TerrAscend Corp, a cannabis company, recently announced the completion of the second and final draw of $26 million from a $140 million senior secured term loan. The loan, overseen by FocusGrowth Asset Management, LP, was initially introduced in August 2024. This influx of funds enabled TerrAscend to reduce high-interest debt specifically in Michigan, contributing to bolstering the company's financial standing, as highlighted by Jason Wild, TerrAscend's executive chairman, earlier this year.
The senior secured term loan, with an interest rate of 12.75% and a maturity date of August 2028, allowed TerrAscend to manage its existing financial obligations without triggering any prepayment penalties. The total loan amount of $140 million, with an initial draw of $114 million received in August, is secured against TerrAscend's assets across various states, including Pennsylvania, California, Michigan, and certain entities in Maryland. Ventum Capital Markets facilitated the transaction as the exclusive financial advisor.
By securing this additional funding, TerrAscend aims to alleviate high-interest debt burdens, particularly in Michigan, where the company continues to expand its operations. The loan's terms, with no prepayment penalties and a guaranteed backing from the Company and TerrAscend USA, Inc., extend until August 2028, providing financial flexibility to the cannabis enterprise. Importantly, no warrants were issued as part of this loan package.
Despite the financial moves and strategic decisions made by TerrAscend, the company's shares faced a 3.82% decline, trading at $1.26 per share at the close of trading on a recent Tuesday evening. This outcome highlights the complexities and fluctuations in the financial markets faced by cannabis companies, even amid significant financing achievements.