EXCLUSIVE: Pelorus Equity Group Completes $77.3M Debt Financing With Harborside

Pelorus Equity Group a company that provides real estate loans for cannabis businesses has completed the second and final tranche of its previously announced $77.3 million non-dilutive real estate debt financing with Harborside Inc. HBOR HBORF.

The original funding contained three separate loans to UL Holdings Inc. ("Urbn Leaf"), a top California cannabis retailer, and LPF JV Corporation ("Loudpack"), the company behind several award-winning cannabis brands in California. The second tranche was made available upon the final closing of the three-way merger – Harborside’s acquisition of Urbn Leaf, and Loudpack. The proceeds were used primarily to retire certain existing loans and provide additional working capital.

Upon completing the transaction, Harborside will be renamed to StateHouse Holdings and will trade under a new symbol - CSE: STHZ, subject to approvals.

“At such a pivotal time in the cannabis market’s evolution, we are proud to bring our strategic partners customized lending solutions to meet their goals,” Dan Leimel, CEO of Pelorus Equity Group and manager of the Pelorus Fund stated. “We were incredibly pleased to complete this funding with Harborside, Urbn Leaf and Loudpack to support their initiatives to transform the California market landscape, and we look forward to a strong partnership with them as they grow.”

Ed Schmults, CEO and a director of Harborside commented, “Pelorus has been a tremendous financial partner as we worked to reach this important milestone. Their ability to provide access to customized financing, as well as considerable sector knowledge and a deep network of experts is unparalleled. Their solutions proved to us why so many of the top players in the industry are turning to them for cannabis finance solutions.”

Financing Details 

The rollup financing contains a nominal interest rate of 10.25%, along with specified origination, closing and other transaction fees, and will be secured by certain real estate assets and cannabis licenses of Harborside, Urbn Leaf and Loudpack.  Furthermore, the financing is subject to debt-service ratio requirements, interest reserves, certain cross-corporate guarantees and defaults, subordination agreements and intercreditor agreements, along with a general corporate guarantee from Harborside.

Merger Highlights 

• The Oakland, California-based cannabis company, Harborside, said its management believes the new combined company – StateHouse – will be the largest and most developed cannabis platform in the state of California.
• It is expected to have the biggest estimated annual revenue and brand market share among its current publicly-listed California peers. On a pro forma basis, management estimates that StateHouse would have generated gross revenue of around $165 million for the first nine months of 2021 (consisting of Harborsides’ $57.8 million, Urbn Leaf’s $45.9 million, and Loudpack’s $61.4 million).

Price Action

Harborside shares closed Friday market session 6.38% higher at 50 cents per share.

Matt Hawkins, chairman of the board of directors of Harborside will be one of the speakers at the Benzinga Cannabis Capital Conference in Miami. There’s still time to sign up for the event that will host many top names in the cannabis industry. Click here for more info.

Photo: Courtesy of Elsa Olofsson on Unsplash