Harborside Inc (CSE: HBOR) this morning had a number of notable developments, starting with the acquisition of two operators within the state of California. Once closed, the firm will also be changing its name.
The first firm to be acquired will be that of Loudpack, whom the company previously took a 15% equity stake in back in March. Originally taking the form of a convertible note, that equity position was achieved for a $5.0 million investment. Terms of the full acquisition of the company as announced this morning were not released in the initial news release.
Loudpack bills itself as a vertically-integrated operator within the state, conducting its own cultivation, manufacturing, processing, and distribution. The firm currently distributes a total of four brands, and for fiscal 2021 has seen revenues of $61.4 million for the first nine months.
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The second firm to be acquired is that of UL Holdings, whom operates as Urbn Leaf. With over 400 employees, the company is a major retailer in southern California that has seen $45.9 million in revenue for the first nine months of the fiscal year.
On a combined basis, the two firms will be acquired via the issuance of 151.4 million subordinate voting shares, and the issuance of 2.0 million warrants, valuing the transaction at a figure of roughly C$119.6 million.
Upon closing of the transaction, which is slated for Q1 2022, Harborside is to be renamed StateHouse Holdings, and trade under the symbol STHZ on the CSE. Loudpack’s CEO Marc Ravner will be named President of the company, while Urbn Leaf’s CEO Ed Schmults will be named CEO of the firm.
The company also announced a financing this morning in connection with the announcement, with the firm set to raise US$10.0 million via the sale of units at C$.079 per unit. Each unit contains one subordinate share and one purchase warrants, with warrants valid for a period of five years at a price of $0.79 per share.
Harborside has also secured a US$77.3 million roll-up financing via a non-binding term sheet to finance the transactions. The debt is stated to bare interest at 10.25% per annum, with the financing to close by the end of the year.
Lastly, Harborside reported Q3 revenues of $17.4 million this morning, along with adjusted EBITDA of $1.5 million, with net income of $2.7 million.
Harborside last traded at $0.79 on the CSE.
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