Entourage Health, a Canadian producer and distributor of cannabis products, amended its existing senior secured credit facility entered into on March 29, 2019 between the Company and Bank of Montreal, and its existing second secured credit facility with an affiliate of the LiUNA Pension Fund of Central and Eastern Canada (“LPF”), entered into on September 30, 2020. The latest amendments to the Senior Credit Facility and Second Credit Facility modify the respective terms under which Entourage secured debt financing.
Under the terms of the Credit Facilities Amendments, Entourage secured an extension of the maturity date of the Senior Credit Facility from June 30, 2022 to June 30, 2024, and of the Second Credit Facility from August 15, 2022 to December 31, 2024, subject to certain conditions, the terms for which are described herein.
“Today’s announcement reflects an important strategic advancement in securing improvements to our debt position and long-term capital structure as we align our liquidity resources with ongoing growth plans – all with the crucial support from our lenders,” said George Scorsis, CEO and Executive Chairman, Entourage. “As part of our corporate transformation, we are continuing to finesse our business operations to produce premium products for added market share growth, whilst assuring that our financial footing is stabilized. This added security provides all our stakeholders with confidence that we are moving tactically in the right direction to reach our profitability goals for long-term success.”
Senior Credit Facility Terms
Under the terms of the amendment of the Senior Credit Facility, the maturity date is extended to June 30, 2024, subject to the satisfaction of certain conditions subsequent by July 31, 2022, failing which the maturity date will instead become October 31, 2023. The Company will report on the completion of the applicable conditions subsequent on or before July 31, 2022.
The amendment of the Senior Credit Facility includes changes to certain financial covenants which are applicable to the Company, including but not limited to the inclusion of an EBITDA target covenant, as more particularly set out in the Credit Facilities Amendments. Additionally, the Company secured deferral of certain of its financial covenants to January 1, 2024.
The Senior Credit Facility is secured by the assets of the Company and its subsidiaries, including the Company’s production facilities. Bank of Montreal’s security under the Senior Credit Facility is in first position.
Second Credit Facility Terms
Under the terms of the amendment of the Second Credit Facility, the maturity date is extended to December 31, 2024, subject to the satisfaction of certain conditions subsequent by July 31, 2022, failing which the maturity date will instead become April 30, 2024. The amendment of the Second Credit Facility includes amendments to the financial covenants that mirror those amendments to the Senior Credit Facility. The Company also secured deferral of certain of its financial covenants to January 1, 2024.
The Second Credit Facility continues to bear an interest rate of 15.25% per annum with the option, at the Company’s discretion, to capitalize interest in lieu of cash payments of interest. The Second Credit Facility is secured by the assets of the Company and its subsidiaries, including the Company’s production facilities, and contains customary financial and other covenants. LPF’s security under the Second Credit Facility is in second position to the Company’s senior creditor.