Mr. Raj Grover reports
HIGH TIDE RESTRUCTURES $10.8 MILLION OF DEBT INTO AN INTEREST FREE DEBENTURE DUE IN 2025
High Tide Inc. has successfully completed a restructuring of approximately $10.8-million of the company's outstanding debt held by a key industry investor under an 8.5 per cent senior unsecured convertible debenture issued in December, 2018. Pursuant to a debt restructuring agreement dated July 23, 2020, and entered into by the company and the key investor, in consideration of the company's agreement to pay to the key investor certain structured instalment payments over a period of approximately three years, beginning on Nov. 1, 2021, the parties have agreed to amend the original debenture into a secured convertible debenture of the company in the principal amount equal to the deferred amount. The structured payments, which start in November, 2021, will be credited toward the deferred amount as a payment plan (and not as any bonus or interest to the key investor) and will have minimal impact on the company's cash flow. As part of the debt restructuring, the parties have also (i) extended the maturity date of the amended debenture to Jan. 1, 2025, (ii) amended the conversion price such that the deferred amount is convertible into common shares of High Tide at a conversion price of 42.5 cents per High Tide share, and (iii) amended the interest provisions such that the deferred amount will not bear any interest until maturity, with the portion of the deferred amount outstanding on maturity bearing interest on and from the maturity date at a rate of 8.5 per cent per annum. The deferred amount represents the largest portion of the company's outstanding debt held by a single creditor.
Extends maturity of $10.8-million of debt by over four years, from December, 2020, to January, 2025;
Bolsters financial position by removing interest on the debt over the four-year period;
Reduces immediate debt overhang, allowing the company to focus on growth and expansion.
"This debt restructuring transaction increases High Tide's financial flexibility and allows High Tide to focus on further building and expanding its business without an immediate debt overhang. Amid evolving market conditions, High Tide is in a strong position to continue delivering on its corporate objectives for 2020 and beyond. I am very happy to have negotiated and secured for High Tide the opportunity to achieve cash flow positive returns and deliver long-term growth to its stakeholders before repayment begins. The company is delighted to have the support of this key industry investor, which clearly understands High Tide's vision and is willing to forgo interest over the four-year period to help High Tide in its expansion plan and goal of becoming the strongest Canadian cannabis retailer," said Raj Grover, president, chief executive officer and director of High Tide.
The company's obligations under the amended debenture are secured by the assets of the company and certain of its subsidiaries pursuant to a subordinated security interest (ranking behind the senior creditors of the debtors) granted in favour of the key investor and such other persons who may from time to time become a party to the security agreement entered into by the parties in connection with the debt restructuring. The company intends to actively engage with all other debt holders to follow the lead of the key investor to extend maturities and enable the company to continue focusing on its growth and expansion.
About High Tide Inc.
High Tide is a retail-focused cannabis company enhanced by the manufacturing and distribution of smoking accessories and cannabis lifestyle products.
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