Safe Harbor Financial SPAC Deal Could Close Today
The Northern Lights Acquisition Corp. (NASDAQ: NLIT), a special purpose acquisition corporation, rescheduled its special meeting of stockholders to Monday, June 27, 2022 at 4:00 pm ET. The vote was originally planned for June 24 in order to approve Safe Harbor Financial as the qualifying transaction for the SPAC. The deal is valued at $185 million or 9.1x 2023 EV/EBITDA vs. 9.7x peer group average according to Northern Lights. The enterprise value of the IPO is 2.0x versus the cannabis SPAC average of 3.0x. Once complete, the company will begin trading on the Nasdaq stock exchange under the ticker “SHFS”.
Protecting the SPAC
Last week, Northern Lights said that it had entered into a redemption backstop arrangement in the form of an OTC Equity Prepaid Forward Transaction agreement for up to $50 million with Midtown East Management NL LLC. Midtown East has agreed not to sell any public shares it purchases in connection with the planned business combination. Northern Lights anticipates that the shares purchased in connection with the agreement will help ensure the maximum redemption threshold condition in the business combination agreement will be met. The redemption backstop arrangement is in addition to the $60 million PIPE commitment from certain accredited investors previously announced on February 14, 2022.
Safe Harbor was founded in 2014 and is a first mover in providing a variety of banking services to cannabis businesses including, but not limited to, managed deposit accounts and commercial lending through its affiliation with Partner Colorado Credit Union. Since legislation protecting cannabis companies’ access to standard banking actions hasn’t been enacted, companies like Safe Harbor continue to fill a need in the industry. Safe Harbor says it is well-positioned to expand its compliance solutions and other service offerings with a proven track record for repeatedly enduring the tests of regulatory scrutiny.
Recently Safe Harbor Financial closed on a $5 million senior secured loan to Solar Cannabis Co., an established vertically-integrated cannabis operator headquartered in Somerset, Massachusetts. Solar Cannabis said it would use the funds to further accelerate its growth. The transaction marked the evolution of Safe Harbor’s senior secured lending program, which was established to provide loans to cannabis operators in states in which cannabis is legal. Solar Cannabis’ loan is the first extended by Safe Harbor outside of its home state of Colorado.
Safe Harbor, through its predecessor entity, began offering loan services in 2020 with the buildout of its commercial lending program in late 2021 to help cannabis operators overcome their historic reliance on expensive, non-traditional forms of capital. Since initiating the program, the company has developed an actionable pipeline of approximately $500 million across nine states from both new as well as existing clients.