MediPharm Labs Closes Upsized Credit Facility

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Extraction specialist MediPharm Labs has closed an upsized credit facility worth $38.7 million with an unnamed “top five Canadian Schedule 1 bank”.

The credit agreement was initially pitched at $20 million and it has almost doubled in size since the first announcement. It is comprised of a revolving term facility, a non-revolving term facility and a non-revolving delayed draw term facility.

It follows on from the closing of an oversubscribed bought deal financing that raised proceeds of $75 million in June. It strengthens MediPharm’s balance sheet and allows it to seize the growth opportunities that potentially lie ahead.

“In particular, this enlarged facility will enhance liquidity and support the delivery of our stated Canadian and Australian capex strategy, to ramp up of production capacity to meet contracted and expected demand for our new product classes,” said chief executive Pat McCutcheon.

MediPharm was founded in 2015 and it specializes in producing purified cannabis oil and concentrates. It has five extraction lines at its facility, resulting in an annualized throughout capacity of 300,000 kg of dried cannabis flower.

It has completed exports to Australia and it should complete the build out of a facility Down Under that has annual processing capacity of 75,000 kg before the end of 2019. This upsized credit facility should help it deliver on that goal and ramp up domestic sales in Canada.

Later this month the Canadian market will open up for edibles and other concentrates, and the first products are due to be on shelves by December. That should theoretically increase demand for MediPharm’s services, as it is among the market leaders in the field of extraction.

Its share price has increased significantly since announcing the credit agreement, going from $3.74 to more than $4. It began the year at just $1.80 and peaked at $7.39 in August before a correction led to a decrease.

It has spent the year trying to tie up other deals that would allow it to fulfil its large throughput capacity, Last month it secured a German export deal with wholesaler ADREXpharma GmbH.

The firm generated pre-tax net income of $4.1 million in Q2 2019 after enjoying a sharp sequential increase in revenue.

The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Capital 10X hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.

Martin Green
Martin Green is an experienced journalist with a strong focus on the cannabis, alcohol, and gambling industries. He is particularly interested in the political issues affecting the global marijuana trade, and he has a keen focus on regulation changes and legal topics. He holds a BA English Literature, MA Creative Writing and a National Qualification in Journalism diploma. He has worked in journalism since 2009 and written for a broad range of newspapers, business titles and magazines, including The Sun, The Metro, The Journal, Livestrong, Drinks Retailing News, Harpers, Sportsbook Review, Vital Football, Essex Live and Surrey Live. Address: 682 Indian Road, Toronto, Ontario, M6P 2C9. Phone: 416-721-8257.

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