Benzinga | Jul 20, 2021 08:54AM EDT

Marijuana Money On The Move: Sundial Joint Venture SunStream Lends $25M To Clever Leaves

Clever Leaves Holdings Inc. (NASDAQ: CLVR) reported Monday it has closed a $25 million financing from Catalina LP, a division of SunStream Bancrop Inc., a joint venture initiative sponsored by Sundial Growers Inc. (NASDAQ: SNDL).

The multinational cannabinoid operator also announced the repayment of the outstanding principal amount of the secured convertible notes, which are due March 30, 2022.

Under the financing arrangement, Clever Leaves issued a secured convertible note to SunStream, which bears an annual interest rate of 5.0%, and has a three-year maturity. Interest is set to be paid quarterly, either in cash or by increasing the principal amount on the convertible note.

SunStream is enabled to convert the principal interest on the convertible note into shares of Clever Leaves, without par value, at a price of $13.50 per share. The conversion limit is set to up to $12.5 million within one year of issuance. Each of Clever Leaves and SunStream may convert into common shares under specified terms.

Repayment Of 2022 Convertible Notes

Furthermore, the New York-based cannabis company also reported it has completely repaid its 2022 Convertible Notes on July 19. The total amount paid accounted for the sum of 90% of the total $27.8 million outstanding principal amount owing under the 2022 Convertible Notes.

"We are always looking at ways to optimize our financing arrangements, and we are grateful to receive this support from SunStream, which is a testament to the strength of our industry relationships and value proposition," Kyle Detwiler, CEO of Clever Leaves stated. "Further, this financing meaningfully strengthens our balance sheet and reflects our commitment to opportunistically pursue value creation opportunities for our shareholders."

Detwiler further explained that the financing improves their liquidity, helps with current indebtedness and provides extra value to the company's shareholders.

"The combination of the SunStream Convertible Note and the repayment of the 2022 Convertible Notes created approximately $2.8 million of value through the discounted repayment, as well as cash interest savings of approximately $0.6 million through the previous maturity of the 2022 Convertible Notes or approximately $1.0 million per year when comparing the pro forma annual run rate cash interest costs. With this financing, we expect to have greater flexibility to pursue new strategic growth opportunities, including new partnerships and acquisitions," Detwiler concluded.

Recent Milestones

At the end of June, Clever Leaves announced the launch of its U.S.-focused research initiative, Project Change Lives, under which the company will contribute up to $25 million in retail value of medical cannabis products to any eligible U.S. organization to help advance scientific research into the potential medical benefits of cannabinoids.

Price Action

Clever Leaves shares closed Monday market session 0.79% lower at $8.80 per share, while Sundial stock closed the day 0.39% lower at 80 cents per share.

Photo: Courtesy of Shane Rounce on Unsplash