Cannaroyalty has announced the closing of a previously announced debt-financing deal with a subsidiary of Sprott.
CannaRoyalty has executed a revolving $12-million secured credit facility, which has a three-year term and is secured against the firm’s Canadian assets, with Sprott Canna Holdco. The proceeds are to be used for specific opportunities pursued by CannaRoyalty for the production or processing of cannabis, as well as general corporate purposes.
In June, Sprott also received CannaRoyalty warrants entitling Sprott to purchase 1.8 million CannaRoyalty shares at an exercise price of $2.05 per share for a period of three years. The warrants may only be transferred to certain permitted entities.
In line with the financing, CannaRoyalty and Sprott have begun to review investment opportunities for a previously announced joint venture. It will focus on debt-investment opportunities in the legal Canadian cannabis sector, with potential target assets including licensed producers, licensed producer applicants, production assets, property, and equipment.
With its industry experience, connections, and investment pipeline, CannaRoyalty will identify and refer attractive Canadian opportunities to the venture. It will also assist Sprott in completing due diligence and providing strategic support, as well as structuring, negotiating, and monitoring investments.
Sprott will use its experience as a provider of asset-backed investment capital in areas that are underserved by traditional creditors. It will also arrange financing, which is anticipated to include both debt and equity upside that CannaRoyalty may choose to participate in.
CannaRoyalty will participate in realized returns from investments. It will also have the opportunity to enter into royalty, streams, offtake agreements, or other business relationships with borrowers in the joint venture.
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