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, April 18, 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 has entered into a non-binding letter of intent
with Connect First Credit Union Ltd. ("connectFirst") for
CAD$30 million in
credit facilities over an initial 5-year term (the "Proposed
Credit Facilities"). The Company intends to use the Proposed
Credit Facilities to replace the Company's existing credit facility
(the "Existing Facility") with its current bank lender as
disclosed in its press release dated October
18, 2021. The Proposed Credit Facilities are comprised of
CAD$15 million of
term debt (the "Term Debt"), and a mergers and acquisitions
revolving master line of CAD$15 million (the
"M&A Master Line"). The Company expects to repay
its Existing Facility with its current bank lender and repaying
other existing debt upon securing the Proposed Credit Facilities
with connectFirst, with the remaining proceeds from the Term Debt
proceeds going to fund continued organic growth and general working
capital requirements.
![High Tide Inc. April 18, 2022 (CNW Group/High Tide Inc.) High Tide Inc. April 18, 2022 (CNW Group/High Tide Inc.)](https://mma.prnewswire.com/media/1798387/High_Tide_Inc__High_Tide_Executes_Letter_of_Intent_for__30_Milli.jpg)
"While in the past it has not been our practice to announce
letters of intent, we want to share this very important development
with the market, which has been in the works for quite some time. I
am very pleased to announce that we have entered into a letter of
intent and have begun due diligence for the $30 million Proposed Credit
Facilities with connectFirst. Our business is on a strong footing,
having generated positive cash flow from operations last quarter
before changes in working capital. Our retail stores continue to
outperform the market, increasing market share every month since we
launched our innovative discount club model in October 2021, and our execution has not gone
unnoticed by top tier lenders," said Raj Grover, President and
Chief Executive Officer of High Tide. "Upon closing the Proposed
Credit Facilities, we will effectively be replacing our Existing
Facility with a larger, less restrictive line – providing a boost
to our balance sheet without diluting our existing shareholders.
The initial $15 million of Term Debt will
help clean up our short-term debt and provide funds for working
capital and capital expenditure, and the $15 million revolving M&A
Master Line will provide dry powder for acquisitions. We are in
discussions with many groups, in various countries, and focused on
different parts of the ecosystem which would be complementary to
High Tide. These acquisition targets have demonstrated a
willingness to take a position in our Company through share-based
transactions. However, we anticipate that having a line set aside
for acquisitions should help us be able to close more accretive
transactions faster, while reducing dilution for our existing
shareholders," added Mr. Grover.
PROPOSED CREDIT
FACILITIES
- CAD$15 Million Term Debt:
The Term Debt will be accessible on request by High Tide. The Term
Debt will be interest only for 12 months followed by blended
principal and interest payments.
- M&A Master Line for Future Growth: The
Proposed Credit Facilities include the CAD$15 million revolving
M&A Master Line to support future mergers and acquisitions
initiatives. The M&A Master Line will have a 5-year term on
each draw down, with blended principal and interest payments
beginning on each draw down.
- Low Interest Rate: High Tide continues to receive
industry leading interest rates that reflect the strength of its
business. The interest rate under the Proposed Credit Facilities is
a 5-year fixed rate of 5.19% per annum for the Term Debt and
connectFirst prime + 2.50% per annum for the M&A Master
Line.
- Financial Covenants: The Proposed Credit Facilities will
have a quarterly tested financial covenant, a debt to equity ratio
of less than 2:1. Additionally, the Proposed Credit Facilities will
have one annually tested covenant, a debt service coverage ratio of
not less than 1.25:1, a monthly current ratio covenant of not less
than 1.25:1, and an annually tested covenant, a funded debt to
EBITDA ratio of not more than 4:1 beginning with the fiscal year
ending October 31, 2022. High Tide's
12-month forecast projects it to be comfortably in compliance with
all financial covenants.
The Company expects to close on the Proposed Credit Facilities
during the first half of June 2022,
subject to certain pre-disbursement conditions and satisfaction of
other customary conditions precedent. While the parties are in due
diligence, no assurances can be given related to the closing of the
Proposed Credit Facilities.
ABOUT CONNECTFIRST
connectFirst Credit Union, one of the largest and most
successful credit unions in Canada, is a full-service financial
institution with over $6 billion in
assets under administration. connectFirst employs 750 Albertans who
provide a range of financial products and advice in more than 40
communities across central and southern Alberta. It serves over 125,000 members
through a community-focused approach to banking.
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 Canadian retailer of recreational
cannabis as measured by revenue, with 113 current locations
spanning Ontario, Alberta, Manitoba, and Saskatchewan. High Tide was featured in the
third annual Report on Business Magazine's ranking of Canada's Top Growing Companies in 2021 and was
named as one of the top 10 performing diversified industries stocks
in the 2022 TSX Venture 50™. The Company is also North America's first and only cannabis
discount club retailer, featuring Canna Cabana, Meta Cannabis Co.,
and Meta Cannabis Supply Co. banners, with additional locations
under development across the country. High Tide's portfolio also
includes retail kiosk 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, and BlessedCBD.de, as well as its
wholesale distribution division under Valiant Distribution,
including the licensed entertainment product manufacturer Famous
Brandz. 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.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
For more information about High Tide Inc., please visit
www.hightideinc.com, its profile page on SEDAR at www.sedar.com,
and its profile page on EDGAR at www.sec.gov.
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: High Tide securing the Proposed
Credit Facilities on the terms and within the timelines set out in
this news release; the use of proceeds from the Proposed Credit
Facilities being utilized as outlined herein; the anticipated
effects of the Proposed Credit Facilities on the business and
operations of High Tide; the Company utilizing the Proposed Credit
Facilities to complete future acquisitions; and High Tide's plans
to extend and strengthen its integrated value chain, while
providing a complete customer experience and maximizing shareholder
value.
Forward-looking information in this news release are based on
certain assumptions and expected future events, namely: High Tide
will secure the Proposed Credit Facilities (and will have the
ability to obtain all requisite approvals) on the terms and within
the timelines anticipated by High Tide; the use of proceeds from
the Proposed Credit Facilities will be utilized as outlined herein;
the Company will utilize the Proposed Credit Facilities to repay
its debt, replace its current credit facility and complete future
acquisitions; High Tide'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 High Tide's product
offerings; current and future economic conditions will neither
affect the business and operations of High Tide nor High Tide's
ability to capitalize on anticipated business opportunities; and
High Tide will extend and strength its integrated value chain,
provide a complete customer experience and maximize shareholder
value. Although considered reasonable by management of High Tide at
the time of preparation, these statements may prove to be imprecise
and result in actual results differing materially from those
anticipated, and as such, undue reliance should not be placed on
forward-looking statements.
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; High Tide being unable to secure the
Proposed Credit Facilities and/or being unable to utilize the
facilities on the terms and within the timelines anticipated; the
inability of High Tide to obtain requisite approvals; the inability
of High Tide to pursue more acquisitions in the future; and the
inability of High Tide to extend and strengthen its integrated
value chain, while providing a complete customer experience and
maximizing shareholder value.
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 High Tide in this
press release may not be indicative of, and are not an estimate,
forecast or projection of High Tide 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. High Tide
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 High Tide'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.