The debt financing from BDC Capital will be used to expand machine capabilities and crop varieties
CubicFarm secures $3.73m in debt financing. (Credit: CubicFarm Systems Corp.)
CubicFarm Systems, a Canadian agtech company, has secured C$5m ($3.73m) in debt financing from BDC Capital, a subsidiary of Business Development Bank of Canada.
CubicFarm Systems has secured the loan bearing an interest rate of 10%, which is expected to decrease if the agtech firm meets the performance targets set by BDC and the loan is payable by June 2025.
Earlier this month, CubicFarm had also secured C$1.16m ($860,000) for selling 1.6 million of its common shares to Harry DeWit and company insiders including chairman Jeff Booth; chief operating officer Rodrigo Santana and chief financial officer Tim Fernback, for C$0.70 ($0.52) per share.
The firm stated that the net proceeds from the loan and the sale of shares will be used for research and development to expand machine capabilities and crop varieties and to fulfil its working capital requirements.
The debt from BDC Capital is repayable by June 2025
CubicFarm CEO Dave Dinesen said: “I would like to recognise BDC and its commitment to helping high-growth technology companies in Canada to thrive.
“I CubicFarms fits within the BDC’s Cleantech Practice’s mandate of investing in companies with commercially validated IP-protected technologies that positively impact the environment, as well as companies demonstrating proven market traction with significant potential for revenue growth and commercial contracts.
“This non-dilutive financing from BDC – combined with our recent raises with Ospraie Ag Science and dairy entrepreneur Harry DeWit – will significantly boost CubicFarms’ cash reserves and position us well to strategically scale the business.”
BDC Capital cleantech practice director Karim Kennedy said: “BDC is proud to support one of Canada’s leaders in controlled-environment agriculture in its mission to provide the world with sustainably produced food through the cutting-edge machine and crop technologies.
“I CubicFarms helps to solve many problems plaguing traditional agriculture, namely weather inconsistencies and the declining availability of arable land, water, labour.
“Controlled, indoor growing is poised to become a mainstream method of farming as farmers discover its high crop quality, high yield benefits – while minimising environmental impacts through a vast reduction of farm water usage and emissions from localizing food production.”
In May, CubicFarm secured an investment of C$5m ($3.73m) from Ospraie Ag Science by acquiring over 21 million shares in the agtech firm for C$0.23 ($0.17) per share.
With the acquisition, Ospraie now owns about 18.8% stake in the firm.