iAnthus Raises $36 Million in Convertible Note Sale

iAnthus Closes on $36 Million Senior Secured Convertible Notes in a Third Tranche of Funding Led by Gotham Green Partners

NEW YORK and TORONTO, Dec. 20, 2019 /PRNewswire/ – iAnthus Capital Holdings, Inc. (“iAnthus” or the “Company”) (CSE: IAN,OTCQX: ITHUF), which owns, operates, and partners with best-in-class regulated cannabis operations across the United States, is pleased to announce the closing of an additional $36.15 million of senior secured convertible notes from Gotham Green Partners (“GGP”) and additional co-investors. The investment by GGP and its co-investors is part of a broader $100 million financing plan that was previously announced on September 30, 2019 to support the buildout of all existing markets in which the Company currently operates. In aggregate, including its original investment made in May 2018, GGP has led investments totaling over $106 million into iAnthus.

In a limited financing market, the continued support from one of the cannabis sector’s largest investors and a fully-financed capital plan are core differentiators for iAnthus.

Julius Kalcevich, Chief Financial Officer of iAnthus

We are on the road to EBITDA positive and operational free cash flow positive in 2020, and the support from GGP will allow us to focus entirely on continued operational execution.

The notes have been issued by iAnthus Capital Management, LLC, the Company’s wholly owned subsidiary, have an annual coupon of 13%, payable quarterly, will mature on May 14, 2021, subject to iAnthus’ right to extend the maturity date by twelve months, and are exchangeable into common shares of the Company (“common shares”) at a conversion price of $1.61, which represents a 25% premium to the closing price of the common shares on Wednesday, December 18, 2019. The notes are being issued with $18.08 million of attached three-year warrants with an exercise price of $1.67. Additional notes issued under the remaining tranche of the financing plan will have substantially the same terms, including conversion price and warrant coverage as the notes issued today, provided such tranche is completed within 45 days hereof and subject to compliance with the policies of the CSE.

As previously disclosed in the Company’s September 30, 2019 announcement, the issuance of the notes and any issuance of additional notes to GGP under the Company’s financing plan are “related party transactions” as defined in Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”) since GGP is a “related party” (as defined in MI 61-101) of the Company. Pursuant to certain requirements of the Company being listed on the CSE, it has been determined that the fair market value of the transactions with GGP pursuant to the Company’s financing plan did not exceed 25% of the Company’s market capitalization when agreed and thus the Company is relying on the exemptions from the formal valuation requirement provided by sections 5.5(a) and 5.5(b) of MI 61-101 and is relying on the exemption from the minority approval requirement provided section 5.7(a) of MI 61-101.

The Company’s board of directors has unanimously approved the transaction. The Company did not file a material change report 21 days prior to today’s closing as the structure of the transaction and details of the participation of GGP had not been confirmed at that time.

About iAnthus

iAnthus owns and operates best-in-class licensed cannabis cultivation, processing and dispensary facilities throughout the United States, providing investors diversified exposure to the U.S. regulated cannabis industry. Founded by entrepreneurs with decades of experience in operations, investment banking, corporate finance, law and health care services, iAnthus provides a unique combination of capital and hands-on operating and management expertise. iAnthus currently has operations in 11 states, including 29 dispensaries (FL-11, AZ-4, MA-1, MD-3, NY-2, CO-1, VT-1 and NM-6 where iAnthus has minority ownership). For more information, visit www.iAnthus.com.

Original press release

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