIF
and MD&A for additional risk factors relating to Sugarbud,
which can be accessed under Sugarbud's profile
on www.sedar.com.
Except as required by applicable laws, Sugarbud does not
undertake any obligation to publicly update or revise any
forward-looking statements.
Neither the TSXV nor its regulation services provider (as
that term is defined in the policies of the TSXV) accepts
responsibility for the adequacy or accuracy of this
release.
SOURCE SugarBud Craft Growers Corp.