Restructuring reduces immediate debt overhang, allowing the Company to focus on growth and expansion.
High Tide Inc. (CSE: HITI), an Alberta-based, retail-focused cannabis corporation enhanced by the manufacturing and wholesale distribution of smoking accessories and cannabis lifestyle products, is pleased to announce that it 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% 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 installment payments over a period of over approximately three years, beginning on November 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 towards 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 January 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 $0.425 per HITI 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 annum. The Deferred Amount represents the largest portion of the Company's outstanding debt held by a single creditor.
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.Raj Grover, President, Chief Executive Officer and Director of High Tide
"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.
To learn more about High Tide, visit the company HQ here.
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