Extraction specialist MediPharm Labs
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.
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