Cannara Biotech announces extension of BMO credit facility, debenture

Cannara Biotech (LOVFF) announced the extension and related amendments to its existing credit agreement with the Bank of Montreal and convertible debenture originally issued on June 21, 2021, as amended on August 31, 2023, and January 30, 2024, in the total initial principal amount of $5.7 million to Olymbec Investments designed to optimize the Company’s financial position and enhance its ability to execute its long-term strategy. The Company has completed an agreement to amend and restate its existing credit agreement with BMO acting as administrative agent, lead arranger, syndication agent and sole bookrunner. Term Extension: The maturity date of the Restated Credit Facility has been extended to December 31, 2027. Debt Structure Adjustments: The Restated Credit Facility provides for a streamlined debt structure, consolidating the Company’s borrowing facilities as follows: a term loan facility provided by Bank of Montreal with a total commitment of $34.8 million a $10 million revolving credit facility which is intended to be used for general working capital purposes and $5.6 million letter of credit to a provincial service provider to support the supply of electricity. Updated Financial Covenants: The Restated Credit Facility also reflects revised covenants which provide the Company with the flexibility and liquidity to continue its track record of strong growth and support execution of its long-term strategy. The Company concurrently announced that the terms of its convertible debenture originally issued on June 21, 2021, as amended on August 31, 2023, and January 30, 2024, in the total initial principal amount of $5.7 million have been amended by Olymbec Investments to extend the convertible debenture term, subject to the approval of the TSX Venture Exchange. The key changes represented by the Third Convertible Debenture Amendment are as follows: Term Extension: The maturity date of the Olymbec Convertible Debenture has been extended to March 31, 2028. Right to Demand Partial Repayment: Olymbec shall have the right to demand a first partial repayment of up to $1 million of the Olymbec Convertible Debenture subject to BMO’s approval. Olymbec shall also have the right to demand a second partial repayment on September 30, 2025, of an amount equal to half of the principal amount then outstanding. Javaa Convertible Debenture: Pursuant to an agreement signed with Javaa Private Equity concurrently with the execution of the Third Convertible Debenture Amendment, a new unsecured convertible debenture is anticipated be issued on or about September 29, 2025, by the Company to Javaa, in the principal amount equal to the amount required to satisfy Olymbec’s demand for the second partial repayment pursuant to the Third Convertible Debenture Amendment. The Javaa Convertible Debenture will have an initial maturity date of March 31, 2028, at the same interest rate as the Olymbec Convertible Debenture. Interest: As previously disclosed in Cannara’s management discussion & analysis for the three-month period ended November 30, 2024, the Olymbec Convertible Debenture bears an interest rate of 10.75% per annum, compounded semi-annually effective January 31, 2025. Interest incurred prior to September 30, 2025, will be due and payable in cash, or in common shares, or in a combination thereof, at a conversion price of $1.80 per share, at the choice of the Company, subject to the approval of the TSXV. Following September 30, 2025, interest shall be paid quarterly in cash at an interest rate of 10.75% per annum.