High Tide Secures Expensive $10 Million Secured Credit Facility

It appears that the reason for High Tide Inc’s (CSE: HITI) late afternoon halt yesterday, is that the firm managed to secure additional funds so as to be able to keep the lights on. The retailer secured $10.0 million in senior secured convertible debt, from lender Windsor Private Capital. It’s been indicated that the funds will be used for the firms Ontario expansion, as well as for the built out of retail locations in Alberta. Finally, the remaining portion will be used for general working capital purposes.

The loan itself is a bit underwhelming. The funds, of which there will be up to $10 million, will be released in two tranches to the firm with the first $6 million being available immediately. Undisclosed conditions are required to be met for the company to have access to the remaining $4 million in the facility.

The debt will have an interest rate of 11.5%, and comes with a one year term that will renew automatically for a second year provided undisclosed conditions are met. Interest in payable monthly in arrears. The debt will also be convertible at a price of $0.17 per share after a six month hold period. The result, is that the initial $6.0 million loan will convert to approximately 35.2 million shares, while the remaining $4.0 million wil convert to an additional 23.5 million shares.

It should also be noted that the conversion price is subject to downward adjustment should the company release a single share at a lower price.

Warrants are also involved in the transaction, with 100% coverage being provided in exchange for the debt issued. The amount of warrants issued under the first facility will be 35.2 million, while the conversion price will be $0.255 per common share. Warrants will be valid for a period of two years from the date of issuance, and will vest immediately upon the issuance of the initial facility, or February 6, whichever comes first.

A one time fee of 3.5% will also be applicable on the initial facility, which equates to approximately $210,000.

High Tide last traded at $0.16 on the CSE.

Information for this briefing was found via Sedar and High Tide Inc. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.