TSL Express Daily News

TORONTO, Aug. 23, 2021 (GLOBE NEWSWIRE) -- Aleafia Health Inc. (TSX: AH, OTCQX: ALEAF) (“Aleafia Health” or the “Company”), a leader in cannabis wellness products and services, is pleased to announce the closing of a $10 million senior secured term (non-revolving) credit facility (the “Credit Facility”).

“This Credit Facility provides us with greater financial flexibility to pursue strategic opportunities and continue the robust sales growth realized during our most recent quarter. This transaction improves our capital structure and provides a lower cost of capital that we believe directly benefits our shareholders,” said Aleafia Health CEO Geoffrey Benic. “Our sales momentum across multiple adult-use product categories, continued scaling of our medical cannabis ecosystem, and the near-term harvest of our largest outdoor cannabis crop to date sets the stage for a strong second half of 2021.”

The full amount of the Credit Facility was drawn down by the Company on closing. The Credit Facility carries a 12-month term, with an option for early repayment, and accrues interest at a rate of 12% per annum, with the interest and principal amounts due upon maturity. The outstanding amount of the Credit Facility together with accrued and unpaid interest thereon, may be repaid by the Company at any time and also includes certain mandatory prepayment obligations upon certain specified incurrences. The Credit Facility is secured by first lien mortgages on the Paris, Ontario and Grimsby, Ontario production facilities.

As partial consideration for the Credit Facility, the Company has granted to the lender 1,000,000 common share purchase warrants (the “Warrants”) of the Company. Each Warrant entitles the holder thereof to acquire one common share (each, a “Warrant Share”) in the capital of the Company at an exercise price of $0.32, subject to adjustment in certain circumstances, until August 20, 2023. The Warrants vest in equal instalments of 250,000 Warrants commencing on November 20, 2021, and subsequently every three (3) months thereafter, subject to adjustment in certain circumstances. The Warrants are not transferable other than to affiliates of the lender.

The Toronto Stock Exchange has conditionally approved the listing of the Warrant Shares issuable on the due exercise of the Warrants. The Warrants and the Warrants Shares are subject to a statutory holder period in accordance with applicable securities laws.

The net proceeds from the Credit Facility are expected to be used to support accretive growth initiatives, including improved product availability in the adult-use business, accelerating onboarding of new employer relationships under the exclusive Unifor agreement, operational efficiency enhancements on the production lines at its manufacturing facility in Paris, Ontario, and for other general corporate purposes.