The company repaid US $2 million of debt retiring the remainder of its 2019 senior debt facility, previously extended to February 28, 2023, with no further obligations. Subsequently, on February 15, 2023, the company amended and extended terms with its junior noteholders to provide for amended and restated promissory notes with an aggregate principal balance of US $38 million.
The amended and restated notes bear a floating interest rate at the higher of 16 per cent or Prime +8.5 per cent, and mature in February 2026. Also on February 15, 2023, the company issued $8.2 million of payment-in-kind secured promissory notes maturing in February 2027 and carrying the same interest rate as the amended and restated notes, in satisfaction of certain outstanding aged and accrued accounts payable held by the junior noteholders. The company did not receive any new proceeds from the junior noteholders as a result of the amendments to the debt facility.
Approximately 62 million of warrants issued pursuant to the 2019 senior debt facility expired unexercised in November 2022. In conjunction with its issuance of the amended and restated notes, the company subsequently issued approximately 92 million warrants carrying a seven-year term. Each warrant is exercisable at any time prior to its expiration for one common share of the company at an exercise price of US $0.07084 per common share.
Additionally, TILT has completed its previously announced sale-leaseback transaction with Innovative Industrial Properties, Inc. pertaining to its White Haven, Pennsylvania facility for US $15 million, with net proceeds used towards repayment of debt and working capital.
“Anytime a company can reduce its long-term debt by almost 50% over a 12-month period, is remarkable. Our ability to withstand unprecedented sector headwinds and overcome the lack of access to traditional banking products and inefficient capital markets is a true testament to the strength and perseverance of our team. Resolving our near-term debt maturities puts TILT on firm footing to be able to focus on revenue growth, improving margins, exploring M&A, and executing against our strategic plan.” — Gary Santo, CEO, TILT
The company also made changes to its board of directors.
On February 10, 2023, Mark Scatterday resigned as a director of the company effective that day. An industry veteran, founder of Jupiter Research, LLC and former chief executive officer of the TILT, Mr. Scatterday was integral in the development of the company’s inhalation hardware business.
“We thank Mark for his leadership over the years and many contributions to TILT’s success. As CEO and chairman of the board, Mark helped stabilize the Company allowing TILT to exit 2019 as one of the only MSOs able to survive on solely its cash flow from operations. His support of the current management team and its business strategy has been instrumental in positioning TILT for long-term growth.” — Gary Santo, CEO, TILT
In addition, effective February 15, 2023, the board designees of the senior debt noteholders, Jane Mathieu and Mark Coleman, resigned as directors of the company as contemplated under the 2019 senior debt facility. Pursuant to the amended debt facility, TILT has reduced its number of board members from six to five. Similar to the terms of the company’s 2019 debt facility, two board members shall be noteholder designees. Accordingly, TILT has appointed one such designee, Adam R. Draizin, to the Board. Mr. Draizin is with an affiliated entity, Collisto Collaborations, LLC, and is a junior noteholder. The remaining noteholder designee will be appointed at a later date.
“Jane Mathieu and Mark Coleman have been invaluable to TILT over the years and I cannot thank them enough for their service. Their experience and candor were key factors in my joining TILT and management could not have accomplished its repositioning of TILT without their support and guidance.” — Gary Santo, CEO, TILT