iAnthus Capital (IAN.C) finds strategic partner in U.S. Cannabis leader – The Green Solution

iAnthus Capital (IAN.C) increased its market clout when the company announced yesterday that its wholly-owned U.S. subsidiary, iAnthus Capital Management, LLC, had entered into a strategic partnership with The Green Solution LLC (“TGS”) and certain of its affiliated Colorado entities.

According to the news release, TGS, operating 12 retail stores and leading cultivation and processing facilities in Colorado, is the largest regulated cannabis sector businesses in the U.S.

Pursuant to the partnership, iAnthus has made an initial financing to TGS comprised of a US$7.5 million loan facility.

Also related to the deal, TGS has entered into an advisory agreement to provide iAnthus with on-the-ground operational expertise and advice regarding iAnthus’ investments in Massachusetts, New Mexico, Vermont and Colorado.

Through its affiliate TGS National Franchise, TGS will also facilitate introductions to franchisee operators in multiple states across America.

This of course will open doors for iAnthus to make further financing and equity investment partnerships with TGS National’s franchisee operators.

TGS clocked more than US$50.0 million in revenue in 2016 and hold a major slice of the Colorado adult-use retail market.

TGS, with 300,000 square feet of indoor hydroponic cultivation, has over 600 employees across its Colorado operations and plans on opening at least five more retail locations in 2017.

TGS National Franchise is registered to offer franchises in 47 states with top-line royalty franchise relationships in states such as Florida, Illinois, and Maryland.

Talk about opportunity for growth.

TGS Co-CEO, Kyle Speidell commented on the deal, “iAnthus has established itself as a source of capital for licensed cannabis cultivators, processors and dispensaries throughout the United States and the decision to develop a strategic relationship with iAnthus was a simple one. This credit facility will allow us to add multiple licenses and stores for the Colorado market in 2017. We look forward to the start of this strategic relationship with iAnthus, as it helps us with our future growth plans in Colorado, and provides an opportunity to catalyze and accelerate our continued expansion across the United States.

iAnthus CEO, Hadley Ford, added, “TGS is one of the leading cannabis operators in the world, measured by impressive revenue growth and award-winning product quality, and we look forward to advancing this mutually beneficial strategic relationship. Our mission is to provide strategic capital and capital markets expertise to licensed US cannabis operators, such as TGS and TGS National Franchise’s franchisees. It’s an added benefit that TGS will provide iAnthus with advice and expertise to help us optimize our existing investments in Colorado and across the U.S.”

In other news, iAnthus also announced a bought deal private placement with a syndicate of underwriters led by Canaccord Genuity.

The transaction calls for an aggregate principal amount $15.0 million in unsecured convertible debentures at a price of $1,000 per debenture.

The convertible debentures will carry an interest rate from the date of closing of 8.0% per annum paid bi-annually with a maturity date of 24 months from the closing.

These debentures will be convertible, at the option of the holder, into common shares of iAnthus at any time prior to the close of business on the Maturity Date at a rate of $3.10 per common share.

Net proceeds from the transaction will be used mainly to fund the credit facility and for general working capital purposes.

The offering is expected to close on or about February 28, 2017.

Things seem to be shaping up nicely for iAnthus.

FULL DISCLOSURE: iAnthus Capital is NOT an EQUITY.GURU client.

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