Australian medicinal cannabis producer Cann Group (ASX: CAN) has taken a significant step toward financial stability after completing a comprehensive debt restructuring, which has dramatically reduced its borrowings and improved liquidity, according to media sources.
Under the agreement, the longstanding lender, National Australia Bank (ASX: NAB), agreed to forgive the majority of Cann Group’s outstanding debt. Total borrowings, which previously stood at nearly $75 million, have now been reduced to approximately $14.45 million following a negotiated settlement.
The restructure involved Cann Group making a payment of around $15 million to NAB, enabling the company to clear the bulk of its historical liabilities. Management has described the outcome as a reset for the business, creating a more sustainable capital structure and easing near-term financial pressure.
Funding the Settlement
To support the transaction and strengthen its balance sheet, Cann Group secured funding through two key initiatives:
- Debt funding of $9 million from an existing Australian private credit provider
- Equity raising of $9 million, completed through a placement and share purchase plan (SPP), both approved by shareholders at the company’s recent AGM
As part of the arrangement, the private lender will receive options equivalent to roughly 4% of shares on issue, exercisable over two years at a price above the company’s current market value.
Leadership and Strategic Reset
The restructure coincided with the appointment of Mike Ryan as Chairman, who officially commenced the role in early December. Ryan brings extensive experience from investment banking and equities markets and has signalled a renewed focus on operational discipline and long-term value creation.
Financial Performance Outlook
Cann Group has accumulated significant losses since its inception, mainly due to investment in large-scale production infrastructure, including its Mildura facility. However, recent results indicate improvement:
- Annual losses narrowed substantially in FY25
- EBITDA, while still negative, is expected to turn positive in the current financial year
- Revenue guidance points to approximately 50% growth, reaching around $17 million
While challenges remain, the debt reduction removes a significant overhang for the company. Investors will now be watching closely to see whether Cann Group can translate its cleaner balance sheet into sustainable profitability.
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