Cann Group Secures Major Debt Restructure and $9M Capital Raise

Victorian medicinal cannabis producer slashes debt by 81% in landmark refinancing deal

Cann Group Limited(ASX:CAN) has announced a transformative debt restructure that will see the Mildura-based medicinal cannabis company reduce its debt burden by approximately $54.7 million, positioning the business for sustainable growth after years of financial pressure.

Major Debt Forgiveness Delivers Fresh Start

In a landmark agreement with National Australia Bank (NAB), Cann Group will settle approximately $70 million in outstanding loan balances—including capitalised interest—for $15.3 million as full and final settlement. The loan facilities total $69.96 million as at 15 October 2025. The major financier has agreed to release all security, discharge property mortgages, and close all loan facilities in exchange for the reduced payment.

The debt forgiveness of $54.7 million represents an 81% reduction in the company's debt and will increase Cann Group's net assets by approximately $60 million.

New Funding Structure

Complementing the NAB settlement, Cann Group's existing subordinated lender—a prominent Australian private credit fund—will contribute an additional $9 million loan and extend the maturity date on an existing $5.5 million facility (balance as at 30 September 2025). The combined $14.5 million loan will mature in two years and carries a 9.5% per annum cash interest rate, payable monthly, plus 3% per annum capitalised interest due at maturity.

The credit fund will also receive 63,439,600 options with a 1.46 cent exercise price, expiring upon loan maturity, and a 2% facility fee (capitalised and due upon maturity).

$9 Million Capital Raise

Cann Group has secured firm commitments for a $9 million capital raise (before costs), comprising:

• Institutional Placement: $6.5 million through the issue of 565,217,391 new shares at 1.15 cents per share, conducted via two tranches (Tranche 1: 120,395,238 shares raising approximately $1.3 million settling 30 October 2025; Tranche 2: 444,822,153 shares raising approximately $5.1 million, subject to shareholder approval at the AGM on or around 28 November 2025, settling 3 December 2025)
• Share Purchase Plan (SPP): $2.5 million minimum, with firm shortfall commitments from institutional investors for the full amount

The placement price represents a 17.9% discount to the last closing share price of 1.4 cents on 22 October 2025 and an 18.3% discount to the five-day VWAP up to and including 22 October 2025.

Eligible shareholders in Australia and New Zealand will be able to apply for up to $30,000 of new shares under the SPP, which opens on 30 October and closes on 17 November 2025. The SPP price will be the lower of 1.15 cents per share or a 2.5% discount to the five-day VWAP up to the closing date.

Significant Option Opportunity

In an attractive sweetener for investors, both placement and SPP participants will receive one free attaching option for every new share issued. These options are exercisable at 1.15 cents and expire on 15 June 2026.

Upon exercise, option holders will also receive one share plus one additional "piggyback option" exercisable at 2.85 cents, expiring 15 June 2028. This structure provides the company with the opportunity to raise up to $31.3 million if all options are exercised.

The options are subject to shareholder approval at an extraordinary general meeting scheduled for around 22 December 2025.

Strong Growth Forecast

With its balance sheet reset, Cann Group has provided guidance for FY26 showing revenue of approximately $17 million—representing 50% growth on FY25—and EBITDA of $0.3 million to $0.7 million, a significant improvement from the $5 million EBITDA loss in FY25.

The company attributes the forecast growth to strong demand for bulk flower and its branded Botanitech™ products.

Leadership Changes

Mike Ryan will join the board as chairman following completion of the transaction. Ryan brings over 40 years of financial services experience, including senior roles at Shaw and Partners, Goldman Sachs, and Morgan Stanley. He currently chairs Sequoia Financial Group and serves as a director of Energy One Ltd and PM Capital Global Opportunities Fund.

Current interim chair Doug Rathbone will revert to a non-executive director role.

CEO's Perspective

CEO and managing director Jenni Pilcher commented: "We are very pleased to have reached this landmark agreement, which represents a major step forward in strengthening our balance sheet and positioning Cann for sustainable growth. The settlement with our major financier eliminates approximately $70 million of their debt for a payment of $15.3 million, providing a clean foundation for the Company's next growth phase. We are equally encouraged by the continued support from our subordinated lender and the additional $9 million capital raising, which together provide the flexibility required to execute on our growth strategy.

"With a clear path to positive EBITDA and forecast FY26 revenue of $17 million, Cann is now well placed to capitalise on the strong demand for our bulk flower and Botanitech™ products."

About Cann Group

Cann Group operates a large-scale cultivation and GMP manufacturing facility near Mildura, Victoria, along with research facilities and corporate headquarters in Melbourne. The company supplies dried flower, oil products, active pharmaceutical ingredients, and extracts to customers in Australia and internationally. Cann Group also owns Satipharm and its patent-protected capsule technology.

Bell Potter Securities Limited acted as lead manager and bookrunner to the capital raising.