Organigram amends C$140 million credit facility, modifies pricing

By Rebecca Melvin

New York, May 29 – Organigram Holdings Inc. said its C$140 million credit facility led by Bank of Montreal has been amended to modify margin pricing and remove a C$35 million accordion commitment.

In addition, the amendment extends the final draw deadline of the term loan to July 31, postpones principal repayments on the term loan to Nov. 30, and adjusts some ratios to be maintained before and after the Nov. 20, 2021 conversion date, according to a press release.

The credit facility consists of a C$115 million term loan and a C$25 million revolver, both maturing in May 2022.

Organigram has drawn C$85 million of the term loan and plans to draw down up to C$30 million through to July 31. Principal repayments on the term loan will commence on Nov. 30, at a rate of 2.5% per quarter.

The revolver for general corporate and working capital purposes is available based on a percentage of trade receivables and is currently undrawn. The company may repay the balance of the facilities without penalty at any time.

Subject to some exceptions, funds raised by the company after Dec. 31 are required to be used to repay the facilities.

The pricing of the facilities continues to be a set margin, which before the conversion date will be fixed at 250 basis points or 375 bps over BMO’s Prime Based Loans or a Bankers’ Acceptance or equivalent rate based on the applicable term, respectively.

After the conversion date, the margin may increase or decrease based on a pricing grid linked to the company’s senior funded debt to EBITDA ratio as calculated at each quarter-end.

Interest is expected to be in the range of 4.4% to 4.8% per annum, based on current rates and the highest level of the pricing grid.

In addition to the existing customary financial and restrictive covenants, the company has agreed to maintain an unrestricted cash balance of not less than C$30 million at all times, C$8 million of which has been deposited as cash collateral with BMO as security for the facilities. The facilities continue to be secured by the assets of Organigram, which primarily consist of the company’s Moncton campus production facility.

The banking syndicate includes three other banks.

Organigram Holdings is the Moncton, New Brunswick-based parent company of Organigram Inc., a licensed producer of medical marijuana.

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