High Tide, a leading retail-focused cannabis company with bricks and mortar as well as global e-commerce assets, entered into a credit agreement to establish a revolving credit facility with ATB Financial ("ATB") in an amount of up to C$25 million or US$20.2 million (comprised of an initial C$10 million limit and C$15 million accordion, the "Facility"), with an expected interest rate of less than 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," said Raj Grover, President and Chief Executive Officer of High Tide. "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," added Mr. Grover.
The Facility, which will become effective by end of business today, 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 (the "Initial Facility Amount"), 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 October 31, 2021. Proceeds from the Facility are expected to be used 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 less than 6% per annum.
Separately, the Company also announced that a further $1.0 million of debt has been converted into equity, which brings the Company's total outstanding debt balance to $27.4 million as of today. Of this amount, only $1.6 million matures during the next 12 months.