KushCo adds working capital as it pays off debt

KushCo adds working capital as it pays off debt

The cannabis company now has no outstanding term debt as it makes $17-million payment

KushCo had a successful 2020 and is ready to see an even better 2021. With global acceptance of cannabis on the rise and the possibility of federal reform in the US, the cannabis ancillary product and services company is preparing for significant growth. In order to make sure it’s ready, KushCo has just made a significant impact on its debt, paying off an outstanding term note worth $17 million.

KushCo was able to pay the full principal balance and accrued interest of its senior unsecured term debt, giving it greater flexibility to meet new growth channels this year. The debt had been used to support KushCo’s sales growth and eliminating it will allow the company to realign its capital structure while significantly reducing its overall outstanding debt obligations. This will give it significant strength to face any potential growth options that arise this year.

Explains Nick Kovacevich, KushCo’s co-founder, chairman and CEO, “Following nearly a year of comprehensive restructuring and right-sizing-which saw us return to growth, reduce our cost structure by more than 50%, and achieve positive adjusted EBITDA for two consecutive quarters-more high-quality institutional investors are beginning to appreciate KushCo’s investment thesis, as evidenced by our recent oversubscribed offering.”

The ability to pay off the debt follows the company’s recent direct offering, which was registered at $40 million. However, it finalized for an oversubscribed amount of more than $125 million. The debt had been expected to mature next month.

Kovacevich adds, “With this capital, we have not only completely retired our term debt-which was set to mature in April 2021, and which we believe has been a material ‘overhang’ on our stock-but have also paid down the balance of our existing line of credit, significantly reducing our total debt outstanding. We also have a healthy amount of capital left from the raise to support our continued growth and fund the business’ sales and financial goals for at least the remainder of fiscal 2021. Overall, we believe this is an incredible achievement for the Company, and the latest sign that we are becoming more in control of our own destiny and moving closer toward establishing ourselves as the preeminent provider of all ancillary solutions to the legal cannabis and CBD industries.”