OTTAWA, ONTARIO–(Marketwired – Aug. 23, 2017) – CannaRoyalty Corp. (CSE:CRZ), an active investor and operator in the legal cannabis industry, is pleased to announce the closing of its previously announced $12 million debt financing with Sprott Inc.
CannaRoyalty and Sprott have also begun reviewing investment opportunities for their previously announced joint venture (“JV“).
“We expect our relationship with Sprott to drive significant value for CannaRoyalty shareholders as we continue to build our portfolio of value-add cannabis assets,” said Marc Lustig, CEO of CannaRoyalty. “Given the quality of the opportunities we are reviewing in the Canadian cannabis market, we believe the timing to launch this joint venture is ideal.”
Financing
CannaRoyalty has executed a revolving $12 million secured credit facility with Sprott Canna Holdco Corp. today, a subsidiary of Sprott Inc. The facility has a three-year term and is secured against Cannaroyalty’s Canadian assets.
Any outstanding principal amount has an annual interest rate of 10%, payable quarterly in cash or CannaRoyalty shares issued at a 10% discount.
In addition, CannaRoyalty warrants were issued to Sprott on June 19, 2017 which entitle Sprott to purchase 1.8 million CannaRoyalty shares at an exercise price of $2.05 per share for a period of three years after closing. The warrants are non-transferable, other than to certain permitted transferees.
Joint Venture
The JV will focus on debt investment opportunities in the rapidly growing legal Canadian cannabis sector. The types of assets that the JV may target include licensed producers, licensed producer applicants, production assets, property, and equipment.
CannaRoyalty will leverage its cannabis sector experience to identify and refer attractive Canadian opportunities to the JV. Additionally, CannaRoyalty will assist Sprott in completing due diligence and providing strategic support to JV investments, as well as the structuring, negotiation, and monitoring of those investments.
Sprott will provide the JV with its significant expertise and experience as a provider of asset backed investment capital in specialized areas that are not fully served by traditional credit providers. Financing for each investment, expected to include both debt and equity upside, will be arranged by Sprott and include participation by CannaRoyalty, if desired by CannaRoyalty.
As partner in the JV, CannaRoyalty will participate in realized returns from investments made, following a customary private equity style waterfall. CannaRoyalty will also have the opportunity to directly enter into royalty, streams, offtake agreements or other business relationships with JV borrowers.
Sprott Capital Partners acted as strategic advisor to the foregoing transactions.
Source: Nasdaq