High Tide’s search for investments finds Aphria

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The retail cannabis company sought private-placement investors and scored with Aphria

Canada-based retail cannabis company High Tide Inc. went on the hunt for investors that wanted to participate in a non-brokered private placement deal that would offer as many as 10,000 convertible debentures in the company, each at a price of $746. The gross proceeds are expected to be capped at $7.46 million and the deal has already found a major anchor. Aphria has ordered $3.36 million.

According to a press release, the net proceeds will give High Tide the ability to fund the construction of KushBar, Canna Cabana and Smoker’s Corner, all retail cannabis stores planned by the company. It will also be able to complete a number of strategic acquisitions in progress, as well as cover some “general working capital purposes.”

The debentures have an interest rate of 10% per year, which will be paid upfront annually through common shares of the company. The payout will be calculated against the ten-day volume weighted average price prior to the closing date of the offering and the vehicles are convertible to common shares at a price of $0.56 per common share at the option of the holder.

High Tide adds, “The Convertible Debentures will include a restriction on conversion to ensure the Company maintains compliance with s. 7 of O. Reg. 468/18 of the [Canadian] Cannabis Licence Act, 2018, which restricts ownership and control of the Company, directly or indirectly, by one or more licensed producers or their affiliates, to 9.9 percent of the Company.”

The company indicates that it has the right to prepay or redeem a part or all of the principal amount at its discretion, provided it gives notice before the redemption data. The debentures will be unsecured obligations and the placement is expected to close on or about tomorrow.