High Tide, a retail-focused cannabis company, entered into a credit agreement to establish a revolving credit facility with ATB Financial in an amount of up to $25 million and comprised of an initial $10 million limit and $15 million accordion with an expected interest rate of under 6% per annum.
“We are extremely pleased to finalize this facility today. We know that our shareholders have been looking forward to us securing non-dilutive financing from a leading Canadian bank, and this is also something that we have been working on for some time, as we believe that it provides validation of our improved financial profile,” Raj Grover, president and CEO of High Tide, said. “This is great news for our shareholders, as this credit facility provides us with the firepower to continue our business growth and acquisitions of quality businesses, which are synergistic with our overall ecosystem, while limiting the dilution of our existing shareholder base. We also expect the facility amount to increase in the future as our EBITDA increases, allowing us to realize arbitrage opportunities through accretive acquisitions while limiting the dilution necessary to fuel expansion. I remain excited about High Tide’s growth prospects for the remainder of 2021 and throughout 2022 and look forward to sharing continued positive developments in our company with our shareholders.”
The facility will consist of senior secured prime rate loans, U.S. base rate loans, LIBOR loans, letters of credit, bankers’ acceptances and a corporate MasterCard.
The facility has an initial term of three years and provides High Tide, upon completion of customary conditions, with access to an initial $10 million in capital that can be drawn down at High Tide’s discretion and, subject to satisfaction of certain conditions, will provide High Tide with access to an additional $15 million in capital. The company expects to have cleared customary conditions for the first draw by the end of its fiscal year ending Oct. 31. High Tide expects to use proceeds from the facility to finance acquisitions as well as working capital and for general corporate purposes. Amounts drawn down under the facility will bear interest calculated on the basis of the company’s adjusted debt-to-EBITDA ratio, which is expected to yield an effective interest rate of under 6% per annum.
Separately, High Tide converted $1 million of debt into equity, bringing the company’s total outstanding debt balance to $27.4 million. Of this amount, $1.6 million will mature during the next 12 months.
