Tilray’s Four Twenty enters $75 million replacement term loan, revolver

By Marisa Wong

Los Angeles, June 30 – Four Twenty Corp., a wholly owned subsidiary of Tilray Brands, Inc., entered into a credit agreement on June 30 with Bank of America, NA as administrative agent, according to an 8-K filing with the Securities and Exchange Commission.

The credit agreement provides for a total aggregate principal amount of $75 million, consisting of term loans totaling $70 million and revolving loan commitments totaling $5 million.

Loans bear interest at SOFR, subject to a 0% floor, plus an applicable rate ranging from 175 basis points to 250 bps, depending on the company’s consolidated leverage ratio.

The borrower is required to pay a commitment fee ranging from 30 bps to 45 bps, also based on the consolidated leverage ratio.

The loans mature on June 30, 2028.

The borrower must make quarterly repayments of the principal of outstanding term loans in an amount equal to $875,000 beginning on Sept. 30, 2023 through June 30, 2024, $1,312,500 beginning on Sept. 30, 2024 through June 30, 2026 and $1.75 million beginning on Sept. 30, 2024 until the maturity date.

Under the credit agreement, the borrower is required to maintain, as of the end of each fiscal quarter, a consolidated fixed-charge coverage ratio of not less than 1.25 to 1.00 and a consolidated leverage ratio of not greater than 4.25 to 1.00 through the fiscal quarter ending May 31, 2024, stepping down 4:00 to 1:00 for the fiscal quarters ending Aug. 31, 2024 through May 31, 2025 and then to 3.75 to 1.00 for the fiscal quarter ending Aug. 31, 2025 and for fiscal quarters after that.

On June 30, the company borrowed $70 million of term loans and $5 million of revolving loans to repay in full all outstanding obligations under its credit agreement dated Dec. 8, 2020.

The prior agreement provided for up to $100 million of term loans and up to $20 million of revolving loans, of which $65 million of term loans and $15 million of revolving loans were outstanding as of June 30.

The existing credit agreement, scheduled to mature on Dec. 8, 2023, was terminated.

Tilray is a Leamington, Ont.-based cannabis and consumer packaged goods company.

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