BZAM Ltd and Lender Amend Credit Agreement in Response to Recent Divestiture

TORONTO– BZAM Ltd., a Canadian cannabis producer, has successfully completed the divestiture of Galaxie Brands Corporation, according to a share purchase agreement. The transaction involved the sale of all outstanding shares of Galaxie to a third party for $556,522, subject to customary post-closing adjustments. This valuation aligns with the assessment of Galaxie’s assets and liabilities as “Held for Sale” in BZAM’s most recent interim unaudited financial statements.

Simultaneously, BZAM and its Canadian lender have mutually agreed to amend the terms of their amended and restated credit agreement, which was initially executed on September 29, 2021, with subsequent amendments. The borrower, The Green Organic Dutchman Ltd., a wholly-owned subsidiary of BZAM, and the lender will enter into a fifth amendment known as the “Fifth Amendment.”

The Fifth Amendment encompasses several modifications, including the amendment of the EBITDA financial covenant, effective as of July 31, 2023. Additionally, it entails a reduction in the term portion of the credit facility. The reduction will be based on the greater of either $3 million or fifty percent (50%) of the net proceeds from the sale of BZAM’s Cedar Way property and the Midway property. However, this reduction will be compensated by an increased availability under the revolving portion of the credit facility for an equal amount. Moreover, the Fifth Amendment allows for prepayments on the term portion of the credit facility, commencing on or after September, on a reasonable monthly basis to be determined by the Agent. Importantly, this amendment does not lead to a reduction in the availability of the credit facility, as any reduction in the term portion will be offset by an increase in the availability under the revolving portion. All other terms of the Credit Agreement will remain substantially unchanged.

These strategic maneuvers by BZAM Ltd. represent important steps in its ongoing business and financial operations. The completion of the Galaxie divestiture ensures the company’s alignment with its planned merger from November 2022, while the amendments to the credit agreement demonstrate a proactive approach to optimizing its financial position. As BZAM continues to navigate the evolving landscape of the cannabis industry, these actions position the company for future growth and stability.