The debt troubles dealing with Parallel are exposing the chance to different corporations. Revolutionary Industrial Properties (NYSE: IIPR) will get 10% of its revenues from Parallel and Sundial’s (OTC: SNDL) three way partnership with SAF Group referred to as Sunstream Bancorp owns some defaulted debt.
In March 2021, Sundial Growers Inc. fashioned a 50/50 three way partnership with SAF Alternatives LP, a member of the SAF Group referred to as SunStream Bancorp Inc. The Joint Enterprise’s first mandate was the formation of a particular alternatives fund with commitments from third-party restricted companions alongside an preliminary dedication from Sundial of $100 million.
Sunstream is the proprietor of $145 million of Junior notes owned by Parallel Hashish and people notes are in default – exposing Sundial to the loss. Based on the lawsuit filed by disgruntled buyers, the notes had been bought shortly after the three way partnership was fashioned and was seemingly the enterprise’s first funding or one of many first investments. The notes had been bought on Might 7, 2021. The lawsuit really attributes the acquisition to SAF Group, however Sunstream’s spokesperson did affirm that it was Sunstream that owned the debt, not SAF Group.
Parallel used the Junior Be aware to refinance vendor financing supplied by the sellers of New England Remedy Entry (“NETA”). NETA is a hashish facility that Parallel acquired in 2019. The Junior Be aware carries an annual non-default rate of interest of 14.25%. Sunstream might have felt some consolation within the language of the Junior Be aware that said Parallel couldn’t incur any extra debt, however the firm is alleged to have performed simply that.
Based on the court docket submitting, “On December 16, 2021, Parallel obtained an much more alarming default discover—this time for the Junior Be aware—within the type of a Discover of Default, Election of Default Charge and Reservation of Rights to the Firm (the “Junior Lien Discover”) from Talladega LP, the Administrative Agent and Collateral Agent for the Junior Be aware holders. The Junior Lien Discover knowledgeable the Firm that it had didn’t (i) preserve the required debt-service-coverage ratio; (ii) preserve specified adjusted consolidated EBITDA as of September 30, 2021; and (iii) “pay Catch-Up [a]mount[s]” due as of September 30, 2021.”
Sunstream’s Silence On Parallel
Sunstream has made a giant deal out of most of its investments. It has lent cash to Jushi (OTC: JUSHF) and the SPAC Greenrose Acquisition Corp. Michigan-based Skymint additionally obtained financing from the three way partnership. Nevertheless, one can be hard-pressed to seek out any point out of the $145 million funding in Parallel. Regardless of the quite a few press releases crowing about these offers and extra, there may be little details about the acquisition of the notes from Sunstream or Sundial.
Sunstream has additionally let or not it’s recognized it was planning to go public. Sunstream IVXX Funding Corp. introduced that it has submitted a draft registration assertion on a confidential foundation to the U.S. Securities and Change Fee for a proposed preliminary public providing of its frequent inventory. Might a dud funding have an effect on that IPO?
Sundial’s buyers
In July 2021, Sundial elevated its dedication to SunStream Bancorp Inc. to $538 million from its beforehand introduced dedication of $188 million. In October 2021, Sundial reported it was shopping for the frequent shares of Alcanna Inc., and after extending the cut-off date, accomplished the transaction on the finish of March. The valuation fell from an all-stock deal valued at $346 million to and mixture of money and inventory valued at $320 million. So, it appears as if it’s enterprise as traditional at Sundial. Nevertheless, analysts overlaying Sundial will little doubt wish to know if the results of this default will bleed into Sundial’s books.
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