After years of sitting on the sidelines, Canada’s top-tier monetary establishments are more and more teaming up with the nation’s largest cannabis corporations to assist fund their aggressive progress plans.
Alberta-based Aurora Cannabis on Tuesday tapped the Bank of Montreal – Canada’s fourth-largest financial institution by income – for 200 million Canadian dollars ($150 million) in debt.
The deal features a CA$150 million time period loan and a CA$50 million revolving-credit facility.
Cam Battley, Aurora’s chief company officer, stated the deal is about 10 occasions bigger than any earlier time period loan, making it a “game-changer” for the marijuana business.
Aurora plans to use the capital to speed up its international enlargement.
“We’re going to be entering each of the European markets as they cascade open,” Battley stated.
A day earlier, Aurora introduced it had made the first medical cannabis cargo to Malta.
Growing debt financing is a big milestone, in accordance to Glen Shear, international cannabis professional and former government director of CIBC World Markets.
“Clearly, both parties benefit materially,” he stated. “Aurora obtains low-cost, nondilutive financing, as well as institutional validation. BMO takes a courageous leadership role in one of the globe’s most dynamic and medically meaningful industries.”
Since 2014, cannabis corporations have largely financed enlargement via fairness offers, however debt is more and more turning into a part of the equation.
Debt financing rose from CA$145 million in 2016 to CA$663 million in 2017.
CEO John McMullen of LGC Capital, an funding agency in Toronto, stated the transfer to extra debt financing is a pure evolution for the cannabis business.
“It shows large institutions are waking up,” he stated. “They’re validating an industry in Canada that could become a global leader.”
Matt Lamers could be reached at mat[email protected]
To sign up for our weekly Canada marijuana enterprise publication, click on right here.