Goodness Growth Holdings, Inc. (“Goodness Growth” or the “Company”) (CSE: GDNS; OTCQX: GDNSF), a cannabis company committed to providing safe access, quality products and great value to its customers, today announced that it has executed a fifth amendment to its credit facility with its senior secured lender, Green Ivy, an affiliate of Chicago Atlantic.
The fifth amendment to the Company’s Green Ivy credit facility reduces cash outlays through the removal of a required amortization schedule and extends the maturity date on the credit facility loans to April 30, 2024 with opportunities for performance-based extensions. The Company will issue up to 15,000,000 Subordinate Voting Shares to the lenders in consideration for the credit facility amendment.
In addition, the Company is in advanced discussions with a separate affiliate of Chicago Atlantic to finalize a U.S. $10.0 million secured convertible loan financing. Preliminary terms for this convertible note offering include a three-year term and an interest rate of 12.0%, including 6.0% paid-in-kind and warrants to purchase 6,250,000 Subordinate Voting Shares of the Company.
Interim Chief Executive Officer Josh Rosen commented, “We continue to be pleased with the partnership approach from our senior secured lender. Verano’s decision to terminate our transaction put us in a vulnerable position in a challenging capital markets’ environment for cannabis, but we are on a path toward becoming a better credit partner with the actions we’ve taken to improve the strength of the Company and we’re optimistic that likely state-level regulatory catalysts can augment and accelerate our growth and drive improved cash flow generation.”
John Mazarakis, Principal of Chicago Atlantic said, “We are pleased to continue partnering with Goodness Growth’s management team and provide them with additional flexibility to execute their strategy. The Company’s footprint is well positioned to benefit from regulatory catalysts and we appreciate the aggressive actions the Company has recently taken to improve its operating and financial performance.”
As of March 31, 2023, the Company has U.S. $60.4 million in loans outstanding related to its credit facility with Green Ivy, which does not include any proceeds from the contemplated U.S. $10.0 million secured convertible financing. The cash interest rate on the Company’s credit facility loans has been changed to equal the U.S. prime rate plus 10.375%, with a minimum required rate of 13.625% per year, in addition to paid-in-kind interest of 2.75% per year. The Company has the potential to extend the maturity date on its credit facility loans to January 31, 2026, with the satisfaction of certain performance-related conditions.
Corporate Governance Updates & Conversion of Super Voting Shares
The Company also announced that Chelsea Grayson and Amber Shimpa have resigned from its Board of Directors, effective immediately. Ms. Grayson had been serving on the Company’s Board since March of 2019, when the Company became publicly traded. Ms. Shimpa had been serving on the Company’s Board since its formation from the amalgamation of two predecessor companies in January 2018. The resignations of Ms. Grayson and Ms. Shimpa result in a reduction in the current number of members of the Company’s Board to five.
The Company also announced that all issued and outstanding Super Voting Shares of Goodness Growth (“Super Voting Shares”) are being converted into Subordinate Voting Shares of Goodness Growth (“Subordinate Voting Shares”). The conversions are required under the amendment to the Green Ivy credit facility announced today. Following the conversion, there will be no Super Voting Shares outstanding, which will have the effect of retiring the enhanced voting rights of the former Super Voting Shares.
Executive Chairman Dr. Kyle Kingsley commented, “Today’s announcement to retire our class of super voting shares results in a more shareholder-friendly voting structure, and aligns our voting rights with several other cannabis companies who have made similar changes in efforts to improve corporate governance. We’d also like to thank Chelsea Grayson and Amber Shimpa, whose leadership and contributions to our board of directors have been instrumental in our evolution as a multi-state operator. We look forward to Amber Shimpa’s continued support of the Company’s mission with her increased management responsibilities in her new role as President of Goodness Growth and Chief Executive Officer of Vireo Health of Minnesota.”
Following the issuance of 15,000,000 Subordinate Voting Shares to the lenders in connection with the amended credit facility and the conversion of Super Voting Shares to Subordinate Shares, the Company will have 93,262,130 Subordinate Voting shares issued and outstanding, and 34,864,200 Multiple Voting Shares issued and outstanding. The Company will have a total of 128,126,330 equity shares issued and outstanding on an as-converted basis, 178,921,494 shares outstanding on an as-converted, fully diluted basis, and 131,348,007 fully-diluted shares on the treasury method basis.
