Vireo Growth adds $10M to Chicago Atlantic debt package
Vireo Growth Inc. (CSE: VREO) (OTCQX: VREOF) snapped up $10 million in convertible debt from Chicago Atlantic as Minnesota prepares to launch recreational cannabis sales next year.
Vireo announced Monday that its senior lender will provide the three-year facility with a 12% annual interest rate. The deal follows a previous credit agreement extension with Chicago Atlantic announced in August. The notes can be converted into company shares at 62.5 cents each.
The deal arrives just weeks after Amber Shimpa took the helm of the Minneapolis-based company – which changed its name from Goodness Growth Holdings in July – replacing former CEO Josh Rosen who moved to an advisory role last month.
The firm said the funds will support “additional capex spending, working capital needs, and … general corporate purposes,” according to the company.
“This facility gives us additional flexibility to execute our strategy for the year ahead,” Shimpa added.
Regulators in Minnesota, which previously allowed only two licensed medical marijuana operators including Vireo, have been moving along, recently preapproving more than 1,800 applicants for its social equity licensing lottery. According to state officials, up to 282 permits will be available across various business categories when recreational sales begin next year.
The cannabis producer has been working to shore up its finances following a collapsed $413 million merger with Chicago-based Verano Holdings. Vireo recently began wholesale sales in New York’s recreational market after receiving its license in July, as it tries to unload some of its assets over there.
Vireo has shown signs of financial improvement lately. The company over the summer narrowed its losses as revenue grew 24% to $25.1 million versus the same period last year.
Much of the its recent growth has been from Maryland, where recreational marijuana sales began last year. Vireo saw its Maryland revenue jumped 182% after the state launched adult-use sales.
By August, it extended its existing credit line with Chicago Atlantic, which held $10.5 million in outstanding notes.
The company had $194.6 million in total assets at the end of June, including $11.2 million in cash. Total liabilities stood at $217.2 million.
Vireo said the latest financing qualifies as a “related party transaction” under Canadian securities rules, as Chicago Atlantic is considered a related party. The deal was completed quickly and meets exemptions from certain regulatory requirements due to its size.
