Upon Closing, This Transaction Will Bring
The Company's Footprint in British
Columbia to Five Stores
This news release constitutes a "designated
news release" for the purposes of the Company's prospectus
supplement dated December 3, 2021 to
its short form base shelf prospectus dated April 22, 2021.
CALGARY,
AB, Sept. 29, 2022 /CNW/ - High Tide Inc.
("High Tide" or the "Company") (Nasdaq: HITI) (TSXV:
HITI) (FSE: 2LYA), a leading retail-focused cannabis company with
bricks-and-mortar as well as global e-commerce assets, is pleased
to announce that it is taking yet another step to expand its
bricks-and-mortar retail cannabis operations, by entering into a
definitive agreement (the "Acquisition Agreement") pursuant
to which High Tide will acquire 100% of the equity interest of
1171882 B.C. Ltd., operating as
Jimmy's Cannabis Shop BC ("Jimmy's"), as well as assignments
of the vendors' shareholder loans, resulting in High Tide's
acquisition of two of the five retail cannabis stores currently
operated by Jimmy's in British
Columbia (the "Stores") for $5.3 Million (the "Transaction"). The
Stores are located at 1225 Cranbrook Street North, Cranbrook and
1543 Victoria Street, Prince
George.
The Cranbrook store is located
near the base camp of the Kootenay Rockies and is within a short
drive of award-winning golf courses and nature trails. It is also
situated within a commercial complex that includes a prominent
local grocery store as well as a multinational hotel chain. The
Prince George store is situated
within the largest city in northern British Columbia, which is also close to the
crossroads of provincial highways 16 and 97. The store itself is
located within a commercial plaza including a national pharmacy
chain and a major discount clothing retailer.
For the trailing four months ended May
31, 2022, the Stores generated annualized revenue of
$5.4 Million and annualized Adjusted
EBITDA1 of $1.0
Million. The purchase price represents 5.25x annualized
Adjusted EBITDA for the trailing four months ended May 31, 2022.
"I am pleased that since opening our first BC Canna Cabana
location in Fort St. John this
past June, we continue to grow in Canada's third largest province both
organically, and through accretive acquisition opportunities. These
two geographically strategic locations in the BC interior, combined
with our existing Vancouver
storefronts as well as our Fort St. John location that
provides us coverage in Northern BC, positions us nicely across the
province setting us up for more success in the coming months," said
Raj Grover, President and Chief Executive Officer of High Tide.
"Our innovative discount club model, which focuses on value-centric
regular users has been a hit nationally, and I am very excited to
continue rolling it out across BC. Given our strong ongoing growth
trajectory, brand recognition and customer loyalty, I anticipate
reaching BC's current store cap of eight before the end of this
calendar year." added Mr. Grover.
TRANSACTION DETAILS
The Transaction, which is an arm's length transaction, is
subject to, among other things, receipt of the required approvals
from the TSX Venture Exchange ("TSXV") and the Liquor and
Cannabis Regulation Branch (BC), and the satisfaction of other
customary conditions of closing, and is expected to close in the
coming weeks. The consideration (the "Consideration") for
the 100% of equity interest acquired will be $5 Million and $300,000 for the assignment of $300,000 of the vendors' shareholder loans, all
paid in common shares of High Tide ("High Tide Shares") on
closing (the "Closing") on the basis of a deemed price per
High Tide Share equal to the 10-day volume weighted average price
of the High Tide Shares on the Nasdaq Stock Exchange
("Nasdaq") ending on the trading day that is three business
days prior to the Closing date, subject to a floor price equal to
the Discounted Market Price (as defined by the TSXV) as of the date
this news release hereof. The purchase price represents 5.25x the
annualized Adjusted EBITDA for the trailing four months ended
May 31, 2022.
From the Consideration, an amount equal to $3.7 Million will be subject to a contractual
hold period of four months and one day from the date of
Closing.
___________________________
|
1 Adjusted
EBITDA is a non-IFRS financial measure.
|
ABOUT JIMMY'S
Jimmy's strives to find a balance between being a boutique and a
neighbourhood store using a heritage theme that is both reflective
of the individual communities in which it does business and
chronicling Jimmy's cultural relationship with cannabis over the
past 100 years. At Jimmy's, we love to have fun, but we also have
the knowledge, background, and training to ensure clients can
purchase responsibly.
ABOUT HIGH TIDE
High Tide is a leading retail-focused cannabis company with
bricks-and-mortar as well as global e-commerce assets. The Company
is the largest non-franchised cannabis retail chain in Canada, with 140 current locations spanning
British Columbia, Alberta, Saskatchewan, Manitoba and Ontario. The Company is also North America's first cannabis discount club
retailer, under the Canna Cabana banner, which is the
single-largest cannabis retail brand in Canada, with additional locations under
development across the country. High Tide's portfolio also includes
retail kiosks and smart locker technology – Fastendr™. High Tide
has been serving consumers for over a decade through its
established e-commerce platforms, including Grasscity.com,
Smokecartel.com, Dailyhighclub.com, and Dankstop.com and more
recently in the hemp-derived CBD space through Nuleafnaturals.com,
FABCBD.com, BlessedCBD.co.uk, BlessedCBD.de, and Amazon United
Kingdom, as well as its wholesale distribution division under
Valiant Distribution, including the licensed entertainment product
manufacturer Famous Brandz. High Tide was featured in the Report on
Business Magazine's ranking of Canada's Top Growing Companies in both 2021
and 2022 and was named as one of the top 10 performing diversified
industries stocks in the 2022 TSX Venture 50™. High Tide's strategy
as a parent company is to extend and strengthen its integrated
value chain while providing a complete customer experience and
maximizing shareholder value.
For more information about High Tide, please visit
www.hightideinc.com and its profile pages on SEDAR at www.sedar.com
and EDGAR at www.sec.gov.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSXV)
accepts responsibility for the adequacy or accuracy of this
release.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain information in this news release constitutes
forward-looking statements under applicable securities laws. Any
statements that are contained in this news release that are not
statements of historical fact may be deemed to be forward-looking
statements. Forward-looking statements are often identified by
terms such as "may", "should", "anticipate", "expect", "potential",
"believe", "intend" or the negative of these terms and similar
expressions. Forward-looking statements in this news release
include statements relating to: the Company adding the number of
additional cannabis retail stores that the Company proposes to add
to the Company's business within the timeframes outlined herein;
the Company's business objectives and milestones and the
anticipated timing of, and costs in connection with, the execution
or achievement of such objectives and milestones; the development
of the Company's business and future activities following the date
hereof; the performance of the Company's business and the
operations and activities of the Company; the Company completing
the development of its cannabis retail stores; the Company's plans
to extend and strengthen its integrated value chain, while
providing a complete customer experience and maximizing shareholder
value; the receipt of regulatory approvals, including the approval
of the TSXV; the Company's ability to obtain, maintain, and renew
or extend, applicable authorizations, including the timing and
impact of the receipt thereof; the Company continuing to grow
through further strategic and accretive acquisitions; the Company
completing the Transaction on the terms and within the timelines
set out in this news release; the Company receiving requisite
approvals for the Transaction; the anticipated effects of the
Transaction on the business and operations of the Company; Mr.
Grover's expectation to announce more retail acquisitions in the
future; the completion of the Transaction to position the Company
for future success; the completion of the Transaction to bring the
Company's British Columbia store
count to five; the continued roll-out of the Company's discount
club model; and Mr. Grover's expectation on reaching a store count
of eight stores in the Province of British Columbia by the end of 2022.
Forward-looking information in this news release are based on
certain assumptions and expected future events, namely: the
Company's financial condition and development plans do not
change as a result of unforeseen events; there will continue to be
a demand, and market opportunity, for the Company's product
offerings; current and future economic conditions will neither
affect the business and operations of the Company nor the
Company's ability to capitalize on anticipated business
opportunities; fluctuations in prevailing interest rates do not
increase the costs of borrowing by the Company or impair the
Company's ability to do so; the Company will have sufficient
working capital and the ability to maintain the funding required in
order to develop and continue its business and operations; the
Company will continue to attract, develop, motivate and retain
highly qualified and skilled consultants and/or employees, as the
case may be; no adverse changes will be made to the regulatory
framework governing cannabis, taxes and all other applicable
matters in the jurisdictions in which the Company conducts business
and any other jurisdiction in which the Company may conduct
business in the future; the Company will be able to generate cash
flow from operations, including, where applicable, the distribution
and sale of cannabis and cannabis products; the Company will be
able to execute on its business strategy as anticipated; the
Company will be able to meet the requirements necessary to obtain
and/or maintain authorizations required to conduct the business;
general economic, financial, market, regulatory, and political
conditions, including the impact of the COVID-19 pandemic, will not
negatively affect the Company or its business; the Company will be
able to successfully compete in the cannabis industry; cannabis
prices will not decline materially; the Company will be able to
effectively manage anticipated and unanticipated costs; the Company
will be able to conduct its operations in a safe, efficient and
effective manner; general market conditions will be favourable with
respect to the Company's future plans and goals; the Company will
extend and strength its integrated value chain, provide a complete
customer experience and maximize shareholder value; the Company
will add the additional cannabis retail store locations to the
Company's business and remain on a positive growth trajectory; the
Company will complete the development of its cannabis retail store;
the Company will continue to grow through further strategic and
accretive acquisitions; the Company will complete its proposed
acquisitions; the Company will complete its current at-the-market
equity offering program (the "ATM Program"); the Company's will use
of the net proceeds from the ATM Program and/or any future offering
as planned; the Company will list the common shares offered in the
ATM Program and/or any future offering; the Company will build upon
its existing momentum in the international hemp-derived CBD and
consumption accessories e-commerce sectors; the Company will
continue to integrate and expand its CBD brands; the Company will
have the ability to successfully complete the Transaction (and will
have the ability to obtain all requisite approvals) on the terms
and within the timelines anticipated by the Company; the
completion of the Transaction will position the Company for future
success; the completion of the Transaction will bring the Company's
British Columbia store count to
five; the Company will continue its roll out of the Company's
discount club model; and the Company will reach a store count of
eight stores in the Province of British
Columbia by the end of 2022.
These statements involve known and unknown risks,
uncertainties and other factors, which may cause actual results,
performance or achievements to differ materially from those
expressed or implied by such statements, including but not limited
to: the risks associated with the cannabis and cannabidiol
industries in general; risk that increases in the prevailing
interest rates will increase the costs of borrowing by the Company;
the inability of the Company to obtain requisite approvals for its
operations; the Company's inability to attract and retain qualified
members of management to grow the Company's business and its
operations; unanticipated changes in economic and market conditions
(including changes resulting from the COVID-19 pandemic) or in
applicable laws; the impact of the publications of inaccurate
or unfavourable research by securities analysts or other third
parties; the Company's failure to complete future acquisitions or
enter into strategic business relationships; interruptions or
shortages in the supply of cannabis from time to time
available to support the Company's operations from time to
time; unanticipated changes in the cannabis industry in the
jurisdictions within which the Company may from time to time
conduct its business and operations, including the Company's
inability to respond or adapt to such changes; the Company's
inability to secure or maintain favourable lease arrangements or
the required authorizations necessary to conduct the business and
operations and meet its targets; the Company's inability to secure
desirable retail cannabis stores on favourable terms; risks
relating to Company's projections; the Company's inability to
effectively manage unanticipated costs and expenses, including
costs and expenses associated with product recalls and judicial or
administrative proceedings against the Company; risk that the
Company will be unable to continue to integrate and expand its CBD
brands; risk that the Company will be unable to grow through
further strategic and accretive acquisitions; risk that the Company
will be unable to add additional cannabis retail store locations to
the Company's business and/or remain on a positive growth
trajectory; risks that the Company will be unable to complete the
development of any or all of its cannabis retail stores; the
inability of the Company to extend and strengthen its integrated
value chain, while providing a complete customer experience and
maximizing shareholder value; risk the Company will not complete
the ATM Program; the Company's inability to list the common shares
offered in the ATM Program and/or any future offering; the
Company's failure to utilize the use of proceeds from the ATM
Program and/or any future offering as expected; risks surrounding
the legality of delta-8 tetrahydrocannabinol ("Delta-8") derived from hemp; risks surrounding
the uncertainty and legality of Delta-8 and delta-9 tetrahydrocannabinol
("Delta-9") state to state; risk
that the United States Drug Enforcement Administration could
consider the Company's Delta-8
products an illegal controlled substance under the Controlled
Substances Act (the "CSA") or Federal Analogue Act in the United States; risk that that state or
federal regulators or law enforcement could take the position that
the Delta-8 and Delta-9 products and/or in-process hemp
extract are/is a Schedule I controlled substance in violation of
the CSA and similar state laws; risk that the Company's
Delta-9 products could be
considered by state law enforcement and state regulators to be
marijuana illegal under state laws criminalizing the possession,
distribution, trafficking and sale of marijuana; risk that should
the Company become subject to enforcement action by federal or
state agencies, the Company could: (i) be forced to stop offering
some or all of it Delta-8 and
Delta-9 products or stop all
business operations, (ii) be subject to other civil or criminal
sanctions, (iii) be required to defend against such enforcement and
if unsuccessful could cause the Company to cease its operations;
and risk that enforcement or regulatory action at the United States federal and/or state level
could adversely impact the listings of the common shares on the
TSXV and Nasdaq Stock Exchange; the inability of the Company to
close the Transaction; the inability of the Company to pursue more
retail acquisitions in the future; the completion of the
Transaction does not position the Company for future success; the
completion of the Transaction will not increase the Company's
British Columbia store count to
five; the Company's inability to continue to roll out of the
Company's discount club model, and the Company's inability to reach
a store count of eight stores in the Province of British Columbia by the end of 2022.
Readers are cautioned that the foregoing list is not
exhaustive. Readers are further cautioned not to place undue
reliance on forward-looking statements, as there can be no
assurance that the plans, intentions or expectations upon which
they are placed will occur. Such information, although considered
reasonable by management at the time of preparation may prove to be
incorrect and actual results may differ materially from those
anticipated.
Forward-looking statements, forward-looking financial
information and other metrics presented herein are not intended as
guidance or projections for the periods referenced herein or any
future periods, and in particular, past performance is not an
indicator of future results and the results of the Company in this
press release may not be indicative of, and are not an estimate,
forecast or projection of the Company's future results.
Forward-looking statements contained in this news release are
expressly qualified by this cautionary statement and reflect our
expectations as of the date hereof, and thus are subject to change
thereafter. The Company disclaims any intention or obligation to
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as
required by law. Factors that could cause anticipated opportunities
and actual results to differ materially include, but are not
limited to, matters referred to above and elsewhere in the
Company's public filings and material change reports, which are and
will be available on SEDAR.
This news release does not constitute an offer to sell or a
solicitation of an offer to buy any of the securities in
the United States of America. The
securities have not been and will not be registered under the
United States Securities Act of 1933 (the "1933 Act") or any state
securities laws and may not be offered or sold within the United States or to U.S. Persons (as
defined in the 1933 Act) unless registered under the 1933 Act and
applicable state securities laws or an exemption from such
registration is available.
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SOURCE High Tide Inc.