It is now a well-established fact that 2019 was a rather disappointing year for the cannabis sector, but in 2020 many cannabis stocks have rebounded strongly, and one of those is The Green Organic Dutchman (TSX:TGOD) (OTCQX:TGODF). TGOD stock has jumped 10% over the past two weeks, and it is quite clear that investors are again warming to the company in the new year.
Amidst all that, it is also important to point out that in light of recent developments, the rally may come as a surprise to many. Towards the end of December, the company agreed on a first lien credit facility with Manybridge Capital Inc that has a value of $42.7 million.
The company announced that the credit facility is made up of a secured term loan of $27.7 million, which is going to mature in 18 months. The rest of the $15 million is going to be released to The Green Organic Dutchman in the form of a secured term loan after it meets some predetermined financial and operational targets.
The company believes that it will be able to meet those targets by the third quarter of 2020. As many as seven million share purchase warrants have also been issued to Manybridge by TGOD.
TGOD stock is trading higher by 1% at C$0.72.
Despite this recent agreement with Manybridge, there are analysts who believe that TGOD could do well in 2020. First and foremost, the company’s current valuations make it quite attractive. At its peak, it used to be worth $1 billion, but due to the carnage in cannabis stocks in 2019, the company is now only valued at $220 million. That could well prove to be a wonderful opportunity for many investors.
The Green Organic Dutchman is involved in the organic cannabis space, and it has become clear that customers are willing to pay for such products. That could be another major factor that results in a reversal in fortunes for TGOD stock.
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