Mr. Raj Grover reports
HIGH TIDE EXTENDS MATURITY OF SENIOR CREDIT FACILITY AND REDUCES INTEREST RATE
Further to its news release dated Jan. 7, 2020, Windsor Private Capital has agreed to extend the maturity of High Tide Inc.'s credit facility pursuant to a loan amendment agreement entered into between the parties on Dec. 8, 2020. The loan amendment extends the maturity date by one year from Dec. 15, 2020, to Dec. 31, 2021, and a subsequent one-year extension moves the maturity date from Dec. 31, 2021, to Dec. 31, 2022. In addition, Windsor agreed to reduce the interest rate from 11.5 per cent to 10.0 per cent per annum.
"Throughout 2020, we worked closely with Windsor to navigate unprecedented economic conditions while also executing on valuable opportunities. We greatly appreciate Windsor's renewed support and the terms of the loan amendment speak volumes about the quality of our working relationship," said Raj Grover, president and chief executive officer of High Tide. "We are pleased with the development of High Tide's business and operations to date, as well as the completion of the acquisition of Meta and the substantial synergies which will be realized as the two companies are integrated. We welcome the opportunity to continue being a partner of High Tide as it continues executing on its business plan," added Jordan Kupinsky, managing partner of Windsor.
As of Dec. 14, 2020, the facility has a total outstanding principal balance of $6-million with $4-million of undrawn capacity. The principal amount advanced under the facility is convertible during the term at any time, at Windsor's option, into common shares in the capital of High Tide at a conversion price of 17 cents. Any additional draws on the undrawn capacity remains subject to approval from the TSX Venture Exchange and have a conversion price at the greater of (i) 17 cents and (ii) the market price at the time of such future draw. Under the loan amendment, Windsor also agreed to remove the downward adjustment provisions relating to the conversion price.
In addition, High Tide and Windsor have agreed to amend the terms of the warrants issued to Windsor on Jan. 7, 2020, in connection with entering into the facility. The company issued to Windsor 58,823,529 warrants to purchase 58,823,529 shares at a price per share equal to 150 per cent of the conversion price in effect on the date of exercise for a period of two years from the date of issuance. As of Dec. 8, 2020, of the 58,823,529 warrants only 35,294,117 warrants have vested while the remaining 23,529,412 warrants have not vested. The parties agreed to amend the warrants to: (i) confirm that only 35,294,117 warrants have vested, while the remaining 23,529,412 are no longer eligible to vest and are cancelled, (ii) set the exercise price at 25.5 cents, (iii) remove the downward adjustment provisions relating to the exercise price, and (iv) extend the expiry to Dec. 31, 2022.
Furthermore, as disclosed in the company's news release dated Nov. 18, 2020, High Tide has finalized the extension of the maturity date of a total $4.25-million of convertible debentures to Dec. 31, 2022, comprising as follows:
$1.25-million of its convertible debentures originally issued on Dec. 12, 2018, with an original maturity date of Dec. 12, 2020, now having a maturity date of Dec. 31, 2022;
$1-million of its convertible debentures originally issued on June 14, 2019, with an original maturity date of June 14, 2021, now having a maturity date of Dec. 31, 2022;
$2-million of its convertible debentures originally issued on Dec. 4, 2019, with an original maturity date of Dec. 4, 2021, now having a maturity date of Dec. 31, 2022.
As partial consideration for these extensions, High Tide has agreed that the principal amount of these debentures is convertible during the term at any time, at the debenture holder's option, into shares at a conversion price of 22 cents. These extensions and conversion adjustments remain subject to final approval from the TSX Venture Exchange and form part of a comprehensive restructuring of the company to extend the maturity dates on all existing debentures to provide further balance sheet flexibility for High Tide.
As certain officers and directors of the company participated in these debenture extensions, it is considered related party transactions for the purposes of Multilateral Instrument 61-101 -- Protection of Minority Security Holders in Special Transactions. The participation of the director and officer is exempt from the formal valuation and minority shareholder approval requirements provided under MI 61-101 in accordance with sections 5.5(a) and 5.7(1)(a) of MI 61-101. The company is relying on an exemption from the formal valuation and minority shareholder approval requirements of MI 61-101 available because the fair market value of the debentures pertaining to the director and officer does not exceed 25 per cent of the company's market capitalization, as determined in accordance with MI 61-101. The company did not file a material change report related to these debenture extensions more than 21 days before the expected closing of the debenture extensions as required by MI 61-101 since the details of the debenture extensions were not settled until shortly prior to the debenture extensions and the company wished to close on an expedited basis for sound business reasons.
About High Tide Inc.
High Tide is a retail-focused cannabis company enhanced by the manufacturing and distribution of consumption accessories. The company is the largest Canadian retailer of recreational cannabis as measured by revenue, with 67 current locations spanning Ontario, Alberta, Manitoba and Saskatchewan. High Tide's retail segment features the Canna Cabana, KushBar, Meta Cannabis Co., Meta Cannabis Supply Co. and NewLeaf Cannabis banners, with additional locations under development across the country. High Tide has been serving consumers for over a decade through its numerous consumption accessory businesses including e-commerce platforms Grasscity and CBDcity, and its wholesale distribution division under Valiant Distribution, including the licensed entertainment product manufacturer Famous Brandz. High Tide's strategy as a parent company is to extend and strengthen its integrated value chain, while providing a complete customer experience and maximizing shareholder value. Key industry investors in High Tide include Aphria Inc. and Aurora Cannabis Inc.
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