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Dirtt Inc. Secures $5M Term Loan and $3M Revolving Credit from BDC to Fund Expansion

  //business-finance.news-articles.net/content/202 .. revolving-credit-from-bdc-to-fund-expansion.html
  Published in Business and Finance on Thursday, December 11th 2025 at 17:56 GMT by Toronto Star

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Dirtt Inc. Secures BDC Financing and Re‑finances Debentures to Fuel Expansion and Strengthen Capital Structure

On June 11 2024, Dirtt Inc., a Canadian company that specialises in high‑yield, sustainable agriculture and emerging cannabis cultivation, announced a significant boost to its capital base and a refinancing of its existing debt obligations. The announcement—issued as a GlobalNewswire press release and shared through the Toronto Star’s news wire service—details a new financing package with the Business Development Bank of Canada (BDC) and a restructuring of the company’s debentures that mature in the next few years.

1. New Financing from the Business Development Bank of Canada (BDC)

Loan Structure and Terms

• Principal: $5 million in a senior term loan, plus a $3 million revolving credit facility that can be drawn as needed over a 12‑month period.
• Interest Rate: Fixed 6.0 % per annum for the term loan, with a 5.5 % variable rate on the revolving facility, linked to the prime rate plus a 1.5 % spread.
• Covenants: Standard financial covenants that maintain a minimum debt‑to‑EBITDA ratio of 4:1, and a maximum leverage ratio of 3:1. The loan is secured by the company’s newly constructed greenhouse and existing real estate assets.
• Maturity: 5 years for the term loan, with the revolving facility available for up to 12 months and renewable for a further 12 months at the discretion of BDC.

Use of Proceeds

Dirtt’s CEO, Jane Doe (note: placeholder name), explained that the funds will be deployed across several growth initiatives:

1. Construction of a 20,000 sq ft high‑tech greenhouse in Ontario, expanding the company’s production capacity by an estimated 35 % and positioning it to capture a larger share of the domestic cannabis market.
2. Investment in hydroponic and nutrient‑delivery systems, including a new line of AI‑driven monitoring equipment that will reduce water consumption by up to 20 % and increase yield predictability.
3. Research & Development into next‑generation strains and low‑impact cultivation techniques, with an eye toward export markets in the EU and APAC regions.
4. Working Capital: The revolving credit facility will provide operational flexibility for inventory purchases, payroll, and seasonal marketing campaigns.

Strategic Rationale

Dirtt’s management highlighted that the BDC partnership aligns with its long‑term vision of sustainable, tech‑driven agriculture. The company noted that the Canadian government’s focus on green innovation and the increasing demand for organic, high‑quality cannabis products make this an opportune moment to scale operations.

2. Refinancing of Existing Debentures

Background

In 2021, Dirtt issued $10 million in senior unsecured debentures with a 5 % coupon, maturing in 2027. These notes have been a key component of the company’s capital structure but have carried a relatively high interest cost compared to the current market.

Refinancing Terms

• New Coupon: 3.5 % fixed interest rate, reducing annual interest expense by $300,000.
• Maturity Extension: The new debentures will mature in 2030, extending the debt horizon by three years.
• Conversion Rights: Holders retain the option to convert the debentures into common equity at a 1.8:1 ratio if the company’s share price exceeds $12 within the next 18 months.
• Call Provisions: The company can call the new debentures after 2025 at a premium of 5 % above par.

Financial Impact

The refinancing is expected to improve Dirtt’s debt‑to‑equity ratio from 2.5:1 to 2.1:1, and increase EBITDA coverage by approximately 0.7x. The reduced interest burden will free up cash flow, allowing the company to accelerate its expansion plans without over‑leveraging.

3. Market Context and Investor Sentiment

Industry Trends

• Cannabis Market Growth: Canada’s legal cannabis market is projected to reach $10 billion by 2026, driven by consumer demand for premium, sustainably produced products.
• Technology Adoption: Advances in hydroponics, AI, and blockchain traceability are reshaping the sector, enabling growers to command higher prices.

Dirtt’s Position

• Regulatory Compliance: The company has obtained all necessary provincial licenses and has met the stringent organic certification standards of the Canada Organic Growers Association.
• Supply Chain Resilience: By expanding its domestic cultivation capacity, Dirtt aims to reduce reliance on imported raw materials and mitigate supply chain disruptions.

Investor Outlook

Analysts and institutional investors have reacted positively to the announcement. The lower cost of capital and the infusion of working capital are seen as catalysts for revenue growth and margin improvement. Moreover, the company’s emphasis on sustainability aligns with ESG investment criteria that are increasingly influential in capital allocation decisions.

4. Key Quotes

Jane Doe, CEO of Dirtt Inc.
“The BDC financing is a testament to the confidence the Canadian government and financial institutions place in our technology‑driven, sustainable approach to agriculture. We’re excited to harness this capital to build a world‑class greenhouse and to continue innovating in crop nutrition and yield optimization.”

John Smith, CFO of Dirtt Inc.
“Refinancing our debentures at a lower coupon and longer maturity will substantially improve our liquidity profile. The savings on interest costs translate directly into funds we can reinvest into growth initiatives and potentially enhance shareholder value.”

5. Forward‑Looking Statements

The press release contains customary forward‑looking statements regarding the company’s future plans, market conditions, and regulatory approvals. It cautions that actual results may differ materially from projections due to factors such as market volatility, supply chain disruptions, and changes in government policy.

6. Additional Information

For more details, the release directs readers to Dirtt’s investor relations page, where financial statements, quarterly reports, and a dedicated section on sustainability initiatives are available. It also provides a link to the BDC’s press release, outlining the broader context of BDC’s support for Canadian high‑tech agri‑businesses.

In Summary

Dirtt Inc. has successfully leveraged the BDC’s financing arm to secure a $5 million term loan and a $3 million revolving credit facility, earmarked for expansion and technological advancement. Concurrently, the company has refined its debt structure by refinancing $10 million of debentures to a lower coupon and extended maturity. These moves collectively strengthen Dirtt’s balance sheet, reduce interest expense, and position the company to capture growing demand for sustainable cannabis and high‑yield agricultural products in Canada and beyond.