Cann Group Limited has negotiated an extension of its NAB loan maturity and deferred upcoming interest payments, providing crucial breathing room for its capital projects and working capital needs.
- NAB extends Cann Group’s loan maturity from May to September 2025
- Two quarters of interest payments (~$1.8 million) deferred and capitalised
- Next construction loan interest payment now due August 2025
- Cann Group negotiating similar terms with private credit fund lender
- Move enhances Cann’s financial flexibility amid ongoing capital expenditure
Loan Maturity Extension and Interest Deferral
Cann Group Limited (ASX: CAN), a leading Australian medicinal cannabis producer, announced that National Australia Bank (NAB) has agreed to extend the maturity dates of its construction loan and working capital facility from 31 May 2025 to 30 September 2025. This extension provides the company with an additional four months to manage its financial obligations amid ongoing capital investment.
In a further concession, NAB has consented to the capitalisation of approximately $1.8 million in interest payments covering the next two quarters. This means Cann Group will defer these interest payments, with the next quarterly interest payment now due in August 2025 instead of earlier in the year. Documentation to formalise these arrangements is currently being prepared.
Financial Flexibility Amid Capital Expansion
The loan extension and interest deferral come as Cann Group continues to invest in its large-scale cultivation and GMP manufacturing facility near Mildura, Victoria, as well as its research and development operations in Melbourne. These moves are critical to supporting the company’s growth trajectory and its ability to supply innovative cannabis medicines both domestically and internationally.
By easing immediate cash flow pressures, the revised loan terms offer Cann Group a valuable window to optimise its capital structure and operational performance. The deferral of interest payments effectively reduces near-term financing costs, which can be redirected towards advancing production capabilities and market expansion.
Ongoing Discussions with Private Credit Fund Lender
Cann Group also disclosed that it is in discussions with its private credit fund lender to secure similar loan relief measures. While details remain confidential, the outcome of these negotiations will be pivotal in shaping the company’s overall debt profile and liquidity position going forward.
Investors will be watching closely to see if Cann Group can replicate the NAB agreement’s flexibility with its other lenders, which would further solidify its financial footing.
Outlook and Market Implications
This development signals a pragmatic approach by Cann Group’s management to navigate the challenges of capital-intensive growth in the medicinal cannabis sector. It also reflects NAB’s willingness to support the company’s strategic objectives through tailored financial accommodations.
While the extension and deferral provide short-term relief, the company’s ability to generate sustainable cash flows and manage its debt obligations will remain under scrutiny as it progresses through 2025.
Bottom Line?
Cann Group’s loan extension and interest deferral buy critical time, but upcoming lender negotiations will test its financial resilience.
Questions in the middle?
- Will Cann Group secure similar loan extensions and deferrals from its private credit fund lender?
- How will these financial accommodations impact Cann Group’s cash flow and capital expenditure plans in 2025?
- What are the longer-term implications for Cann Group’s debt maturity profile and refinancing risk?