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Extends Maturity Date with Existing Lending Partner, Reduces Interest Payable and Expands Potential Financing Opportunities
PHOENIX, Ariz., May 6, 2023 /PRNewswire/ – 4Front Ventures Corp. FFNT FFNTF (“4Front” or the “Company”) announced today that it has entered into a non-binding term sheet (“Term Sheet”) with its senior secured lender, LI Lending, LLC (“Lender”) to extend the maturity date, reduce the interest payable, and expand the third-party financings available under the December 17, 2020 Amended and Restated Loan and Security Agreement (“Loan”) between 4Front and Lender on the terms and conditions set out therein (collectively, the “Extension”).
Under the Term Sheet, the Lender would extend the maturity date of the Loan to May 1, 2026 and reduce the interest payable to 12.0% per year, payable monthly. Previously, the Lender advanced US$42,500,000 accruing interest at 16.5% per year, of which 12.5% is payable monthly, and 4% accrues monthly, with all accrued interest and principal payable on May 1, 2024.
Currently, Lender holds a senior secured position on all assets of 4Front and certain of its subsidiaries and the right of consent over any additional financings secured by those assets. The Term Sheet contemplates that Lender will consent to equipment financing collateralized by 4Front equipment of up to US$5 million; secured convertible debt senior to the Loan collateralized by all assets of 4Front of up to US$10 million; and secured debt senior to the Loan collateralized by the assets of new Illinois retail locations of up to US$20 million, with Lender taking a junior secured position on those assets.
Pursuant to the proposed terms of the Extension, Lender would receive a number of warrants equal to 33% of the Loan balance as of the current maturity date (US$17,061,000) each exercisable into one subordinate voting share of the Company for a term equal to the term of the loan and with an exercise price not less than CAD$0.255 (each a “Warrant”). If…
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