PHOENIX, May 15, 2020 /PRNewswire/ -- PRESS RELEASE -- 4Front Ventures Corp. has announced the upsizing and close of a private placement of convertible debentures and the close of the sale of its non-core retail assets in Pennsylvania. The closing of these transactions marks significant progress towards the company's stated objectives of being fully-funded and achieving cash flow positivity in the second half of 2020.
The company has closed a raise of approximately $5.8 million U.S. in a private placement of convertible debt led by Navy Capital. The financing was upsized from the previously announced commitments for $4 million U.S., with the incremental capital coming mostly from existing shareholders.
The notes have an annual coupon of 5%, paid-in-kind, and will mature on Feb. 28, 2022. The notes are exchangeable into subordinate voting shares at a conversion price of $0.25 U.S. Some lenders were issued a debenture which exchanges a portion of their existing equity investments into a security intended to mimic the liquidity preference found in a preferred equity.
Non-Core License Sales
4Front also announced that it completed the sale of its stake in Pennsylvania retail assets to Ethos Cannabis for approximately $10.6 million U.S. in cash. As previously announced, 4Front has also entered into a binding agreement to sell its stake in non-core retail assets in Maryland. The sale of these assets is also to Ethos Cannabis and is expected to close over the next 45 days pending certain regulatory approvals.
Beacon Securities Limited acted as financial advisor to 4Front in connection with these asset sales and received a customary advisory fee.