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High Tide restructures $8.9 million of outstanding secured debt

(CNW) Calgary — High Tide Inc., the high-impact, retail-forward enterprise built to deliver real-world value across every component of cannabis, is pleased to announce that it has successfully completed a restructuring of approximately $8.9 million of the company’s outstanding debt held by a key industry lender under a senior secured convertible debenture issued on July 23, 2020, as amended, maturing on January 1, 2025 pursuant to a debt restructuring agreement dated July 23, 2020, as amended, entered into between the parties.

Pursuant to the terms of the debt restructuring agreement, the parties have agreed to settle the outstanding structured installment payments, which equals the aggregate sum of $5,024,546, in common shares in the capital of High Tide at a deemed price of $2.0168 per High Tide Share, to the key lender, subject to prior approval and compliance with the policies of the TSX Venture Exchange, calculated on basis of a deemed price per High Tide Share equal to the 10 day volume-weighted average trading price (in Canadian dollars) of the High Tide Shares on the TSXV ending on October 31, 2023. Upon the outstanding structured payment being satisfied in High Tide Shares, the outstanding amount of the debenture will be reduced proportionately.

Future structured payments have been changed from a quarterly obligation to a semi-annual obligation, and each remaining structured payment may be paid in cash or satisfied in free trading High Tide Shares, provided that: * High Tide provides the key lender 30 days prior written notice of its intention to make a structured payment in free trading High Tide Shares; (y) the key lender, at its sole unfettered discretion, does not provide notice to High Tide at least 10 days before the applicable structured payment is due, that a portion of or all of the applicable structured payment is to be paid in cash.

If both conditions have been met, subject to prior approval by the TSXV, High Tide shall be entitled to satisfy the applicable structured payment, or the remaining portion thereof, through the issuance of installment shares, calculated on the basis of a deemed price per High Tide Share equal to the 10 day VWAP ending on the day prior to the public announcement of such issuance.

The installment shares issued in connection with the outstanding structured payment, and any installment shares issued in settlement of any future structure payments, shall be subject to certain resale, volume and trading restrictions as agreed by the parties.

High Tide’s obligations under the debenture are secured by the assets of High Tide 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 lender 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.

“I’m excited to announce the restructuring of the debenture, which creates more flexibility on our balance sheet as we start pushing the momentum on new store openings again. Recall that at the beginning of 2021, just after the acquisition of META, our gross debt stood at approximately 65 million dollars. Over the past three years, we have now cut our outstanding debt in half to 32 million dollars today, representing just 1.2 times the Adjusted EBITDA we reported over the past four quarters.

“While eliminating this debt, we have simultaneously grown High Tide to an annual revenue run rate exceeding half a billion dollars and generated 4.1 million dollars in free cash flow during our last reported quarter, ending it with a cash balance exceeding 25 million dollars. As mentioned during our last quarterly call, with regular payments coming due, amending the terms of this debt was a priority for us, as it now allows us to allocate more cash toward the acceleration of organic store openings. On that front, we have secured more than fifteen premiere locations, with more in the pipeline, and we are excited to now crystalize these opportunities to generate even more cash for shareholders.” — Raj Grover, founder & CEO, High Tide