- Verano refinances existing $350 million credit facility, extending the maturity with a four-year term
- Floating interest rate based on the prime rate and at a current rate of 12.75%, which reflects favorably on Verano given today’s rising-rate environment
- Credit Agreement structure provides Verano with the opportunity to obtain up to $270 million of additional debt financing, comprised of $120 million of real-estate secured indebtedness, a $100 million accordion, and a $50 million revolving credit facility
- Optional prepayment features allow for up to a $100 million prepayment at any time for a favorable $1 million prepayment fee, allowing Verano to actively manage its blended cost of capital
- In the medium term, Verano is targeting a blended interest rate on total indebtedness of 10.5% as the Company plans to continue to pursue lower cost real-estate secured indebtedness, similar to its recently executed mortgages with fixed interest rates below the current prime rate
CHICAGO, Oct. 27, 2022 (GLOBE NEWSWIRE) — Verano Holdings Corp. (CSE: VRNO) (OTCQX: VRNOF) (“Verano” or the “Company”), a leading multi-state cannabis company, today announced it has entered into a credit agreement to refinance its existing $350 million credit facility, extending the maturity date to October 30, 2026. The refinanced indebtedness bears interest at a floating rate based on the prime rate, with a current rate of 12.75% per annum.
The refinanced facility provides the Company flexibility to secure additional future indebtedness of up to $270 million, comprised of $120 million in third-party mortgages secured by real estate that is currently unencumbered, a $100 million accordion under the new credit facility to be funded at the option of the existing lenders, and a $50 million third-party revolving credit facility upon the passage of cannabis banking legislation, in each case subject to certain conditions. The ability to incur an additional $120 million in indebtedness secured by real-estate that is currently unencumbered is expected to enable the Company to lower its blended total cost of debt. The Company believes the potential $50 million revolving credit facility could be obtained on improved terms if cannabis banking legislation becomes effective. Additionally, under the new credit facility, Verano can elect to prepay up to $100 million of outstanding indebtedness at any time by incurring a prepayment fee of $1 million. George Archos, Chairman, Chief Executive Officer and Founder of the Company, is participating in the credit facility as a lender.
“We’re pleased to continue our partnership with Chicago Atlantic as our credit facility Agent and as a Lender, extending the maturity and securing terms we believe are favorable during this rising interest rate environment,” said George Archos, Chairman, Chief Executive Officer and Founder of the Company. “Importantly, we maintained flexibility around prepayments and the ability to incur additional debt which we believe adds significant value to the deal, especially given the legislative environment that has seen positive momentum build in support of cannabis policy and banking reform. Since Verano’s inception, we have taken a conservative approach to our balance sheet, including avoiding sale leasebacks, which has allowed us to leverage our real estate to bring down our blended cost of debt. This refinancing enables us to continue a selective approach to further strategic opportunities as we position our company for the future.”
John Mazarakis, Partner of Chicago Atlantic, added, “It’s been exciting to see Verano’s continued execution on its strategic vision, and we welcomed the opportunity to continue our partnership as Agent and lead Lender, a Lead Arranger, and Administrative Agent. Our syndicate of participants, including partners such as Silver Spike Capital, represents the most trusted and dependable capital providers in the industry, dedicated to supporting the sector’s strongest operators. Verano is one of the few U.S. multi-state operators able to attain this cost of capital in a rapidly rising interest rate environment, driven by its margin profile and strong operating performance. The structuring of the new credit facility allows Verano the flexibility to manage down its overall cost of capital and potentially expand the facility depending on market conditions and growth opportunities.”
ATB Capital Markets Inc. (“ATB”) and Chicago Atlantic Advisors, LLC (“Chicago Atlantic”) acted as Lead Arrangers for the senior secured credit facility. Chicago Atlantic is also the Administrative Agent for the credit facility.
