High Tide Inc. HITI HITI (FSE:2LYA) has closed a short-term debt financing from an arm’s length credit provider for CA$5 million ($3.85 million). The company has chosen to proceed with a small debt facility at this time as the company’s proposed non-dilutive credit facilities with ConnectFirst Credit Union for CA$30 million has been delayed until July 2022.
The company issued the lender a non-convertible subordinated secured debenture of the company. The debenture matures on June 21, 2023 and bears interest at a fixed rate of 10% per annum, payable quarterly. The company shall have a right to prepay part of or the entire principal amount of the debentures at par plus accrued and unpaid interest at any time by providing a minimum of 5 days and a maximum 60 days notice to the lender.
“Our first of its kind discount club model is clearly working, as evidenced by rapid same store sales growth, and has now defined us as the clear leader in the Canadian cannabis retail landscape as it continues to gain popularity in communities large and small. We want to continue building on this momentum by setting up additional Canna Cabana locations in all Canadian provinces where we operate with a goal of reaching at least 150 locations by the end of this year,” stated Raj Grover, president and CEO of High Tide.
As part of the loan, the company issued to the lender 700,000 warrants. Each warrant entitles the lender to purchase one common share of the company at an exercise price of CA$4.98 per common share until June 21, 2023. The term of the loan may be extended within 90 days prior to the maturity date. If the parties mutually agree to extend for an additional 12 months, the warrants will also extend for an additional 12 months, subject to approval from the TSX Venture Exchange. The net proceeds of the loan will be used to fund growth initiatives, general corporate purposes, and working capital.
Photo: Courtesy of CNW Group/High Tide Inc.