The Green Organic Dutchman Holdings has signed arrangements for up to $103 million in funding. "The financing package consists of three elements: a definitive agreement for a sale-leaseback of the Ancaster Energy Centre; a construction mortgage loan term sheet; and a convertible equity note term sheet," the team with the company explains.
The Company has executed a definitive sale-leaseback agreement for the Ancaster Energy Centre, for proceeds of $23 million. "It carries a term of 10 years after which TGOD is able to repurchase the energy centre for $1 and is non-dilutive. The closing of this definitive agreement is subject to the satisfactory completion of the purchaser’s financial due diligence and documentation of a concurrent Energy Services Agreement and Operating Agreement with the purchaser, an infrastructure investor. There can be no assurance that such conditions will be achieved or whether the closing will occur on the expected timeframe or at all."
"A term sheet with an investment fund for a $40 million construction mortgage loan has also been signed, secured on the facilities at Ancaster and Valleyfield. The terms include $15 million payable on closing, with a $25 million additional advance available upon achieving certain operational milestones, which are expected later in 2020. The loan carries a 12% interest rate, an initial term of 2 years with the ability to extend further and is non-dilutive."
TGOD has also entered into a term sheet with an investment fund for a USD$30 million (~CDN$40 million) note with a 5% coupon, convertible into common shares of TGOD. Under the terms, TGOD would receive US$10 million upon closing with US$20 million immediately placed in escrow, to be released as the note is converted into common shares.
Closing of the two non-binding term sheets is subject to various conditions, including entering into legally binding documentation, satisfactory due diligence and the receipt of required regulatory approvals. The Company expects to close these transactions by the end of Q4, 2019, but there can be no assurance that the transactions close on that time frame or at all.
"TGOD intends to use the proceeds from the financings to continue its rapid yet disciplined expansion with a focus on near-term profitability," they further explain.
According to them, raised capital will be used to:
- Complete construction of the processing facility at Ancaster.
- Complete construction of six zones in the Valleyfield hybrid greenhouse and enclose the balance of the facility with the ability to quickly expand production as the market develops.
- Provide adequate cash for working capital needs to bridge until the Company expects to generate positive operational cash flow.
- Achieve national distribution of TGOD products in early 2020.