Post by
Plainview on Jan 17, 2022 9:56am
J -Lotus
The problem with addtional capacity, and its costs, is the distress signals it send out. Veridian Capital, a very well respected cannabis investment bank has a 3.x threshold for predicting insolvency for cannabis producers. This ratio means if a pubco borrowers more than 3 times its market cap/value - its a sure sign of major financial distress. Of course Veridian does not cover Lotus, but its latest distress signal is for Halo. If J borrows $11 million + it will be 2x its current market cap/value. BUT Lotus already has "debt" from its streaming deal with XLY - in the form of selling 50% of its current production at less than wholesale rates.
Did Lotus build its current site on time and in budget? The record says it did not (see old press releases). Odds are whoever lends this money will own this company, lock, stock and barrel in next 2 years.
What lender would deal & on what terms, given all the faclities and production capacity already in distressed M&A sale mode?