High Tide Closes $19 Million Non-Dilutive Credit Facility with connectFirst Credit Union
High Tide Inc., a leading retail-focused cannabis company with bricks-and-mortar as well as global e-commerce assets, is pleased to announce that, further to its press release dated August 18, 2022, it has closed a $19 million senior secured credit facility (the "Credit Facility") with connectFirst Credit Union Ltd. ("connectFirst"), with an initial 5-year term, at connectFirst's floor interest rate.
"I am extremely pleased that we have successfully closed the Credit Facility with connectFirst today. Our business has been on an impressive upward trajectory for the past few years, and we are now able to further capitalize on this strong momentum with this facility in place. Our growth has been amplified since we launched our innovative discount club model in October 2021, and we are now operating 140 Canna Cabana locations across Canada with 36 additional stores having been added to our portfolio year to date through organic growth and accretive acquisitions. Our goal is to continue gaining market share rapidly by increasing our store count to 150 by the end of this calendar year and to 200 by the end of 2023. This Credit Facility from connectFirst will help us do exactly that and give us the ability to pour even more fuel on the fire," said Raj Grover, President and Chief Executive Officer of High Tide.
"We will have access to $19 million, upon completion of customary conditions, which we can use to open more stores organically, invest in working capital and capital expenditures without having to issue equity to fund these growth drivers. We expect that as our business continues to grow, and as we execute on our communicated business plan, the amount of funding we can obtain from connectFirst will also increase in tandem, propelling our rapid expansion in the future. I would like to take this opportunity to thank connectFirst and look forward to building our relationship further," added Mr. Grover.
"High Tide is a clear leader in cannabis retail, not just in our home province of Alberta, but across Canada, with a foothold in other international markets. We are proud to be able to support companies like High Tide and help them expand further. We hope that today's announcement will lead to a long and mutually fruitful relationship between our two companies," said Sourav Neogi, Relationship Manager, Corporate and Commercial Banking at connectFirst.
CREDIT FACILITY TERMS
$19 Million Term Debt: Accessible on request by High Tide, blended principal and interest payments.
Low Interest Rate: High Tide secured connectFirst's floor interest rate, due to the strength of High Tide's business.
Financial Covenants: The Credit Facility will have a quarterly tested financial covenant of debt service coverage ratio of not less than 1.40:1, a monthly current ratio covenant of not less than 1.25:1, and a quarterly tested covenant of funded debt to earnings before interest, taxes, depreciation and amortization ratio of not more than 3:1, beginning with the quarter ending January 31, 2023. High Tide's 12-month forecast projects it to be comfortably in compliance with all financial covenants.
Echelon Capital Markets ("Echelon") acted as the exclusive financial advisor to High Tide in connection with setting up the Credit Facility. In connection with their services, Echelon is entitled to a cash commission equal to: (i) 1% of the aggregate amount of the Credit Facility and (ii) 1% of the amount drawdown on the Credit Facility.