Five-Year Debt Financing Provides More Fuel
to Continue Growing While Remaining Free Cash Flow Positive
This news release constitutes a "designated
news release" for the purposes of the Company's prospectus
supplement dated August 31, 2023 to
its short form base shelf prospectus dated August 3, 2023
CALGARY,
AB, June 13, 2024 /PRNewswire/ - High Tide
Inc. ("High Tide" or the "Company") (Nasdaq: HITI)
(TSXV: HITI) (FSE: 2LYA), the high-impact, retail-forward
enterprise built to deliver real-world value across every component
of cannabis, announced today that it has entered into binding
subscription agreements with arm's length institutional credit
providers (together, the "Lenders") for aggregate gross
proceeds of $15 million in a
subordinated debt financing (the "Financing").
"I am very excited to announce that we have signed definitive
agreements for an aggregate of $15
million in debt financing, plus a $10
million accordion feature. We have discussed publicly how we
believe we are underleveraged, with our gross debt representing
less than one times our 12-month trailing Adjusted
EBITDA1, and could stand to benefit from
obtaining more debt to continue fueling our rapid store expansion
across Canada," said Raj Grover,
Founder and Chief Executive Officer of High Tide.
"I believe we have found the sweet spot with this financing,
which demonstrates how we prudently manage our balance sheet. We
have secured a commitment for $15
million in debt, of which $5
million will not be drawn for several months. By structuring
the financing this way, we have secured the additional funds, but
avoid paying interest on the remaining $5
million until drawn, as we don't require the funds
imminently given our strategic growth plans and strong free cash
flow profile. Further, this financing includes a $10 million accordion feature, which we may
pursue should it make sense to do so. Given the turbulence in the
cannabis retail landscape in Canada, with several of our peers having
recently filed for creditor protection, this financing is yet
another sign that the market believes in the strength of our
business and the creditworthiness of our Company. On that front, I
look forward to sharing more with the release of our Q2 2024
results after the close of markets today, and on our earnings
conference call tomorrow morning," added Mr. Grover.
FINANCING DETAILS
Pursuant to the Financing, the Company will complete an offering
of $1,000 principal subordinate
secured debentures of the Company (each, a "Debenture") for
aggregate gross proceeds of $15,000,000 at a price of $900 per Debenture, representing a 10% original
issue discount. The Debentures will mature on the date that is 60
months from the date of issuance and shall bear interest at a fixed
rate of 12% per annum on drawn amounts, payable quarterly.
Pursuant to the terms of the subscription agreements, the funds
will be drawn in two tranches: (i) $10,000,000 at closing (the "Initial
Tranche") and (ii) $5,000,000 in
November 2024 (the "Final
Tranche"). The Final Tranche, until drawn, will be subject to a
1% per annum standby fee.
On closing of the Initial Tranche, the Company will issue to
each Lender their pro rata share of an aggregate of 230,760
common shares in the capital of the Company ("Common
Shares") at a deemed price of $3.47 per Common Share, representing the 10-day
volume weighted average price of the Common Shares on the TSX
Venture Exchange ("TSXV") ending on June 11, 2024.
It is anticipated that the Debentures will be governed by the
terms and conditions of a debenture trust indenture to be entered
into by the Company and Olympia Trust Company, in its capacity as
trustee and collateral agent. The Company will reserve the right to
redeem the Debentures at any time prior to maturity, in whole or in
part, upon sixty days' notice and payment of certain penalties. The
obligations under the Debentures will be collaterally secured by
general security and guarantee agreements from the Company and
certain subsidiaries of the Company and will rank in second
position to the Company's existing senior lender.
The Company plans to use the proceeds from the Financing to
repay the remaining balance of its outstanding convertible
debentures (currently less than $1,000,000) and will use the remaining proceeds
for ongoing development of the Company's business model and general
working capital purposes.
The Financing is expected to close on or prior to June 30, 2024, and is subject to certain
conditions including, but not limited to, the receipt of certain
closing deliverables, the satisfaction of certain conditions
precedent and the receipt of all necessary regulatory and stock
exchange approvals, including the approval of the TSXV.
Echelon Capital Markets is acting as financial advisor to High
Tide in connection with facilitating the Financing.
All Debentures and Common Shares issued pursuant to the
Financing will be subject to a statutory hold period of four months
plus one day from the date of issuance in accordance with
applicable securities legislation in Canada and restrictions on resale in
the United States with applicable
U.S. restrictive legends as required pursuant to the United
States Securities Act of 1933, as amended (the "U.S.
Securities Act").
This news release shall not constitute an offer to sell or
the solicitation of an offer to buy the securities in any
jurisdiction, nor shall there be any offer or sale of the
securities in any jurisdiction in which such offer, solicitation or
sale would be unlawful. The offer and sale of the securities has
not been and will not be registered under the U.S. Securities Act
or any state securities laws and may not be offered or sold in
the United States or to
United States persons absent
registration or an applicable exemption from the registration
requirements of the U.S. Securities Act and applicable state
securities laws.
ABOUT HIGH TIDE
High Tide, Inc. is the leading community-grown, retail-forward
cannabis enterprise engineered to unleash the full value of the
world's most powerful plant and is the second-largest cannabis
retailer in North America by store
count2. High Tide (HITI) is uniquely-built around the
cannabis consumer, with wholly-diversified and fully-integrated
operations across all components of cannabis, including:
Bricks & Mortar Retail: Canna Cabana™ is the largest
non-franchised cannabis retail chain in Canada, with 172 current locations spanning
British Columbia, Alberta, Saskatchewan, Manitoba and Ontario and growing. In 2021, Canna Cabana
became the first cannabis discount club retailer in North America.
Retail Innovation: Fastendr™ is a unique and fully
automated technology that integrates retail kiosks and smart
lockers to facilitate a better buying experience through browsing,
ordering and pickup.
E-commerce Platforms: High Tide operates a suite of
leading accessory sites across the world, including Grasscity.com,
Smokecartel.com, Dailyhighclub.com, and Dankstop.com.
Brands: High Tide's industry-leading and consumer-facing
brand roster includes Queen of Bud, Cabana Cannabis Co, Daily High
Club, Vodka Glass, Puff Puff Pass, Dopezilla, Atomik, Silipipe,
Evolution and more.
CBD: High Tide continues to cultivate the possibilities
of consumer CBD through Nuleafnaturals.com, FABCBD.com,
blessedcbd.de and blessedcbd.co.uk.
Wholesale Distribution: High Tide keeps that cannabis
category stocked with wholesale solutions via Valiant™.
Licensing: High Tide continues to push cannabis culture
forward through fresh partnerships and license agreements under the
Famous Brandz™ name.
High Tide consistently moves ahead of the currents, having been
named one of Canada's Top Growing
Companies in 2021, 2022 and 2023 by the Globe and Mail's Report on
Business Magazine, and was named as one of the top 10 performing
diversified industries stocks in both the 2022 and 2024 TSX Venture
50. High Tide was also ranked number one in the retail category on
the Financial Times list of Americas' Fastest Growing Companies for
2023. To discover the full impact of High Tide, visit
www.hightideinc.com. For investment performance, don't miss the
High Tide profile pages on SEDAR+ and EDGAR.
Neither the TSXV nor its Regulation Services Provider (as
that term is defined in the policies of the TSXV) accepts
responsibility for the adequacy or accuracy of this
release.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This press release may contain "forward-looking information"
and "forward-looking statements within the meaning of applicable
securities legislation. The use of any of the words "could",
"intend", "expect", "believe", "will", "projected", "estimated" and
similar expressions and statements relating to matters that are not
historical facts are intended to identify forward-looking
information and are based on the Company's current belief or
assumptions as to the outcome and timing of such future events. The
forward-looking statements herein include, but are not limited to,
statements regarding: the expected size of the Financing, the
aggregate amount of total proceeds that the Company will receive,
the closing date of the Financing and the satisfaction of
conditions precedent to the Financing, including receipt of all
necessary regulatory and stock exchanges, the entering of the
debenture trust indenture on the terms indicated herein, the
Company's expected use of proceeds from the Financing, and the
listing of Common Shares offered in the Financing. Readers are
cautioned to not place undue reliance on forward-looking
information. Actual results and developments may differ materially
from those contemplated by these statements. Although the Company
believes that the expectations reflected in these statements are
reasonable, such statements are based on expectations, factors, and
assumptions concerning future events which may prove to be
inaccurate and are subject to numerous risks and uncertainties,
certain of which are beyond the Company's control, including but
not limited to the risk factors discussed under the heading
"Non-Exhaustive List of Risk Factors" in Schedule A to our current
annual information form, and elsewhere in this press release, as
such factors may be further updated from time to time in our
periodic filings, available at www.sedarplus.ca and www.sec.gov,
which factors are incorporated herein by reference. Forward-looking
statements contained in this press release are expressly qualified
by this cautionary statement and reflect the Company's expectations
as of the date hereof and are subject to change thereafter. The
Company undertakes no obligation to update or revise any
forward-looking statements, whether as a result of new information,
estimates or opinions, future events or results, or otherwise, or
to explain any material difference between subsequent actual events
and such forward-looking information, except as required by
applicable law.
1 Adjusted EBITDA is a non-IFRS financial
measure.
2 As reported by ATB Capital Markets based on store
counts as of February 8,
2024
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SOURCE High Tide Inc.