MariMed Inc. reported that it closed a $58.7 million secured credit facility with a U.S. chartered bank on Nov. 17.
The 10-year loan is a Construction to Permanent Commercial Real Estate Mortgage (CREM). The proceeds allowed MariMed to pay off existing term loans with Chicago Atlantic and Bank of New England and a sellers note from its Ermont acquisition, totaling approximately $46.8 million.
The remaining funds will be held in escrow by the lender to complete the expansion of MariMed’s Hagerstown, Maryland cultivation facility. Any unused proceeds will be released to the company after completion of the cultivation facility expansion.
“The credit facility bolsters our ability to continue executing our strategic plan, particularly as it relates to growing the company through mergers and acquisitions,” said MariMed CEO Jon Levine. “There are many attractive opportunities for accretive deals to be made in our industry, and we intend to explore any that will increase shareholder value.”
MariMed noted the loan offers interest at a lower fixed rate. After the first five years, the rate will be reset for the remaining 5 years. The company will make Interest-only payments for the first 12 months, then payments will be based on a 20-year amortization schedule.
“I am delighted to announce the closing of this debt refinancing, which will generate significant cash savings,” Levine said. “Securing a lower rate, when interest rates continue to rise, is the result of the financial discipline we have displayed over the past decade. Importantly, we are pleased there is no warrant or other equity component resulting in dilution to our shareholders.”
The loan is secured solely by MariMed’s Maryland and Massachusetts operating assets and real estate holdings.
Levine noted paying off the Chicago Atlantic loan has unencumbered the company’s operating assets in Illinois, Ohio and Delaware, as well as its branded products, providing additional levers for future term loans if needed.
“The principal and interest savings of $4.7 million in the first year, and $3.5 million a year for the four years thereafter, will significantly improve cash flow from operations going forward, and provide funds that can be used for acquisitions if we choose,” Levine said. “Including this facility, our lower blended interest rate and new debt facility represent a Debt/EBITDA ratio of 2.5 times, which is among the lowest in the cannabis industry and speak to our ability to generate significant positive cash flow from operations.”