Cann Group Cuts Debt by 81%, Raises $9m, Forecasts Positive FY26 EBITDA
Cann Group Limited has executed a transformative debt restructure, reducing its $70 million debt by 81% and raising $9 million in fresh capital, setting the stage for a positive EBITDA turnaround in FY26.
- Debt forgiveness of $54.7 million, settling $70 million for $15.3 million
- Extension and increase of subordinated loan to $14.5 million with a two-year maturity extension
- Institutional placement and share purchase plan raising $9 million before costs
- FY26 revenue guidance of $17 million, a 50% increase over FY25
- Appointment of Mike Ryan as Chairman following transaction completion
A Major Debt Overhaul
Cann Group Limited has announced a significant refinancing deal that dramatically reshapes its financial landscape. The company has secured an agreement with its major financier, National Australia Bank, to forgive $54.7 million of debt, effectively settling its $70 million outstanding loan for just $15.3 million. This move releases Cann Group from all associated property securities and loan liabilities, providing a much-needed clean slate.
Loan Extension and Capital Injection
Alongside this debt forgiveness, Cann Group has negotiated an extension of its existing subordinated loan from $5.5 million to $14.5 million, with a maturity pushed out by two years. The loan carries a 9.5% annual cash interest rate plus capitalised interest, reflecting a structured approach to managing its obligations.
Complementing the debt restructure is a $9 million capital raise through a combination of a $6.5 million institutional placement and a $2.5 million share purchase plan (SPP), supported by both existing and new investors. The placement shares are priced at 1.15 cents each, representing a discount to recent trading prices, and the SPP offers shareholders an opportunity to participate up to $30,000 each.
Optimistic Financial Outlook
Looking ahead, Cann Group projects a 50% increase in revenue for FY26, targeting approximately $17 million, up from FY25. More notably, the company anticipates a positive EBITDA between $0.3 million and $0.7 million, a significant turnaround from the $5 million EBITDA loss recorded in FY25. This optimistic guidance is underpinned by strong demand for its bulk and branded cannabis products, including its Botanitech™ range.
Leadership and Strategic Direction
In a strategic leadership move, Mike Ryan, a seasoned financial services executive with over 40 years of experience, will join the Cann Group board as Chairman upon completion of the transaction. His appointment signals a strengthened governance framework and a clear vision for the company’s growth trajectory. CEO Jenni Pilcher expressed confidence that the debt settlement and capital raise provide a solid foundation for the company’s next phase of development.
Shareholder Engagement and Next Steps
The capital raise and issuance of attaching options are subject to shareholder approvals at upcoming meetings, including the Annual General Meeting and an Extraordinary General Meeting scheduled for late 2025. Investors will be watching closely for the outcomes of these votes, which will determine the full execution of the company’s refinancing strategy and its ability to capitalize on the positive momentum forecast for FY26.
Bottom Line?
Cann Group’s bold debt restructure and capital raise set a promising stage, but execution and shareholder backing will be critical to sustaining its turnaround.
Questions in the middle?
- Will shareholder approvals for the capital raise and attaching options proceed smoothly?
- How will Cann Group manage cash flow given the new loan terms and capital structure?
- Can the company sustain the projected revenue growth and achieve positive EBITDA in FY26?
