TORONTO, May 4, 2022 /CNW/ – ShinyBud Corp. (“ShinyBud” or the “Company”) (TSXV: SNYB) today announced that it has entered into two agreements that modify its debt structure to provide greater strategic and operational flexibility and a total cost of financing of lower outstanding debt. The Company entered into an agreement for a new credit facility for an unsecured loan of up to $1,000,000 (the “New Facility”) with one of its founding shareholders. In addition, its wholly owned subsidiary Shiny Bud Inc. (the “Borrower”) signed an amendment to its existing secured debt with FirePower Capital(1) (the “Amendment”) involving an $1,000,000 prepayment of the $3,000,000 Principal (the “Term Loan“) and lifted the covenants and security to better accommodate the next stage of business growth.

ShinyBud Corp logo. (CNW Group/ShinyBud Corp.)

“FirePower Capital’s term loan amendment and new facility reduce the cost of our outstanding debt while providing greater operational and strategic flexibility as we plan to execute our growth strategy,” said Kevin Roseau, Chairman and Chief Executive Officer. “We thank FirePower and our shareholders for their accommodating support as senior debt partners and their continued commitment to helping grow our business.”

New credit facility

The New Facility contemplates an unsecured loan from one of the Company’s founding shareholders of up to $1,000,000including an initial advance of up to $500,000 must be made by September 30, 2022. This unsecured loan bears interest at the rate of 10% per annum. Additional advances under the New Facility are subject to the prior approval and mutual agreement of ShinyBud and the Shareholder and are therefore unsecured.

The Company has issued a promissory note in respect of the new facility which matures on December 15, 2023, the date on which the unpaid principal and all accrued interest thereon will become due and payable. Interest under the new facility will be determined daily and compounded monthly.

The Company has no material covenants under the new facility beyond the obligation to repay principal and accrued interest when due, and is authorized to prepay, in whole or in part, from time to time, the unpaid principal and accrued interest prior to maturity.

term loan Refund

On June 17, 2021the Borrower entered into a loan agreement with FirePower Capital for a $3,000,000 loan at an interest rate of 13.75%, with related warrants and certain covenants. With this amendment, the term loan will be repaid by $1,000,000 and a bonus in the amount of $400,000 will be paid to FirePower Capital.

Financial covenants under the term loan, requiring the borrower to maintain total debt equal to the annualized EBITDA of the last 6 months(2) ratio of not more than 2:1 and a minimum debt service coverage ratio of not less than 1.4 (in each case, calculated in accordance with the loan agreement on the last day of each month) will become effective on October 31, 2022. All operating and other covenants under the Term Loan will remain in effect for as long as the Loan Agreement is in effect.

the $1,000,000 principal repayment under the term loan is to be made in five equal monthly installments of $200,000starting in May 2022 the remaining installments being due on the first day of June, July, August and September, respectively(3).

Under the Amendment, the Borrower has agreed to pay a premium in the aggregate amount of $400,000payable in two equal installments of $200,000 due October 1, 2022 and November 1, 2022reducing the Borrower’s total debt exposure and after which no further fees will be payable in respect of any voluntary or compulsory prepayment of the Term Loan(4).

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Endnotes

(1)

Secured debt of $3,000,000 due June 17, 2024 with Evergreen Gap Debt GP Inc. (“FirePower Capital”).

(2)

EBITDA refers to earnings before interest, taxes, depreciation and amortization. It is a non-IFRS financial measure which does not have a standardized meaning under IFRS and therefore is unlikely to be comparable to similar measures presented by other issuers. . Non-IFRS measures provide investors with an additional measure of the Company’s operating performance and, therefore, highlight trends in the Company’s core businesses that may otherwise not be apparent based solely on IFRS measures. Management uses non-IFRS measures to measure the Company’s financial performance.

(3)

Subject to the Borrower’s right, upon 30 days’ written notice, to make larger installments or a single payment (provided that the full sum of $1,000,000 is paid by September 1 2022).

(4)

Prior to this Amendment, the Term Loan agreement further requires that, in connection with any voluntary or compulsory prepayment, the Borrower pay a fee equal to (i) 6 months interest, if the prepayment is made before June 17, 2022, being the first anniversary of the Term Loan, (ii) 4 months interest, if the prepayment is made after June 17, 2022 but before June 17, 2023, during the second year of the Loan term, or (iii) 3 months interest, if the prepayment is made after June 17, 2023, in the third year of the term loan (calculated in each case on the basis of the expected interest payments which would have been made for the applicable number of months immediately following the prepayment date, being approximately $1,130 per day at the original loan amount of $3,000,000 and which will be reduced to approximately $753 per day after completion of the prepayment of $1,000,000 described above).

About Shiny Bud

Shiny Bud Corp. is a multi-banner cannabis retailer with 41 corporate and licensed stores across Ontariofrom Canada largest cannabis market. The company’s mission is to help people never settle, live life to the fullest by offering a wide range of carefully selected cannabis products and creating a more diverse and accessible cannabis experience for adult consumers. ShinyBud’s board of directors and management team have extensive experience in retail operations, a key competitive differentiator in directing its growth strategy and franchising program. ShinyBud trades on the TSX Venture Exchange (TSXV) under the ticker symbol SNYB. For more information, visit investor.shinybud.com.

Caution Regarding Forward-Looking Information

This press release contains “forward-looking information” within the meaning of Canadian securities laws. Forward-looking information generally refers to information about the business, capital, or operations of an issuer that is forward-looking in nature and includes forward-looking financial information about the issuer’s prospective financial performance or financial condition. The forward-looking information contained in this press release includes information about the potential advance of funds to ShinyBud under the new facility. The Company has made certain important assumptions in developing the forward-looking information contained in this press release, including, but not limited to: the ability of the lender under the new facility to make the initial loan $500,000 the advance, and its willingness and ability to advance any additional amounts thereafter; prevailing market conditions; general business, economic, competitive, political and social uncertainties; and ShinyBud’s ability to execute and achieve its business objectives. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in the forward-looking information. Accordingly, readers should not place undue reliance on forward-looking information. Actual results may differ from the forward-looking information contained in this press release due to certain material risk factors. These risk factors include, but are not limited to: adverse market conditions; dependence on key and qualified personnel; regulatory and other risks associated with the cannabis industry generally, as well as risk factors discussed or referred to in disclosure documents filed by the Company with securities regulatory authorities in certain provinces of Canada and available on www.sedar.com. The above list of material risk factors and assumptions is not exhaustive. If any factor affects the Company in an unexpected way, or if the assumptions underlying the forward-looking information prove incorrect, the actual results or events could differ materially from the results or events predicted. Any such forward-looking information is expressly qualified in its entirety by this cautionary statement. Further, the Company assumes no responsibility for the accuracy or completeness of such forward-looking information. The forward-looking information included in this press release is made as of the date of this press release, and the Company undertakes no obligation to publicly update or revise the forward-looking information, except as required by applicable law.

SOURCEShinyBud Corp.

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