VANCOUVER, BC, Sept. 14, 2022 /CNW/ - CubicFarm® Systems Corp. ("CubicFarms" or the "Company") (TSX: CUB), a leading local chain agricultural technology company, today announced that it has entered into a binding term sheet (the "Term Sheet") for a senior secured revolving term loan (the "Term Loan") to support its business operations.
The Term Sheet commits to a total of CAD6.25 million, with an option to increase the commitment to CAD8.0 million. The Term Loan will have a term of two years, subject to prepayment obligations upon the Company achieving certain milestones or disposing of assets outside of the ordinary course of business and will bear and pay interest at a rate of 10.0% per annum.
The Term Loan is provided by a group of lenders (the "Lender") that includes one non-independent director of the Company whose loan amount is less than 20% of the total facility size.
The Term Loan will be supported by security in favour of the Lender, evidenced by a general security agreement over all of the assets of the Company and its subsidiaries. The Term Loan will be subject to an upfront fee equal to 1.0% of the commitment amount.
The closing of the Term Loan will be subject to execution of a term loan agreement and satisfaction of certain conditions precedent by the Company, including the subordination of an existing loan from a senior lender.
For each Term Loan draw, the Lender will receive share purchase warrants (the "Warrants") in HydroGreen, Inc. ("HGI"), a wholly-owned subsidiary of the Company, at a number and price determined by the amount of a Term Loan draw divided by a price per HGI share calculated using a formula at the time of such Term Loan draw. Such exercise price for the Warrants shall initially be at a pre-money valuation of HGI that is the lesser of USD20.0 million and the market capitalization of the Company at the time of the draw. The Warrants will have a term of five (5) years.
"We believe that this Term Loan will provide the additional liquidity necessary to successfully pivot our strategy to a focused, scalable business model," said Edoardo De Martin, interim Chief Executive Officer. "The Term Loan complements our ongoing cost control measures and will allow us to execute key strategies that will accelerate our path to profitability, including HydroGreen sales and our carbon credit commercialization program. It's rare to have a globally scalable technology that can improve animal health and performance, deliver meaningful environmental benefits, and position us to enter the rapidly growing carbon credit market to support companies and institutions with net-zero goals."
The Term Loan remains subject to the approval of the Toronto Stock Exchange ("TSX").
CubicFarms is a leading agricultural technology company developing and deploying proprietary ag-tech technologies to enable growers to produce high quality, predictable produce and fresh livestock feed with HydroGreen Nutrition Technology, a division of CubicFarm Systems Corp. The CubicFarms™ system contains patented technology for growing leafy greens and other crops on-site, indoors, year-round.
HydroGreen's Automated Vertical Pastures™ technology produces high-energy fresh forage at commercial scale 365 days a year using a unique process to sprout grains, such as barley and wheat, in a controlled environment with minimal use of land, labour, and water. Automated Vertical Pastures™ not only provides a superior nutritious feed to benefit the animal, improving feed efficiency, cow health, nutrition, and performance outcomes, but also enables significant environmental benefits to the farm while helping to meet increasing demand for valuable farm-based inset and offset carbon credits.
For more information, please visit www.cubicfarms.com and www.hydrogreenglobal.com.
Forward looking and other cautionary statements
Certain statements in this release constitute "forward-looking statements" or "forward-looking information" within the meaning of applicable securities laws, including, without limitation, statements with respect to the closing of the Term Loan and TSX approval of the Term Loan.
Such statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Such statements can be identified by the use of words such as "intend", "expect", "believe", "plan", "anticipate", "estimate", "scheduled", "forecast", "predict", and other similar terminology, or state that certain actions, events, or results "may", "can", "could", "would", "might", or "will" be taken, occur, or be achieved.
These statements reflect the Company's current expectations regarding future events, performance, and results and speak only as of the date of this news release. Consequently, there can be no assurances that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Except as required by securities disclosure laws and regulations applicable to the Company, the Company undertakes no obligation to update these forward-looking statements if the Company's expectations regarding future events, performance, or results change.
SOURCE CubicFarm Systems Corp.
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