- Redfund converts loan into equity position in Mary’s Wellness Ltd.
- Company’s equity stake totals 5.55 percent of the cannabis-infused tea manufacturer
- First year global sales for Mary’s Wellness Ltd. forecast to hit $12 million
The recent announcement by Redfund Capital Corp. (CSE: LOAN) (OTC: PNNRF) (Frankfurt: O3X4) of an equity-for-debt swap is a good indication of the merchant bank’s innovative approach to providing capital. It also sets up a win-win scenario for both the client, which benefits from reduced leverage and interest payments, and Redfund, which gets a shot at any upside. Arrangements like these demonstrate Redfund’s willingness to work with client companies and its adaptability to changing market conditions. The Canadian merchant bank provides debt and equity solutions to companies in the mid to late stages of development. Currently, Redfund is focused on providing financing solutions to companies in the medical cannabis, hemp, cannabidiol (CBD) and health care-related sectors.
The equity-for-debt swap converts C$100,000, extended to Mary’s Wellness Ltd. (“MWL”) as the first tranche of a convertible secured promissory note, into equity (http://ibn.fm/YIZtJ). Late in 2018, Redfund agreed to provide C$1 million of debt financing to Mary’s Wellness Ltd, under a promissory note, with the option to convert in part or its entirety at Redfund’s discretion at any time during the term. The remaining C$900,000 remains covered by the promissory note, which is secured by a general security agreement on the assets of MWL. In addition, Redfund was granted the right of first refusal in providing financing to MWL under the same business terms previously offered. Conversion of the first tranche will give Redfund an ownership stake of 5.55 percent of Mary’s Wellness Ltd.
Assuming that licenses will soon become available for edibles, MWL projects its revenues in the Canadian market at $5.5 million in the first year, climbing to $8.5 million in the second year, with EBITA in year two reaching $5 million. Moreover, MWL estimates that international sales could hit $12 million in just the first year. Redfund’s management team thinks that the brand could become as widely recognized as Starbucks, and it expects to guide MWL to an IPO at the appropriate time.
Mary’s Wellness Ltd. of Ontario, Canada, was founded by Virginia Vidal in 2016. Vidal began experimenting with infused hot beverages to help manage her pain after the birth of triplets in 2007. Now, MWL produces a line of cannabis-infused teas in over a dozen formulations and flavors, including Bella Coola, Berry Berry, Chai, Chamomile, Earl Grey, Echinacea, Green Tea, Green Tea with Ginger, Green Tea with Ginseng, Lemon, Orange Pekoe and Peppermint. There’s also Apple Cider, Hot Chocolate, English Toffee Cappuccino, French Vanilla Cappuccino and Java Coffee. The teas, sold in boxes of 12 packets, will generally deliver 60 mg of THC and 6 mg of CBD per packet.
The Tea Association of the USA reports that, globally, tea is the second-most consumed beverage after water, and the Zion Market report published in August 2018 estimates that the global tea market was valued at around $49.5 billion in 2017. It is expected to grow at a CAGR of 4.5 percent between 2018 and 2024, reaching $73.1 billion by 2024.
Founded by bankers and entrepreneurs with years of experience in business, consulting, capital markets, corporate finance and health care services, Redfund Capital provides debt and equity financing solutions to help companies build their valuations and get to the next level in their financing cycles without giving away equity prematurely. Diversification is an essential portfolio strategy. The company has interests in Canada, Europe and the U.S. The merchant bank is currently focused on the cannabis and hemp wellness sectors.
For more information, visit the company’s website at www.RedfundCapital.com
NOTE TO INVESTORS: The latest news and updates relating to PNNRF are available in the company’s newsroom at http://ibn.fm/PNNRF
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