Romspen to Lend up to $40MM to Cronos Group

Cronos Group Secures $40M in Debt for Domestic Capacity Expansion

TORONTO, Aug. 24, 2017 /CNW/ – Cronos Group Inc. (TSXV:MJN) (OTC: PRMCF) (“Cronos” or the “Company”) is announcing today that it has entered into a commitment letter for $40 million in debt financing with Romspen Investment Corporation (“Romspen”) to fund the continued construction of its 315,000 sq. ft. expansion (the “New Peace Facility”) previously outlined in the Company’s press release dated May 23, 2017.

Under the commitment letter, Romspen has agreed to provide the $40 million senior secured facility (the “Loan”) to the Company’s wholly-owned licensed producer, Peace Naturals Project Inc. (“Peace”). The Loan is secured by a first mortgage on the real estate of each of Peace and In The Zone Inc. (“ITZ”). ITZ, Hortican Inc. and the Company are also guarantors of the Loan. Under the Loan, the Company retains its ability to enter into equipment financing arrangements.

The Loan will be made available in multiple advances which are expected to begin in September 2017. Advances will be subject to ongoing conditions, including Romspen’s approval of construction progress. The Loan bears interest at a rate of 12% per annum (interest only accrues on advances made), has a 2 year term with a one-year extension option, and is prepayable on one-month’s notice.

Given the speed at which we anticipate payback of investment in the New Peace Facility, we prioritized accessing the debt markets to fund this domestic expansion. We always look for ways to enhance shareholder value and we’re pleased to be able to work with Romspen again to deliver that value.

Mike Gorenstein, CEO of Cronos

Company Grants Options

Additionally, the Company has granted options to subscribe to 2,903,000 common shares of the Company to certain of the Company’s employees and directors, the whole in accordance with the Company’s stock option plan. The options are exercisable at a price of $2.42 per common share, which was the closing price of the Company’s common shares on the TSX-V on August 23, 2017. The options shall expire at the earlier of 180 days of the death, disability or incapacity of the holder or five years after the date of issue. The grant of options is subject to the Company receiving all necessary and appropriate regulatory consents and approvals, if any, and to the Company’s stock option plan.

About Cronos Group

Cronos Group, is a geographically diversified and vertically integrated cannabis company that operates two wholly-owned Licensed Producers (“LPs”) regulated within Health Canada’s Access to Cannabis for Medical Purposes Regulations (the “ACMPR”) and holds a portfolio of minority investments in other Licensed Producers. The Company’s flagship LPs, Peace Naturals Project Inc. (Ontario), and In The Zone Produce Ltd. (British Columbia) are collectively situated on over 125 acres of agricultural, licensed land. Cronos Group is focused on building an international iconic brand portfolio, providing patients with compassionate and personalized care, and creating value for our shareholders.

About Romspen

With its origins in the mid-1960’s, Romspen manages one of the largest non-bank commercial/industrial mortgage investment entities in Canada, with a portfolio in excess of $1.7 billion.

Original press release: http://www.newswire.ca/news-releases/cronos-group-secures-40m-in-debt-for-domestic-capacity-expansion-641624843.html

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Published by NCV Newswire
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